Where is it going?

Fuel costs and environmental considerations are at the heart of all forms of commercial transport today. Some are doing better than others … for now. Evolution takes a look at the global future of transport and logistics.

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Fuel costs and environmental considerations are at the heart of all forms of commercial transport today. Some are doing better than others … for now. Evolution takes a look at the global future of transport and logistics.

In his address tothe 61st International Air Transport Association (IATA) Annual General Meeting on May 30, 2005, IATA Director General and CEO Giovanni Bisignani characterized the state of the air transport industry with a list of gloom-inducing figures. He pointed out that the association’s annual fuel bill had increased to 71 billion euros in 2004, or some 33 billion euros more than in 2003. He also pointed to the fact that North American commercial aviation companies had lost some 8 billion euros that year.

But, he told the gathering, all was not doom and gloom in the aviation business. 2004 had been the safest year for flying since the start of the association in 1945. Some 1.8 billion people flew, making it a record year for passenger air transport, and the industry employed 4 million people, generating some 320 billion euros in economic output.

Turning to the environment, Bisignani said air transport had never been more environmentally friendly and quoted an improvement in overall fuel efficiency by industry aircraft of 3.4 percent in 2004. Modern aircraft have a fuel efficiency of 3.5 litres per 100 passenger kilometres – or the same as a compact car. And the advent of the new Airbus A380 and the Boeing 787 will mean targeting efficiencies of well under three litres.


Bisignani was striking chordwith his remarks. Questions of fuel efficiency and environmental considerations lie at the heart of any discussion about the future of transport and trade. Despite rising fuel costs and tougher environmental considerations, transport by road and sea will be the major forms of cargo and freight transport in the foreseeable future, and as economies such as China and India develop further, the volumes will only grow. Measuring the growth in global road freight is difficult, because much of the movement of goods is carried out on an unregulated basis. Tracking movement within the EU is easier, though, and according to Steve Williams of the UK’s Road Haulage Association, an industry watchdog, transport of goods among EU member states has risen by 38 percent over the past decade and is likely to increase even faster with the admission of new members to the EU.

Freight movement by road network has advantages over every other form of transport in its ability to carry goods door-to-door within a flexible timescale. This will only increase in the coming years, says Williams, as will the resultant concern over exhaust emissions, at least in Western Europe and the United States. There is likely to be focus on two factors in particular within road transport: the need for better engine and fuel technology and the need to make more efficient use of vehicles. Despite trends towards biofuels and other fuel sources, diesel will be the most popular and efficient choice of fuel for trucks for some time to come, but with some important changes. “Within around 10 years Scania (the Swedish truck manufacturer) will be ready with an engine that will unite Otto (combustion engine) and Diesel (diesel engine) technology with more or less no pollution,” says Hans-Åke Danielsson, information manager at the Scania Group. In the meantime, better use of logistics information technology and the consolidation of existing transport networks will make sure that trucks travel with fuller loads. And there will be more emphasis on the use of larger, hence fewer, trucks on the roads of Europe, as is already happening in the Netherlands and parts of Scandinavia. The use of longer trucks and trailers weighing up to 60 tonnes, is currently under investigation in the UK. Danielsson points out that proper driver training could also play a significant part in environmental performance: The difference between a good driver and a less efficient one can affect a truck’s fuel consumption by up to 20 percent.


Although the overall numberof passenger kilometres increased during the past 10 years to 9 billion passenger kilometres, the amount of freight carried worldwide by rail moved only slightly upwards to 22.2 billion tonnes-kms and may not change much in the next 10 years. In Europe and the US the share of freight sent by rail lost out to the roads, again because of more efficient capabilities in point-to-point delivery. At present it is not clear how developing nations will use their rail resources. India’s rail system, which recently celebrated its 150th anniversary, was certainly key to the development of the country. But today, this government-owned enterprise, which employs 1.5 million people, is not making enough money to meet its investment needs. And it is losing customers to the improving road network. The story is similar in most post-communist countries as well. But some “new” European markets are more upbeat about the future of rail: Slovakia, which is rapidly becoming the Detroit of Europe, says it expects its railways to carry 85 percent of the 900,000 cars it will produce by 2008. Trends to watch in rail freight include the increasing use of “intermodal” transport, where road trailers and containers cover part of their intended journey on rail freight cars.


But it is shippingthat is by far the biggest form of transport in trade, carrying about 90 percent of all global exports and generating an income from freight rates of around 320 billion euros, according to Simon Bennett of the International Chamber of Shipping. World trade is growing at a fast rate, much of it attributable to China’s economic expansion. This has created a huge need for raw materials in the country and a strong demand for vessels to ship manufactured goods out to foreign markets. Consequently, shipping is enjoying an all-time boom. Strong demand has created a rise in shipping rates, and during 2004 there was some 65 billion euros worth of orders for new vessels placed with shipyards. At the end of the year, the world cargo fleet, with 889 million deadweight tonnes (dwt) capacity, was 14 percent larger than at the end of 2000, according to Lloyd’s Register. The world’s tanker fleet grew by 39 million dwt in 2004 alone. Bennett says that, given the sustained growth rate of the Chinese and Indian economies, the volume of maritime trade could grow by as much as 30 percent over the coming decade. But, he cautions, shipping is always prone to unexpected political factors and demand is notoriously volatile. He quotes the oil crisis and the reopening of the Suez Canal. And even though shipping is the most environmentally friendly of all forms of transport in terms of emissions and fuel consumption per tonne carried, there is still the oil factor to be considered. “But if the oil runs out,” he says, “we can always resort to sail.”

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