Summary

There are dynamic industry-wide changes that continue to influence and shape the global freight industry as worldwide international trade is transformed by the global economy. The principal forces that are likely to affect future international merchandise trade and freight movements include the following:

• changes in U.S. reliance on imported consumer products,
• China's expanded role in the world economy and global trade,
• fluctuations in fuel prices and transportation costs,
• environmental concerns, and
• a rise in Internet shopping and on-demand deliveries.

These global forces and the pace of U.S. reliance on imported consumer products may affect the movement of freight from, to, and within the United States. Increased freight movements resulting from future resumption of growth in worldwide merchandise trade could affect U.S. freight gateways and the relative dominance of particular seaports, airports, and land border crossings.

Principal Forces of Change

Changes in U.S. reliance on imported consumer products. Like other leading world economies, the United States has seen its domestic economy shift from manufacturing and agriculture to an emphasis on service and information industries (USDOT FHWA 2007a). As the output of the U.S. information and service sectors expanded, American demand for consumer goods continued to increase steadily over the last two decades (Moran and McCully 2001). At the same time, U.S. businesses outsourced more parts and finished products from trading partners around the world. Together, those trends led the United States to rely more significantly on imports of consumer goods to meet growing domestic demand for manufactured products. A resumption of growth in U.S. demand for foreign consumer goods would spur an increase in international freight handled by U.S. gateways.

China's expanded role in the world economy and global trade. As the world's largest developing economy, China has emerged as a significant force in global trade. Since China opened its markets, its economic impact in the world has expanded rapidly. During the past two decades, China increased its industrial output and became the world's top manufacturer (CRS 2007). In 2008, China was the United States' second leading trading partner. China was also a top trading partner for the world's other developed economies, including Japan and the European Union. Continued growth in China's economic position, coupled with its continuing demand for raw materials and parts from around the world, will significantly fuel growth in global merchandise trade and freight movements.

Fluctuations in fuel prices and transportation costs. In 2007 and 2008, concerns about increased fuel prices and transportation costs emerged as oil price fluctuations seriously impacted freight carriers. When fuel prices rise, transportation costs become more important relative to the cost of inventory or shipping (Hummels 2009). If wide fluctuations in fuel prices continue in coming years, they could have the effect of reconfiguring global production, distribution, and freight transportation services. Significant fluctuations in world fuel prices could seriously affect the financial performance of freight carriers engaged in international trade, and could also change industry alliances and recent patterns of carrier cooperation.

Environmental concerns. While freight transportation is essential to continued economic growth, like other industrial activities it can have an unintended and negative impact on environmental quality (USDOT RITA BTS 2008). Some of the most prominent environmental concerns surrounding freight transportation include the following:

• Climate change. Transportation is the second-largest source of greenhouse gases, accounting for a significant proportion of the world's carbon dioxide emissions.


• Pollution, water, and air quality. Pollutants produced through the operation of the freight trucks-such as carbon monoxide, ozone, nitrogen oxide, and sulfur dioxide-contribute to climate change and harm human health. The use of larger maritime vessels increases the need for harbor dredging and increases the amount of ballast water produced, a factor that can help introduce nonindigenous aquatic species into waterways.


• Land-use compatibility around maritime ports. Increased port traffic exacerbates congestion on landside transportation systems, increasing vehicle delays and emissions.

Global and national actions aimed at mitigating these environmental impacts could potentially affect the worldwide freight industry in terms of future technology adoption, performance, and growth.

Rise in Internet shopping and on-demand deliveries. The continued popularity and acceptance of Internet shopping, coupled with increased adoption of just-in-time inventory management by shippers globally, has had an impact on how freight moves. Internet shopping requires carriers to deliver goods to end users rather than to intermediaries, resulting in overall growth in direct shipments to customers (USDOT FHWA 2007b). Together, these trends have increased the number of shipments, particularly small shipments, that carriers handle, and expanded the number of links in the freight supply chain that are needed to deliver goods to their final destination.

Summary and Conclusion

Globally, more than 8 billion tons of freight moved in international maritime and air transportation in 2008. A vast number of vessels, aircraft, and vehicles operated by several freight carriers moved these goods around the world. The major highlights of this report include the following:

• The majority of international freight transported worldwide comes from a few countries. In 2008, more than three-quarters of exported freight were from only 25 countries.


• From mid-2008 to mid-2009, as global economic activities slowed, goods transported worldwide by ocean carriers and airlines fell.


• Since 2001, U.S. shares of world GDP and exports have fallen as the share of developing Asian countries, particularly China, increased.


• Ocean carriers continue to transport the majority of internationally traded goods. During the past decade, worldwide containerized cargo grew faster than air cargo.


• In 2008, three U.S. seaports-South Louisiana, Houston, and New York/New Jersey-ranked 13th, 16th, and 21st, respectively among the world's top ports.


• Among the world's top container ports, Los Angeles, Long Beach, and New York/New Jersey ranked 16th, 17, and 20th, respectively.


• Among the world's top airports, Miami, Ted Stevens Anchorage, and John F. Kennedy ranked 10th, 12th, and 15th, respectively.

Changes in the global economic situation as well as trade between nations will continue to affect the choices of transportation modes used in transporting traded goods around the world and in the United States. Resumption of growth in worldwide merchandise trade is likely to create more demand for intermodal freight services. Continued integration of global economic activities and resumption of growth in oceanborne and air cargo would increase demand for freight transportation services.

Global economic activities will continue to shape where and how goods are produced and distributed. Expanded trade among countries will ultimately affect the movement of freight internationally as well as into and out of the United States. Fuel costs, changes in logistics supply chains, out-sourcing, just-in-time inventory management systems, and online shopping could impact the demand for freight transportation.