Transportation and Globalization
Jean-Paul Rodrigue
Department of Economics & Geography, Hofstra University, Hempstead, New York 11549, USA. E-mail:
ecojpr@hofstra.edu
In R. Robertson and J.A. Scholte (eds) Encyclopedia of Globalization, London: Routledge. Forthcoming
Introduction: The Linchpin of the Global Economy
Transportation is one of the least visible, but critical components of the global economy
by supporting a wide array of movements of passengers and freight between nations.
Freight transportation is particularly unnoticed even if globalization depends on the trade
of raw materials, parts and finished products. The substantial diversity, availability and
affordability of goods in the global economy thus depend much on the capacity to
transport them. For instance, a DVD player manufactured in China embarks in a complex
journey, involving a multitude of stages with transport modes such as trucks,
containerships and trains, and with transport facilities such as ports, railyards and
distribution centers, to insure that it reaches global markets. This does not even consider
the staggering array of movements related to the components of this DVD player. These
flows of goods are also complemented by movements of people between borders for a
wide array of activities such as business, tourism and even migration. The circulation of
goods and people within the global economy thus must be supported by transportation.
The Emergence of a Global Transportation System
In spite of its importance in the contemporary global economy, international
transportation predates globalization. For as long that there has been trade, transportation
activities have been present to support it. One is the prerequisite for the other; they are
both mutually interdependent. What has changed is not the purpose of transportation, but
its volume, capacity, speed and efficiency. As economies and societies emerged, axis of
trade and circulation came into existence. One of the first major “international” trade
route was the Silk Road, its name taken from the prized Chinese textile that flowed from
Asia to the Middle East and Europe. The Silk Road consisted of a succession of trails
followed by caravans through Central Asia, for a total length of about 6,400 km. Since
the transport capacity was limited, over long distance and often unsafe, luxury goods
were the only commodities that could be traded. The Silk Road also helped the diffusion
of ideas and religions (initially Buddhism and then Islam), enabling civilizations from
Europe, the Middle East and Asia to interact. The road endured from the 2nd century BC
to the 15th century when more efficient maritime transportation helped its downfall. A
rudimentary system of international trade was thus permitted.
The transport system of the Roman Empire put in place between the 3rd century BC and
the 2nd century AD was a fundamental component of a circum Mediterranean system of
trade with two interdependent transport systems; the road and short distance – coastal –
maritime shipping. The Mediterranean Ocean provided a central role to support trade
between the major cities of Empire, the majority of them being located along the coast
(Rome, Constantinople, Alexandria, Cartage, etc.). These cities were serviced by a road
network permitting trade within their respective hinterlands. For instance, the world's first
dual carriageway, Via Portuensis, was built to link Rome and the port of Ostia at the
mouth of the Tiber River. At the peak of the Roman Empire around 200 AD, its road
system covered about 80,000 kilometers, but once the empire collapsed in the 5th century,
the road system fell into disrepair and became fragmented.
It is however with long distance maritime transportation that more globally oriented
economic systems were permitted, with the creation of commercial empires. Initially,
ships were propelled by rowers and sails were added around 2,500 BC as a
complementary form of propulsion. China was one of the first to establish an important
fluvial transport network with several artificial canals connected together to form the
Grand Canal. At its peak in the 15th century, the canal system totaled 2,500 kilometers,
with some parts still being used today. By Medieval times, an extensive maritime trade
network, the highways of the time, centered along the navigable rivers, canals, and
coastal waters of Europe was established. Shipping was extensive and sophisticated using
the English Channel, the North Sea, the Baltic and the Mediterranean where the most
important cities were coastal or inland ports. Still, transportation was mainly a short
distance and very risky endeavor with long distance maritime routes mainly controlled by
Arab merchants linking the Middle East, South Asia and Southeast Asia.
By the 14th century galleys were finally replaced by full fledged sailships (the caravel
and then the galleon) that were faster and required smaller crews. 1431 marked the
beginning of the European expansion with the discovery by the Portuguese of the North
Atlantic circular wind pattern, better known as the trade winds. A similar pattern was also
found on the Indian and Pacific oceans with the monsoon winds (long discovered by the
Arabs). The ensuing era of colonialism was mainly the era of the sailship, linking Europe
with the rest of the world. Although shipping services were rather sporadic, large colonial
empires such as those of the Spanish, British, French and Dutch were the early expression
of a global economy. For instance the Dutch East Asian Company, founded in 1602, can
be considered as one of the first multinational corporations. By 1750, it employed around
25,000 people and did business in more than 10 countries, mainly from the Dutch colony
of Indonesia.
The beginning of the 19th century saw the establishment of the first regular maritime
routes linking port cities worldwide, especially over the North Atlantic between Europe
and North America. Sailships became increasingly efficient, with some like the Clipper
ships mainly designed for speed more than for cargo holding. They dominated long
distance ocean trade until the late 1850s when they were gradually replaced by
steamships. Another significant improvement resided in the elaboration of accurate
navigation charts where prevailing winds and sea currents could be used to the advantage
of navigation. The improvement of steam engine technology permitted longer and safer
voyages. The first regular services for transatlantic passengers transport by steamships
were inaugurated in 1838 and until the mid 20th century, Liners accounted for the
majority of international passenger travel. In the 1840s, it took about 12 days for a Liner
to cross to Atlantic, a figure that dropped to 4 days in the 1930s.
By the end of the 19th century additional improvements in engine propulsion technology
and a gradual shift from coal to oil as a fuel increased the speed and the capacity of
maritime transport. Energy consumption by maritime shipping was reduced and coal
refueling stages were bypassed. An equal size oil-powered ship could transport more
freight than a coal-powered ship, reducing operation costs considerably and extending its
range. Global maritime circulation was also dramatically improved when shortcuts such
as the Suez (1869) and the Panama (1914) canals, were constructed. With the Suez Canal,
the far reaches of Asia and Australia became more accessible, while the Panama Canal
considerably reduced the time it took to link the Atlantic to the Pacific.
The capacity of maritime shipping also increased, which enabled to move low-cost bulk
commodities such as minerals and grain over long distances. The size of oil tankers grew
substantially, especially after World War II when global energy demands surged.
Maritime routes were thus expanded to include tanker routes, notably from the Middle
East, the dominant global producer of oil.
The airline industry has also played a significant role in supporting the emergence of a
global economy. It began with air mail services since they initially proved to be more
profitable than transporting passengers. 1919 marked the first commercial air transport
service between England and France, but air transport suffered from limitations in terms
of capacity and range. The 1920s and 1930s saw the expansion of regional and national
air transport services in Europe and the United States with successful propeller aircrafts
such as the Douglas DC-3. The post World War II period was however the turning point
for air transportation as the range, capacity and speed of aircrafts increased. A growing
number of people were able to afford the speed and convenience of air transportation. In
1958, the first commercial jet plane, the Boeing 707, entered in service and
revolutionized international movements of passengers, marking the end of passenger
transoceanic ships, leaving the maritime passengers sector to the niche markets of cruises
and ferries. The availability of the Boeing 747 in the early 1970s truly made air transport
a global industry. Still, passengers transportation is a marginal, albeit visible, component
of globalization.
By the second half of the 20th century, many international transportation systems were in
place, forming the basis of a global transport system and reinforced by a global
telecommunication network. Fundamental changes were about to take place as the role of
transportation evolved. From a situation where transportation was a simple infrastructure
permitting and supporting trade and mobility, transportation became a significant factor
shaping global production and markets. The fragmentation of the production and an
international division of labor increased the quantity of freight in circulation. Containers
have been particularly important in this regard. Introduced in the late 1950s, containers
became the main agents of the modern international transport system.
The Importance of Containerization and Intermodal Transportation
The container is a load unit that has the advantage of being used by several transport
modes. Maritime, railway and road modes are all able to handle containers, increasing the
flexibility of freight transport, mainly by reducing transshipment costs and delays.
Containerization underlines a growing relationship between freight transportation modes
and a standardization of loads. The container has a reference size of 20 feet long, 8 feet
high and 8 feet wide, corresponding to a Twenty-foot Equivalent Unit (TEU). The most
common containers are 40 feet in length, permitting them to fit well on a ship, truck or
railcar.
Recent efforts in international transportation have been made to integrate separate
transport systems through the use of at least two different modes. This came to be known
as intermodal transportation, which enhances the economic performance of the
transportation system by using respective modes in the most productive manner. Thus,
the line-haul economies of maritime shipping and rail may be used for long distances,
with the efficiencies of trucks providing local distribution. The entire transport sequence
is now seen as a whole, rather than as a series of stages, each marked by an individual
operation with separate sets of documentation and rates.
The emergence of intermodal transportation has been brought about in part by technology.
Techniques for transferring freight from one mode to another have facilitated intermodal
transfers. Early examples include piggyback, where truck trailers are placed on rail cars,
and LASH (lighter aboard ship), where river barges are placed directly on board seagoing ships. The major development has however been the container, which permits easy
handling between different modal systems. Containers have become the most important
component for rail and maritime intermodal transportation, enabling them to interact
closely and conferring significant time and cost savings.
Most major ports have been transformed to become container ports with the construction
of new container transshipment infrastructures. These infrastructures accommodate
containerships, ships built solely for the purpose of carrying stacked containers. For rail,
new facilities were also required to handle container traffic as well as specialized railcars.
The doublestacking of containers on railways has doubled the capacity of trains to haul
freight with minimal cost increases, thereby improving the competitive position of
railways with regards to trucking for long distance shipments. Road transportation has
also adapted to containerization but the requirements are minimal with new trailers able
to latch in containers.
Intermodal transport is transforming a growing share of freight distribution across the
globe. Large integrated transport carriers provide door to door services through a
sequence of modes, terminals and distribution centers. Transportation, in terms of modes
and routing, is no longer of much concern for customers, as long as shipments reach their
destinations within an expected cost and time range. Thus the concerns are mainly with
cost and level of service. For the customer of intermodal transport services, transportation
and distance appear to be meaningless, but for the intermodal providers routing, costs and
service frequencies assume an ever greater importance.
Transportation and International Trade
International transportation systems have been under increasing pressures to support the
growing demands of international trade and the globalization of production and
consumption. This could not have occurred without considerable technical improvements
permitting to transport larger quantities of freight and people, and this more quickly and
more efficiently. Since containers and intermodal transportation improve the efficiency of
global distribution, a growing share of general cargo moving globally is containerized.
Consequently, transportation is often referred as an enabling factor that is not necessarily
the cause of international trade, but a mean over which globalization could not have
occurred without.
Because of the geographical scale of the global economy, most international freight flows
circulate over several modes. Transport chains must be established to service these
requirements which reinforce the importance of transportation modes and terminals at
strategic locations. International trade requires distribution infrastructures that can
support its volume and extent. Two transportation modes are specifically supporting
globalization and international trade; maritime and air transportation. Road and railways
tend to account for a marginal share of international transportation since they are above
all modes for national or regional transport services. However, a substantial share of the
trade between Canada, United States and Mexico is supported by trucking, as well as
large share of the Western European trade.
The growth of maritime transportation has been fueled by many issues. First, there is an
increase in energy and mineral cargoes derived from a growing demand of industrial
(mainly Europe, North America and Japan) and industrializing nations. Second, the
international division of the production and trade liberalization permitted by globalization
has resulted in additional demands for long distance trade, which is mainly supported by
maritime transportation. Third, improvements in ship and maritime terminals have
facilitated the flows of freight, particularly containerized traffic.
In terms of weight, about 96% of the world trade is carried by maritime transportation. A
large share of this trade is handled by large containerships linking producers and
consumers along sea lanes. This transportation system is organized around major
maritime transport gateways where continental trade converges, namely Shanghai, Hong
Kong, Singapore and Busan for Pacific Asia, Rotterdam and Antwerp for Europe and Los
Angeles / Long Beach and New York for North America, among the largest container
ports in the world (Figure 1).
Tacoma
Los Angeles
Hampton Roads
New York/New Jersey
Oakland
Charleston
Long Beach
Jeddah
San Juan
Dubai
Salalah Nhava Sheva
Colombo
Less than 2 million TEU
2 to 4 million TEU
4 to 7 million TEU
7 to 10 million TEU
Melbourne
More than 10 million TEU
Europe
Pacific Asia
Laem Chabang
Hong Kong
Port Kalang
Tanjung Pelepas
Guangzhou
Singapore
ShenzhenXiamen
Keelung
Kaohsiung
Tanjung Priok
Rotterdam
Hamburg
Tianjin
Dalian
Quingdao
Felixstowe
Antwerp
LeHavre
NingboShanghai
Busan
Osaka
Nagoya
Kobe
Genoa
Tokyo
Barcelona
Manila
Tanjung Perak
Valencia
Gioia Tauro
Piraeus
Algeciras
Figure 1 Traffic at the 50 Largest Container Ports, 2003
The role of air transportation in the global economy is also substantial as it accounts for
about 40% of the value of international trade. Goods with a high value to weight ratio
such as electronics account for this preponderance. Further, the fast delivery of parcels,
which substantially leans on air transport, is a dominant segment of the air freight
industry. Traditionally, freight was carried in the bellyhold of passenger airplanes and
provided supplementary income for airline companies. However, specialized cargo-only
airplanes as well as specialized air freight carriers are becoming dominant. This goes on
par with a level of specialization of airports particularly in the United States where
centrally located airports such as Memphis and Louisville are handling a large share of
the freight. Pacific Asian airports such as Hong Kong, Singapore and Inchon have also a
significant preponderance as air freight gateways for Asian exports (Figure 2).
Europe
Seattle/Tacoma Sea/Tac
London Heathrow
Minneapolis Intl
San Francisco Intl
Toronto P earson
Chicago O'H are
Detroit Wayne Co
New York Ny/Newark Kennedy
Denver S tapleton
London Gatwick
Frankfurt Intl
Paris De Gaulle
Los Angeles Intl
Atlanta Hartsfield
Las Vegas MccarranPhoenix Intl
Passengers
Madrid Barajas
Dallas Intl
Houston Intercont
Less than 30 million
30 to 40 million
Orlando Int'L
40 to 60 million
Miami Int'L
More than 60 million
North America
Freight (tons)
Less than 1 million
1 to 2 million
Amsterdam Schiphol
More than 2 million
London Heathrow Luxembourg Findel
New York Ny/Newark Newark In
Chicago O'H are New York Ny/Newark Kennedy
Indianapolis Intl
Oakland Intl
Paris De Gaulle
Frankfurt Intl
Louisville Standiford
Los Angeles Intl
Memphis IntlAtlanta Hartsfield
Dallas Intl
Miami Int'L
Beijing Capital
Pacific Asia
Beijing Capital
Bangkok Int'L
Bangkok Int'L
Hong Kong Intl
Singapore Changi
Guangzhou Baiyun Shanghai Pudong
Tokyo Narita
Kuala Lumpur Subang Int
Hong Kong Intl
Taipei Shek
Tokyo Haneda Singapore Changi
Incheon
Tokyo Haneda
Kansai Intl
Tokyo Narita
Figure 2 Passengers and Freight Traffic Handled by Major Airports, 2004
Economic development in Pacific Asia and in China in particular, has been the dominant
factor behind the growth and the changes of international transportation in recent years.
Since the distances involved are often considerable, this has resulted in increasing
demands on the maritime shipping industry and on port activities. As its industrial and
manufacturing activities develop, China is importing growing quantities of raw materials
and energy and exporting growing quantities of manufactured goods. The outcome has
been a surge in demands for international transportation, but also problems of imbalanced
trade. The ports in the Pearl River delta in Guangdong province now handle almost as
many containers as all the ports in the United States combined.
Logistics: Organizing and Managing Transportation in a Global Economy
The complex web of global production, transportation and consumption requires greater
efforts to manage. Logistics is the series of activities required for goods to be made
available on markets. This mainly includes purchase, orders processing, inventory
management and transportation. As the range of production expanded, transport systems
adapted to new demands in freight distribution where the reliability and timely deliveries
can be as important as costs. Logistics has consequently taken an increasingly important
role in the global economy, supporting a wide array of commodity chains. First,
improvement in transport efficiency expanded the geographical range of commodity
chains. Second, a reduction of telecommunication costs enabled corporations to establish
a better level of control over their commodity chains. Third, technological improvements,
notably for intermodal transportation, enabled an increased continuity between different
transport modes and thus within commodity chains.
The results have been a decrease of the friction of distance and a spatial segregation of
production. This process is strongly imbedded with the capacity and efficiency of
international and regional transportation systems, especially maritime and land routes. It
is becoming rare for the production stages of a good to occur at the same location.
Consequently, commodity chains are integrated with transport systems with logistics as a
strategy used to reduce time. For instance, commodity chains are also becoming
increasingly managed by demand, implying that what is being produced is done so to
match as closely as possible to what is being consumed. Logistics services are becoming
complex and time-sensitive to the point that many firms are sub-contracting parts of their
distribution activities to specialized logistics providers.
Conclusion: Transportation in a Globalized Economy
Globalization has been supported and expended by the development of modern transport
systems. From large containerships to small delivery trucks, the whole distribution
system has become closely integrated linking manufacturing activities with global
markets. However, the beginning of the 21st century brings many challenges to the role of
transportation in the global economy. The capacity of many segments of transport system
has been stretched by additional demands tying up long distance transportation modes.
Congestion in many international transport terminals such as ports often causes delays
and unreliable deliveries and there is an acute need for improving inland transportation
systems, notably those linked to the major gateways of the global economy. Last, but not
least, the long trend of growing energy costs is likely to impose significant adjustments to
international transport systems.
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