MANAGEMENT OF TRANSPORTATION

Edgar del Bosque de la Cruz A01381179

The motor carrier industry played an important role in the development of the
U.S. economy during the 20th century. During 2001, 1.8 million people were
employed in this industry, with an average compensation of US$40,365.30.
For-hire: provides services to the public and charge a fee for the service.
Private: provides the service to the industry or Company that owns or leases
the vehicles. Market structure Motor carriers primarily transport manufactures,
high- value products. They transport less of commodities such as grain, primary
nonferrous metal products, motor vehicles and equipment, and paper allied
products. Because such commodities generally must move long distances and
in large volumes, shipping them by rail and water is usually less expensive.
Competition Motor carrier compete energetically with one another for freight.
With the large number of for-hire motor carriers, rivalry between firm can be
intense. However, the most severe competition for hire carriers often come
from the private carrier.
The growth and widespread use of motor carrier transportation can be traced
to the inherent service features of this method. The motto carrier possesses a
distinct advantage over other modes in the zone of accessibility. The motor
carrier can provide service to virtually any location, as operating authority of
the for-hire carrier no longer places restrictions on the areas served and
commodities transported. Motor carrier Access remains not constrained by
waterways, rail tracks, or airport locations. The U.D. system of highways is so
pervasive that virtually every shipping and receiving location is reachable via
highways. Therefore, motor carrier is referred to as the universal coordinator.
Another service advantage of the motor carrier is speed. For loads going under
500 miles, the motor carrier vehicle can usually deliver the goods in less time
than other models. Although the airplane travels at a higher speed, the
problem of getting freight to and from the airport via motor carrier adds to the
carriers total transit time.
Many of the motor carrier service advantages emanate from the technical
features of the transportation vehicle. The high degree of flexibility, the
relatively smooth ride, and the small carrying capacity of the vehicle are the
unique characteristics that result in greater accessibility, capability, frequency
of delivery and pickup, cargo security and lower transit time.
The motor carrier vehicle can also be loaded quickly. A railroad operation needs
to collect some freight cars to be pulled by one power unit; the motor carrier
has just one or two. The availability to operate one cargo unit eliminates the
time needed to collect several cargo units. The public provision of highways
has played a major role in the development of the motor carrier because of the
ubiquitous level of accessibility provided by the complete U.S. highway system.
The private carrier is a very important part of the motor carrier industry and a
viable option to large and small companies requiring special services, such as
grocery or food deliveries. The need of U.S. industry for dependable and
controlled service has also subsidized to the development.
For-hire motor carrier can be classified in different ways: local versus intercity,
common vs contract, regulated vs exempt, general vs focused and TL vs LTL.
MANAGEMENT OF TRANSPORTATION
Edgar del Bosque de la Cruz A01381179

One pf the manifestations of deregulation has been the tremendous growth in

the TL segment of the motor carrier business, especially among the small
truckload carriers, which has significantly escalated the degree of international
competition.
The LTL segment of the motor carrier industry has experienced increased
concentration; that is, the larger carrier has generated a larger share of the
total tonnage, as they have aggressively expanded and marketed their
services.
The cost structure of motor carriers is dominated by variable costs largely due
to the carriers ability to utilize a publicly provided right-of-way where payment
is based upon user charges such as fuel taxes and license
The rail transportation played a significant role in the economic development of
the nation from 1850 to 1950. The establishment of a transcontinental railway
in 1869 contributed to the population migration. The railroads provided a
lifeline for that migration because they provided inbound and outbound
movement of products to sustain the people in the area.
The railroad industry has declined in relative importance during the last half of
the 20th century for:
The alternate transport modes
Resurgence in water transportation
Changing needs of the economy
In 1984 the railroad industry adopted a new depreciation accounting system
and return on investment shot up to 5.7 and in 2001 RIO again showed an
increase to 7.33 however the railroads play an important role in our economy.
Railroads were the dominant mode of transportation before World War II now
the industry is faced with intense intermodal competition and selective
intramodal competition. There are small number of large railroads and they
serve somewhat different market areas. Their major source of competition in
intermodal in nature.
Intramodal vs Intermodal: Pricing can be controlled by firms and the economic
regulations implemented by the ICC before 1980 bought the geographic
coverage and the rate-making procedures of the railroads under federal
scrutiny and control so that intramodal and intermodal competition might be
promoted.
Merges: many merges have taken place in the railroad industry and the size of
the remaining carrier has correspondingly increase. Early rail mergers grew out
of efforts to expand capacity to benefit from large volume traffic efficiencies
and economies. Side-by-side combinations were made to strengthen the
financial position of many of the railroads and eliminate duplication. The end-
to-end merges were created to provide more effective intermodal and
intramodal competition.
Commodities hauled: Coat the third of the total tonnage handled by the
railways Farm products is the second one commodity group haunted by
MANAGEMENT OF TRANSPORTATION
Edgar del Bosque de la Cruz A01381179

railroads. Chemicals and allied products are classified as hazardous by the Us

DOT because they are transported in specially tank cars.
Transportation equipment.
Employment in the carrier industry has increased incredibly has transported
since 2002 the total number of 0.5 percent of the total intercity.
There are several types of carriers; there is the private carrier which can be
segments into for-hire carriers and private carriers. A private carrier is the one
that transport company personnel or freight to support its business. This kind
of transportation is used in several ways; one is to transport personnel,
emergencies, etc. The private one is subject to the FFA of the United States
department of transportation. There is also, the charter carrier, which are the
air taxis, they use small to medium aircraft transport people of freight. These
ones, charter the plane to transport a group of people or cargo between
specified origins and destinations.
Obviously exist a competition into this industry and there are many ways to do
it; as the intermodal way, which face limited competition from others as much
for passengers and for freight. There is the intramodal which is very intense,
and the number of carriers is small. All the carriers have excess capacity and
attempt to reach some passengers by lowering fares to fill the empty seats.
There is also the service competition which englobes the frequency and timing
of flight on routes. As we know they want to meet the demand always, as any
other company. So, the flight departures are most frequent in the early
morning.
All the revenue of the carriers comes from passenger flights. This revenue is
generated by all the people who travels through planes, but there is also
profitable, since the 12.5 percent of all the carrier revenue came from it in
2002. Also, for emergency shipments the cost, as well known, should be high
enough, but is inconsequential compared to the cost of delaying the goods.
Economies of density can be placed when a carrier has a significant volume
between an organization pair to fully utilize capacity on forward-haul
movement as well as utilize the capacity on back haul movements. We know
that exists government subsidies to air carriers.
The rates for one fly service is well known by discounts from full fare. Business
people pay or for flight because of their schedule, the price of seats on
different flights and the price of the same seat on a flight can vary due to
competition with other airlines, the time and day of departure and return, etc.
Also, one of the current issue that must do with carriers and air transportation
is the safety, which is of great importance to the airline industry. An incident
involving airplanes receives a great deal of publicity from the media because of
the number of people involved in the catastrophic event. Many factors can
contribute to affect the air safety, one of them is the scrutiny over the past
several years as the 9/11 case that caused lots of injured and death people.
The technology in the airline industry has been developed very fast; this
because more everyday people need faster flights and sophisticated
equipment. Therefore, they have developed programs like air cargo fast
MANAGEMENT OF TRANSPORTATION
Edgar del Bosque de la Cruz A01381179

created to speed the processing of air freight cargo through customs

processing.