Transportation Modes, Modal

Competition and Modal Shift

Basic References:
• The Geography of Transport Systems, FIFTH EDITION
Jean-Paul Rodrigue (2020), New York , published by
Routeledge
• Maritime Economics by Martin Stopford published by
Routeledge
Coplementary Reading List:
• Review of Maritime Transport, UNCTAD
• Containerization International
• Lloyds List
Data Bank
• www.statista.com
• www.worldbank.org
 Course syllabus
Topic 1 Transportation Modes, Topic 7 Logistics and Freight
Modal Competition and Distribution
Modal Shift And Integration
Topic 2 Transportation in the Topic 8 Evolution of ports and
globalized economy shipping industry

Topic 3 Transportation Market Topic 9 Integration in shipping

Cycle industry
Topic 4 The Four shipping Topic 10 Smart ports
Markets
Topic 5 Cost , Revenue and Topic 11 Transport and economic
Financial Performance growth

Topic 6 The Supply and Demand Topic 12 Transportation and

for Transportation Economic Development
• Transport modes are the means of supporting
the mobility of passengers and freight.
• They are mobile transport assets and fall into
three basic types;
• land (road, rail, pipelines), water (shipping),
and air.

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Passengers Modal Options

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Freight Modal Options

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Air Cargo

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 Trucks

curtain side flat

Reefer Dry
tank

open Hooper
8
 Rail

Car load flat

Hooper Gondola

boxcar
9
Unit train
 First: A Diversity of Modes
• Transport modes are designed to either carry
passengers or freight, but most modes can carry a
combination of both.
• Each mode is characterized by a set of technical,
operational, and commercial characteristics.
➢ Technical characteristics relate to attributes such as
speed, capacity, and motive technology.
➢ operational characteristics involve the context in which
modes operated, including speed limits, safety
conditions, or operating hours.
➢ The demand for transport and the ownership of modes
are dominant commercial characteristics.

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 1. Road transportation
• Road infrastructures are large consumers of space with the lowest
level of physical constraints among transportation modes. However,
physiographical constraints are significant in road construction with
substantial additional costs to overcome features such as rivers or
rugged terrain. While historically road transportation was
developed to support non-motorized forms of transportation
(walking, domestic animals, and cycling at the end of the 19th
century), it is motorization that has shaped the most of its
development since the beginning of the 20th century.
• Road transportation has average operational flexibility as vehicles
can serve several purposes but can rarely operate outside roads.
Road transport systems have high maintenance costs, both for the
vehicles and infrastructures. They are mainly linked to light
industries and freight distribution, where rapid movements of
freight in small batches are the norm. Yet, with containerization,
road transportation has become a crucial link in freight distribution.

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 2. Rail transportation
• Railways are composed of a traced path on
which wheeled vehicles are bound.
• Heavy industries are traditionally linked with
rail transport systems, although
containerization has improved the flexibility of
rail transportation by linking it with road and
maritime modes.

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 3. pipelines
• Pipeline routes are practically unlimited as they can be laid on land
or underwater.
• Their purpose is to move liquids such as petroleum products over
long distances in a cost-effective fashion.
• The longest gas pipeline links Alberta to Sarnia (Canada), which is
2,911 km in length.
• The longest oil pipeline is the Transiberian, extending over 9,344 km
from the Russian arctic oilfields in eastern Siberia to Western
Europe.
• Pipeline construction costs vary according to the diameter and
increase proportionally with the distance and with the viscosity of
fluids (from low viscosity gas to high viscosity oil).
• Pipeline terminals are essential since they correspond to refineries
and harbors.

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 4. Maritime Transportation
• Maritime transportation is the most effective mode to move large
quantities of cargo over long distances.
• Main maritime routes are composed of oceans, coasts, seas, lakes,
rivers, and channels.
• However, due to the location of economic activities, maritime
circulation takes place on specific parts of the maritime space,
particularly over the North Atlantic and the North Pacific.
• The construction of channels, locks, and dredging are attempting to
facilitate maritime circulation by reducing its discontinuity, but such
endeavors are highly expensive.
• Comprehensive inland waterway systems include Western Europe,
the Volga / Don system, the St. Lawrence / Great Lakes system, the
Mississippi and its tributaries, the Amazon, the Panama / Paraguay,
and the interior of China.

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 4. Maritime Transportation
• Maritime transportation has high terminal costs since
port infrastructures are among the most expensive to
build, maintain, and operate.
• These high costs also relate to maritime shipping,
where the construction, operation, and maintenance of
ships is capital intensive.
• More than any other mode, maritime transportation is
linked to heavy industries, such as steel and
petrochemical facilities adjacent to port sites.
• With containerization, maritime shipping has become
the linchpin of globalization, allowing trading a wide
range of goods and commodities.

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 5. Air transportation
• Air routes are practically unlimited, but they are denser
over the North Atlantic, inside North America and Europe
and over the North Pacific.
• Air transport constraints are multidimensional and include
the site (a commercial plane needs about 3,300 meters of
runway for landing and take-off), the climate, fog, and
aerial currents.
• Air activities are linked to the tertiary and quaternary
sectors, notably finance and tourism, which lean on the
long-distance mobility of people. More recently, air
transportation has been accommodating growing
quantities of high-value freight and is playing an increasing
role in global logistics.

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 6. Intermodal transportation
• Intermodalism concerns a variety of modes used in
combination so that the respective advantages of each
mode are advantaged.
• Although intermodal transportation applies for
passenger movements, such as the usage of the
different, interconnected modes of a public transit
system, it is over freight transportation that the most
significant impacts of intermodalism have been
observed.
• Containerization has been a powerful vector of
intermodal integration, enabling maritime and land
transportation systems to interconnect.

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 Second: Modal Competition
• Each transportation mode has key operational and
commercial advantages and properties. However,
contemporary demand is influenced by integrated
transportation systems that require flexibility in the
respective use of each mode.
• As a result, modal competition exists at various
degrees and takes several dimensions. Modes can
compete or complement one another in terms of cost,
speed, accessibility, frequency, safety, comfort, etc.
There are three main conditions that ensure that some
modes are complementing one another:

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1. Different Geographical Markets
• If different markets are involved, modes will
enable a continuity within the transport system,
particularly if different scales are concerned, such
as between national and international
transportation.
• This requires an interconnection, commonly
known as a gateway, where it is possible to
transfer from one mode to the other. Intermodal
transportation has been particularly relevant to
improve the complementarity and connectivity of
different geographical markets.

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 2. Different Transport Markets
• The nature of what is being transported, such
as passengers or freight, often indicates a level
of complementarity.
• Even if the same market area is serviced, it
may not be equally accessible, depending on
the mode used.
• In some markets, rail and road transportation
can be complementary as one may be
focusing on passengers and the other on
freight.
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 2. Different Transport Markets
• Thus, there is modal competition when there is an overlap
in geography, transport markets, and level of service. Cost
is one of the most important considerations in modal
choice.
• Because each mode has its price/performance profile,
competition between the modes depends primarily upon
the distance traveled, the quantities shipped, and their
value. While maritime transport might offer the lowest
variable costs, road transport tends to be most competitive
over short distances and for small bundles of goods.
• A critical factor is the terminal cost structure for each
mode, where the costs (and delays) of loading and
unloading a unit impose fixed costs that are incurred
independent of the distance traveled.
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Modal Competition and
Complementarity

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 a. Passengers and freight
• Since both systems cover different markets they are
perceived as complementary since specific modes are
designed to carry only passengers or freight (with a few
exceptions such as air transport where planes can carry
both passengers and freight).
• In simple terms, a truck does not compete with a bus.
Passenger and freight modes can however compete for
the usage of infrastructure such as terminals and
routes.
• In this case a truck will compete with a bus for the
usage of road infrastructure, particularly in situations
of congestion where each vehicle will impair the
mobility of others.

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 b. International and domestic
• Domestic transport modes are not designed to
service international markets and vice versa.
There is no significant example of competition
between domestic and international markets.
• This is particularly the case if international
transportation involves a maritime segment.
• Intermodal transportation helped improve the
geographic complementarity by enabling a higher
level of interaction between both systems of
circulation.

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 c. Performance
• Performance criteria usually covers a time and cost
perspective which is difficult to reconcile. For long
distances, complementarity prevails, particularly for
freight as time sensitive shipments are usually routed
through air transport (some instances of long distance
trucking) while cost sensitive shipments are routed
through maritime or rail transport.
• For passengers, there is neither competition or
complementarity for long distances as the only
practical mode remains air transport (it becomes a
matter of integrating international and domestic
segments). For shorter distances, competition prevails
as different modes are possible for the concerned
passenger and freight traffic.
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Distance, Modal Choice and Transport
Cost

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Distance, Modal Choice and Transport
Cost
• Transportation modes have different cost functions
according to the serviced distance. Using a simple linear
distance effect, road, rail, and maritime transport have
respectively a C1, C2, and C3 cost functions.
• While road transport has a lower cost for short distances,
its cost increases faster than rail and maritime costs.
• At a distance D1, it becomes more profitable to use rail
transport than road transport while from a distance D2,
maritime transport becomes more advantageous.
• These are referred to as break-even distances. Point D1 is
generally located between 500 and 750 km of the point
of departure, while D2 is near 1,500 km.
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 Third: Modal Shift
• The technological evolution in the transport
industry aims at adapting transport
infrastructures to growing needs and
requirements.
• When a transport mode becomes more
advantageous than another over the same route
or market, a modal shift is likely to take place.
• A modal shift involves the growth in the demand
of a transport mode at the expense of another,
although a modal shift can involve an absolute
growth in both concerned modes.

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 Modal Shift
• The comparative advantages behind a modal shift can be in
terms of costs, convenience, speed or reliability.
• Depending on what is being transported, the importance of
each of these factors vary. For some, time is of the essence,
and a modal shift will occur if the new mode offers time
improvements or if new capacity is no longer available, while
for others, it is mostly a matter of costs.
• The outcome is a series of decisions made by firms (for
freight) or individuals (for passengers) to shift to another
mode if comparative advantages are significant. Comparative
advantages can involve the difference in cost, time, level of
service, comfort, or reliability between two modes.
• The higher it is, the more there is an incentive to switch from
one mode to another. 29
 Fourth: Passengers and Freight:
Complementarity versus Competition
• There is a complementarity between passenger and freight
transport systems.
• With some exceptions, such as buses and pipelines, most
transport modes have developed to handle both freight and
passenger traffic.
• In some cases, both are carried in the same vehicle, as in air
transport.
• In others, different types of vehicle have been developed for
freight and passenger traffic, but they both share the same road
infrastructure, as for example in rail and road traffic.
• In shipping, passengers and freight used to share the same
vessels and often the same terminals. Since the 1950s,
specialization has occurred, and the two are now entirely
distinct, except for ferries and some RORO services. 30
• Sharing freight and passenger modes is not without
difficulties, and one of the major problems confronting
transportation occur where the two compete for the
use of scarce transport infrastructure.
• For example, trucks in urban areas are seen as a
nuisance and a cause of congestion by passenger
transport users. Daytime deliveries and double-parked
trucks are perceived as a particular nuisance.
• The poor performance of some modes, such as rail, is
seen as the outcome of freight and passengers having
to share routes.

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 Advantages of joint operations
• High capital costs can be justified and
amortized with a diverse revenue stream.
• Maintenance costs can be spread over a
broader base.
• The same modes or traction sources can be
used for both freight and passengers,
particularly for rail.

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The main disadvantages of joint operations
• Locations of demand rarely match since the origins and destinations
of freight flows are usually quite distinct spatially from passenger
traffic.
• Frequency of demand is different as for passengers, and the need is
for high-frequency service. For freight, it tends to be somewhat less
critical.
• Timing of service. Demand for passenger services has specific peaks
during the day. For freight, it tends to be more evenly spread
throughout the day. Several freight operations prefer night services
since they ensure that shipments arrive at their destination in the
morning.
• Traffic balance. On a daily basis, passenger flows tend to be in
equilibrium, irrespective of the distance involved (e.g. commuting or
air transportation). For freight, market imbalances produce empty
flows that require the repositioning of assets. 33
The main disadvantages of joint operations
• Reliability. Although freight traffic increasingly demands
quality service, delays (diversion from posted schedules) are
unacceptable for passengers.
• Sharing routes favor passenger traffic with passenger trains
often given priority or trucks excluded from specific areas at
certain times of the day.
• Different operational speeds where passengers demand
faster service but specific cargo, such as parcel, facing similar
requirements.
• Security screening measures for passengers and freight
require different procedures.
• The ongoing separation of passengers and freight on specific
gateways and corridors is consequently a likely outcome,
involving a growing divergence of flows, modes, and
terminals.

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 Fifth: A Growing Divergence
• Passengers and freight are increasingly
divergent activities as they reflect different
transportation markets.
• In several modes and across many regions,
passenger and freight transport are being
unbundled.

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 a. Shipping
• It has already been mentioned that in the maritime
sector, passenger services have become separated
from freight operations. The exception being ferry
services where the use of ro-ro ships on high-frequency
services adapt to the needs of both passenger and
freight market segments. These ferry ships can
transport cars, buses, and trucks carrying freight with
the respective proportions determined by the demand.
Deep-sea passenger travel is dominated by cruise
shipping, which has no freight-handling capabilities,
and bulk and general cargo ships rarely have an interest
or the ability to transport passengers.

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 b. Rail
• Most rail systems improved passenger and freight services.
Where both segments are maintained, the railways give
priority to passengers since rail persists as the dominant
mode for inter-city transport in India, China, and much of the
developing world.
• In Europe, national rail systems have prioritized passenger
service as a means to expand regional mobility.
• Significant investments have occurred in improving the
comfort of trains and in passenger rail stations, but most
notable has been the upgrading of track and equipment in
order to achieve higher operational speeds.

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 b. Rail
• Freight transport has tended to lose out because
of the emphasis on passengers since such
systems were optimized for passenger flows.
• Because of their lower operational speeds, freight
trains are frequently excluded from day-time
slots, when passenger trains are most in demand.
• Overnight journeys may not meet the needs of
freight customers.
• This incompatibility is a factor in the loss of
freight business by most rail systems still trying to
operate both freight and passenger operations.
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 c. Roads
• Freight and passenger vehicles still share the roads. The
growth of freight traffic is increasing road congestion, and in
many cities, concerns are being raised about the presence of
trucks.
• Already, restrictions are in place on truck dimensions and
weights in certain parts of cities, and there are growing
pressures to limiting truck access to non-daylight hours.
• Certain highways exclude truck traffic.
• growing trend; the need to separate trucks from passenger
vehicle traffic. Facing chronic congestion around the access
points to the port of Rotterdam and at the freight terminals at
Schiphol airport, Dutch engineers have worked on feasibility
studies of developing underground road networks only for
freight vehicles. 39
 d. Air transport
• Air transport is the mode where freight and passengers are the
most integrated.
• First, they tend to share the same terminal facilities, although there
is a specialization with some airports focusing on freight activity.
• The growth of all-freight airlines and the freight-only planes
operated by some of the major carriers, such as Singapore Airlines,
are heralding a trend.
• The interests of the shippers, including the timing of the shipments
and the destinations, are sometimes better served than in
passenger aircraft. The divergence between passengers and freight
is also being accentuated by the growing importance of charter and
“low-cost” carriers.
• Their interest in freight is minimal, especially when their business is
oriented towards tourism since tourist destinations tend to be lean
freight generating locations.

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 Assignment

1. The largest container ports worldwide

2. containerized cargo flows
3. Largest shipbuilding nations
4. Number of crude oil tankers worldwide
5. Owned and chartered TEUs of the world's leading container ship operators
6. Leading ship operator's share of the world liner fleet
7. Number of chartered ships of the world's leading container ship operators
8. Leading container shipping companies worldwide
9. crude oil tankers worldwide
10. Transport volume of crude oil in global seaborne trade
11. The world's leading ocean freight forwarders

https://www.statista.com/markets/419/topic/489/water-transport/