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Economic Impact of Freight

The value of freight shipments in 2002, including domestic commodity shipments and domestic transportation of exports and imports, was $11 trillion-a 45-percent increase over 1993 when measured by value of shipments in inflation-adjusted chained 2000 dollars1. This steady growth in freight movements was possible because of growth in the U.S. economy, an increase in U.S. international merchandise trade, improvements in freight sector productivity, and the availability of an extensive multimodal transportation network in the United States.

A Close Link

There is a close link between growth in freight transportation and economic growth. Changes in economic activities influence the demand for freight services. An indicator, known as freight transportation intensity, illustrates this relation­ship. Measured as the ratio of total ton-miles to total Gross Domestic Product (GDP), this indicator shows that the actual freight activity required to produce a unit of goods and services in the nation's GDP has declined. The ratio dropped from 0.59 ton-miles per dollar of GDP in 1970 to 0.38 ton-miles per dollar of GDP in 2002 (as measured in 2000 dollars). This suggests an increase in freight trans­portation productivity. Alternatively, this decline may be due to GDP growing at a faster rate than growth in freight transportation. Changes to the ratio reflect both macro level driving forces (e.g., the shift in the structure of the economy from goods to more services) and micro level factors (e.g., changes in freight rates, time in transit, accessibility to ports, and security of goods).

Factors Affecting Shipment Levels

Strong growth in the U.S. economy, wholesale trade, and retail trade sales were key factors that affected the level of U.S. freight shipments between 1993 and 2002 (see figure). Increases in these factors meant greater volume of goods produced and consumed, resulting in increased demand for freight transportation, more freight movements, and increased length of haul.

In 2002, the U.S. economy-measured by Gross Domestic Product-was one-third larger than in 1993 (see figure). The economy's strong growth-3.3 percent annually-spurred the growth of freight shipments. During this period, the value of freight shipments grew 45 percent by value at an average rate of 4.2 percent annually (both adjusted for inflation), in part because of the faster growth rates of wholesale trade and retail trade sales. Tons and ton-miles of freight shipments grew more slowly-18 and 24 percent respectively-because of the relatively slower growth of the manufacturing sector and increased production of lighter weight goods.

Changes in patterns of goods production and trade (in which manufacturing and assembly operations are often located in different countries), increases in consumer demand for rapid delivery of goods, and a rise in international trade have contributed to the growth in freight tonnage and ton-miles. Also, continued shifts in the U.S. and world economy toward more services and high-value, low-weight products such as laptops, cell phones, and handheld personal computing devices are influencing the commodity mix and modal choice even as overall freight shipments rise. For example, electronic and electrical equipment have a much higher value per ton ($18,000) than wood products ($430), are more likely to move by truck or air courier service, and frequently travel farther (612 miles per ton) than the lower value per ton wood products (355 miles per ton) (CFS 2002).

In 2002, a ton of goods shipped was valued at $637, a 7-percent increase over $597 in 1993 (both in chained 2000 dollars). Higher value shipments (more than $1,000 per ton) accounted for 75 percent of the value of overall 2002 shipments, up from 71 percent in 1993. Because these high-value goods are lighter products (e.g., pharmaceuticals, precision instruments, and textiles) they accounted for just about 13 percent of the tonnage and 18 percent of the ton-miles in 2002, both within 3 percentage points of the corresponding figures in 1993 (see figure).

While the U.S. economy will continue to use large quantities of low-value bulk commodities, and the movement of these goods may continue to grow, it is likely that higher value shipments' relative proportion of overall freight and their contribution to GDP will increase. Today, due to improved freight productivity and reliability, timed delivery of a wide range of goods-from flowers and perishables to parts from suppliers for factory assembly-has become much more common and, in contrast to three decades ago, such goods may come from or go to places anywhere in the world. Even for commodities traditionally shipped in bulk, more specialized shipping requirements are becoming more common. Containers, for example, may be used to ship grain and other cereal products that are handled as neo-bulk.2

For more information, see Interpreting Shipment Value and Tonnage Data.

See also: Transportation Services Index

1This report uses inflation-adjusted figures when discussing the overall totals for all modes of transportation. It uses the goods GDP deflator (not the overall GDP deflator) to adjust the value of freight shipments because overall GDP covers goods and services. See notes on table 1 for additional information on adjusting for inflation.

2Neo-bulk commodities are generally handled like bulk commodities, except they move in small quantities per shipment. For example, steel, lumber, oranges, and forest products could all be shipped in the same vessel with cargo separation maintained during loading, transportation, and unloading (Muller 1999).