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Transportation: Planes, Trains and Automobiles

Industry Overview

Transportation comprises all those businesses that move people or goods, by land, sea, or air, from one point to another. This is a big industry, employing millions: In addition to the package deliverer, truck driver, and airline attendant-the ambassadors of the industry-there is a beehive of behind-the-scenes workers bustling to load containers, fuel airplanes, coordinate the logistics of thousands of railroad cars, and chart the best routes for truck drivers to take across America.

The transportation industry has come a long way from the days of the spice trade. Virtually everything that surrounds us-including our clothes-comes from somewhere else. Your computer's components, manufactured in multiple countries, all had to be transported to the computer manufacturer, assembled, and then transported to a store or perhaps your front door. The newspaper you read this morning could not have been produced (think of the trucks delivering logs to the paper mill; think of the paper and ink being delivered to the printing press) or delivered without the transportation industry. And then there's passenger travel-the airlines, trains, boats, and buses that people use every day to get from place to place. Transportation may not be sexy, but it pervades nearly every area of our lives. Without the transportation industry, economies, global and domestic, would disintegrate.

Opportunities in the industry can be classified geographically, as local, regional, or national. In many career paths, you'll need to pay your dues in a local job before moving up to a regional transportation outfit, and you'll have to work at a regional one before moving to a national one. And if you go into freight transportation, be aware that this sector has been consolidating, as companies seek to become global players by merging into giant, full-service transportation integrators, combining ships, trains, boats, and rail.

Labor vs. Management
Transportation is a big industry, employing millions. It's a labor-intensive industry, employing blue-collar workers from airline baggage handlers to railroad conductors to longshoremen. It's an industry with thin profit margins and a constant desire on the part of management to lower costs by lowering wages or replacing employees with technology. As a result of all this, it's an industry that's constantly beset with strife between labor and management.

The most recent example: the dispute between labor and management at U.S. ports, which led to a labor lockout at west coast ports and culminated in a new agreement between the opposing parties giving longshoremen increased compensation and benefits while giving shippers the ability to continue to develop new labor-saving technologies.

"Just-in-Time" Technology
Just-in-time technology allows businesses to avoid inventory costs by allowing them to procure goods only when they're needed. Take PC manufacturers like Dell or Gateway, which promise rapid delivery. Rather than having to gather together all of the parts necessary to make a PC, assemble all those parts, and store the PC in inventory-tying up money that could be used for other purposes before anyone's actually purchased the PC, and increasing costs due to inventory maintenance-just-in-time technology allows PC manufacturers to order PC components, have the components delivered, have the components assembled into a PC, and ship the PC to the customer in a matter of hours. The freight transportation industry has earned new relevance thanks to its implementation of just-in-time technology.

Airliner Woes
The airline sector of the transportation industry is in deep trouble. The airline industry has long been hampered by cutthroat competition (putting downward pressure on revenues) and labor demands (putting upward pressure on costs); anyone who's been late to a meeting or had to change travel plans due to the airlines' poor service knows that this is an industry with problems. The situation got even worse for the airlines when the stock market plummeted and business spending dried up, resulting in countless empty seats. And the tragic events of September 11, 2001, made a bleak picture even bleaker in the airline industry; in the wake of 9/11, airlines were stuck with more empty seats than ever before. Indeed, the airline industry is projected to lose some $8 billion in 2002, and has cut capacity by 20 percent to compensate. One result has been massive layoffs, on the order of 100,000 employees. Another result has been the bankruptcy of United Airlines.

Merger Time
Across the board, mergers are becoming commonplace, and the railroad industry leads the pack. In the last century, the Canadian National Railway has seen 220 mergers, and in the recent past, U.S. lines have consolidated into just a handful of major ones. Similar mergers have taken place in the cruise ship industry: Only four North American cruise lines control 80 percent of the market. In the freight industry, DHL has swallowed Worldwide Freight to form DHL Worldwide. And the major airlines, hoping to recover from their slump of the early '90s, are partnering to lower costs. British Airways is working with AMR, the parent of American Airways; Lufthansa and United Airlines have an alliance; Swissair and Sabena work together; and KLM is in a venture with Alitalia. However, full-scale airline mergers are hampered by treaties that might rescind landing rights to a foreign airline if its country of ownership changed-because of acquisition by a company from a different country, for example.

There are two sides of the transportation industry: companies that move goods (freight and shipping companies) and companies that move people (passenger transportation companies). The biggest of the shipping companies are the ones that integrate several types of transportation services to offer clients efficient door-to-door service, thanks to just-in-time technology and containers that allow goods to be transferred seamlessly from ships to railroads to trucks.

Here's how the two sides of the transportation industry look when broken down by the type of vehicle used:

Plane
The biggest shipping players in this segment-FDX Corporation (FedEx), Airborne, DHL Worldwide, and UPS-integrate air transportation with other types of transportation.

On the passenger side, the airline industry has consolidated in the years since it was deregulated in 1978. American Airlines, Continental Airlines, Delta Airlines, Northwest Airlines, and United Airlines earn more than half of U.S. airline revenues. The remainder of this sector comprises regional carriers, which fly people between rural areas and bigger airports. Biggest among the regional carriers: Southwest Airlines.

Ship
About three quarters of all maritime shipping are transoceanic, including tankers that mostly carry petroleum. The biggest shipping companies are based outside the U.S.: Taiwan's Evergreen Marine, Japan's Nippon Yusen Kabushiki Kaisha, and Denmark's AP Moller move enormous numbers of containers. Although the federal government is revitalizing U.S. performance in this segment through the use of advanced technology, job opportunities are generally better at the foreign companies.

Passenger transportation, which accounts for less than 5 percent of total water transportation revenues, includes ferries and cruise liners. Carnival is easily the biggest cruise company in the world. The ferry business is not as consolidated as the cruise business, with most companies owned regionally. Both businesses are predicted to grow slowly in coming years.

vTruck and Bus
The $360 billion trucking industry carries 80 percent of all consumer goods. The biggest players in this segment are integrated-transportation parcel-delivery companies such as United Parcel Services (UPS), FDX Corporation, and DHL Worldwide. The sector includes trucking companies like Schneider National, Consolidated Freightways, J.B. Hunt, and Yellow Corporation, as well as truck rental companies like Amerco (best known for its U-Haul trucks) and Ryder System.

On the passenger side, the biggest bus company in the United States is Greyhound. Greyhound, which also offers express package delivery, employs about 13,000 people.

Rail
Freight trains mainly carry coal, grain, and lumber. After a period of intense consolidation in this segment, the four leading companies are Burlington Northern Santa Fe, CSX, Norfolk Southern, and Union Pacific.

Passenger rail transportation in the U.S. is dominated by the federally funded Amtrak, which makes stops in 45 states. In an attempt to be more self-sufficient, Amtrak is trying to rely less on Congress and more on profits to fund operations.

This is an industry that employs some ten million people in the U.S. If you want to hop aboard, however, you'll want to keep some things in mind. Those interested in having direct contact with cargo and vehicles should think about jobs in operations, which are often set outdoors and can involve loud noise and physically strenuous work-for example, loading or unloading boats or trains.

Logistics, which involves planning and managing efficient transportation for everything from individual shipments (such as a book from your favorite e-commerce site) to entire fleets of trucks, has been growing in recent years as information technology advances have swept the industry. Today, it's possible to track shipments by satellite and thus improve the efficiency of the transportation and shipment process. Be aware that for many positions, you'll need to join a union-and in recent years, strikes and other labor disputes

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