Economy of the United States: Transportation and Logistics | Free Essay Example

Economy of the United States: Transportation and Logistics

Words: 1377
Topic: Business & Economics


Although the statement about a direct link between transportation and the economic balance of the United States might seem somewhat farfetched, the two are, in fact, related to each other quite closely. A brief overview of the factors that gear the American economy towards prosperity will reveal that the state economic wellbeing, in fact, depends on transportation considerably.

Indeed, the economic success of the reforms adopted by the U.S. government has been increasing steadily since 1907, though a major drop in the amount of deposits and bank savings could be observed at the time of the Great Depression (Stuckler et al., 2010). Since the United States are geographically isolated from the rest of the world, transportation has been playing an essential part in its trading relationships with the rest of the world and, therefore, defining its economic success since the Great depression, which the recent spur in economy predetermined by the technological progress is a graphic proof for.

Literature Review

The connection between the U.S. economy and the logistics in general and transpiration in particular becomes entirely clear after a single retrospect into the history of the United States and the economic development thereof. As it has been stressed above, even the time slots, at which the U.S. economy displayed the results that were far from being stellar, the link between transportation and the economic development of the state was obvious (Duranton & Turner, 2012).

However, the times of the state economy resurrection and the further economic prosperity could also be observed at the same time that the United States witnessed a significant enhancement of the transportation system and the success of the government logistic strategy. Therefore, it can be assumed that the transportation issue is essential for the steady development of the state economy.

In fact, the incorporation of adequate transportation strategies and reasonable logistics choices, e.g., the selection between the air and water transportation of freight, often predetermined the outcomes of the economic moves that the American government made (Duranton & Turner, 2012). The shift towards urbanization, which the United States experienced in the 20th century, also heralded a major spur in the significance of transportation and logistics for the economy of the state, as “new roads are assigned to cities realizing a positive employment shock but fear that they are given to cities realizing a negative employment shock” (Duranton & Turner, 2012, p. 1412). The employment shock, in its turn, is likely to trigger a major drop in the economic growth of the state; therefore, transportation choices made in the urban setting redefined the landscape of the American economy completely in the 20th and 21st centuries.

The correlation between the use of transportation and the overall economic progress of the country cannot be considered entirely even, though. For instance, the recent crisis, which the United States economy witnessed in 2000s does not quite align with the technological breakthrough of the 21st century. In fact, the crisis, which the United States witnessed at the time, displayed a role reversal in the relationship between transportation and economy: the latter defined the problems in the area related to the American transport.

To be more exact, it was the state of the U.S. economy that affected the transportation system: “The economic crisis has lead to a dramatic reduction of international trade and freight transport” (Rothengatter, 2011, p. 15). In other words, the economic downfall of the state defined a drop in the efficacy of the transportation process. At first, the specified phenomenon can be considered rather bizarre; however, a closer look at the issue will reveal that the problematic economic situation, which the United States were involved into, led to major budget cuts for a range of areas, including logistics in general and transportation in particular.

As a result, the issues of transport maintenance, purchase of fuel, location of the most expeditious transportation methods, etc., was shifted into the background. The tangible connection between the U.S. transportation and economy in general can be proven by fact that a model developed for addressing the issues triggered by the crisis was implemented in 2008–2009 quite successfully. According to Rothengatter, the so-called ASTRA Model based on the system dynamic philosophy (Rothengatter, 2011) proved quite efficient in the late 2000s.

When it comes to defining the impact that transportation has on the U.SA economy at present, one must mention that the process of products and raw materials transfer requires an elaborate strategy due to the comparatively large distance between the United States and the partner countries: “Economic globalization requires firms to produce and deliver goods faster to customers around the world” (Rondinelli & Berry, 2000, p. 399). Therefore, the U.S. economy depends on transportation choices made by the government considerably.

Moreover, the issue of environmental sustainability and, therefore, a very careful choice of transportation has recently gained major publicity; as a result, the reputation of the United States and, therefore, the economic relationships between the U.S. and the rest of the countries depends heavily on whether a sustainable transportation model is chosen: “Transportation and logistics firms that do not manage their environmental impacts proactively also face competitive risks” (Rondinelli & Berry, 2000, p. 404).

In other words, in order to maintain its high economic status, the USA government will have to adopt the approach that is based on the integration of the latest technological advances and environmental policies into the transportation framework. In fact, the principle of multimodal transportation has recently been developed in order to improve the economic outcomes of the key transactions carried out by the U.S. state organizations (Rondinelli & Berry, 2000).

The enhancement of the positive influence, which the U.S. transportation system and the state economy have on each other, can be enhanced with the help of the redesign of the current R&D system. Particularly, the enhancement of the R&D aspect of the U.S. economy should be considered as a means to improve the state transportation system and, therefore, upgrade the American economy to the point where it can become exemplary once again.

Seeing that the significance of information technology is getting increasingly big in the realm of the U.S. economy, the American government should consider the idea of exploring the current IT opportunities for the logistics and transportation system enhancement (Rothengatter, 2011). Specifically, the inbound and outbound logistics processes can be galvanized by integrating several IT tools into the overall framework of the state logistics system.

Particularly, the development of interactive maps for determining the most favorable routes for the shipment of goods and raw materials, the creation of the software that will allow for efficient scheduling of the key transportation processes, the development of an interface convenient for communicating with the key partners, etc. needs to be viewed as the key opportunities for expanding the U.S. logistics and transportation systems (U.S. transportation solutions, 2015).

In addition, the options that the U.S. government has at present in terms of the methods of transportation (i.e., air, water, etc.) should be analyzed carefully, as each of the tools suggested above have their pros and cons in terms of cost and efficacy. While the traditional transportation tools are rather cheap, they can be viewed as time-consuming and, therefore, impeding the development of the American economic relationships.

Herein the need to reconsider the current transportation modes and come up with the tools that will allow for enhancing the transportation process lies. Additionally, the use of the latest technological advances in terms of not only planning, but also transporting goods and raw materials needs to be born in mind.

The above-mentioned approach based on the principles of sustainability is likely to define the further development of the U.S. transportation and its effect on the state economy: “In the future, proactive environmental management will be essential for the transportation industry and for organizations managing multimodal transportation hubs” (Rondinelli & Berry, 2000, p. 398).

Moreover, the expansion of the U.S. economy into the global environment is expected to trigger an enhancement of the freight shipment in all four major transportation routes (air, water, rail and road) (Rondinelli & Berry, 2000). Hence, it is assumed that the further development of the transportation and logistics within the state will cause a steady increase of the state economy as long as the sustainability principles are followed.

Reference List

Duranton, G. & Turner, M. A. (2012). Urban growth and transportation. Review of Economic Studies, 79, 1407–1440.

Rondinelli, D. & Berry, M. (2000). Multimodal transportation, logistics, and the environment: Managing interactions in a global economy. European Management Journal, 18(4), 398–410.

Rothengatter, W. (2011). Economic crisis and consequences for the transport sector. In W. Rothengatter, Y., Hayashi & W. Shade, Transport moving to climate intelligence: New chances for controlling climate impacts of transport after the economic crisis (pp. 9–28). New York, NY: Springer.

Stuckler, D., Meissner, C., Fishback, P., Basu, S. & McKee, M. (2010). Banking crises and mortality during the Great Depression: evidence from US urban populations, 1929–1937. JECH.

U.S. transportation solutions. (2015). Intergraph.