Nearly every company, business, government and consumer in the world is, to some degree, dependent on the transportation industry. As such, the shipping of supplies, products and consumer goods is essential to the domestic and international economic system. Since 1998 the transportation industry has accounted for 3% of the U.S. GDP each year.[1]
The transportation industry can be broken down into three major groups of companies: Shipping, passenger transport, and equipment manufacturers. In some cases, particularly within shipping and passenger transport, companies provide services in multiple areas of the industry. Shipping companies are responsible for the transportation of supplies, and products to businesses, governments and individual consumers and operate on a global basis. The passenger transport segment provides people with the means to get anywhere on the planet, whether it is by air, sea or land. Finally, the manufacturing segment produces the trucks, planes, ships and railcars along with all the technology that allow transportation to exist in its current form. These manufacturers are just as essential to the transportation of materials and people as are the companies that transport them.
[edit] Shipping
The small parcel shipping industry is largely dominated by three major companies, FedEx (FDX), United Parcel Service (UPS) and DHL. These companies ship packages both domestically and internationally through complex networks of hubs that connect every corner of the globe. Their services offer various time-frames for shipments delivered by air and land. Because these companies transport consumer goods and business products their operations and volumes are very correlated with the health of the economy. In weaker economic times volumes are lower as consumers and businesses consume and produce less, while the reverse is true during periods of growth in the economy. Furthermore, as is the case with nearly every company in the transportation industry, these companies' revenues can be significantly affected by changes in oil prices.
The transportation of supplies and larger scale shipments is generally categorized into freight and cargo shipping. Much of this transportation is done by rail and sea. This segment of the transportation industry has many more key players than the smaller scale shipping segment. In the U.S. Union Pacific (UNP) and Burlington Northern Santa Fe (BNI) dominate the Western U.S. rail shipping market while Norfolk Southern and CSX are the major players in the East.
Railroad Shipping Company Comparison 2007
All figures in $ billions
|
| BNI
| KSU
| CSX
| NSC
| UNP
|
| Market Cap
| $28.8
| $2.5
| $17.8
| $20.2
| $30.0
|
| Net Debt
| $7.6
| $1.6
| $5.2
| $5.7
| $6.7
|
| Revenue
| $15.3
| $1.7
| $9.8
| $9.3
| $15.8
|
| Operating Income
| $3.4
| $0.3
| $2.1
| $2.5
| $3.1
|
| Net Income
| $1.8
| $0.1
| $1.2
| $1.5
| $1.7
|
| Net Debt/OI
| 2.2
| 5.0
| 2.5
| 2.2
| 2.2
|
| Dividend Yield
| 1.6%
| 0.0%
| 1.5%
| 2.0%
| 1.2%
|
Companies involved in freight and cargo shipping through railroads and trucking include
A portion of the freight and cargo volume that is shipped around the globe travels through the air, but the large majority of international freight and cargo shipments are sent by sea. Many companies own their own fleet of vessels that are used to ship goods, however some operate as logistics managers and delegate the actual shipping portion of the business to third parties that own and operate shipping vessels. Companies whose operations involve shipping and transportation by sea include
[edit] Other Shipping and Distribution Services
There are also smaller sectors of the transportation industry that are equally essential to the economic system both in the U.S. and internationally. These companies provide transportation services that are more easily overlooked in industry. The transportation of food, and waste are examples of services that are among smaller sectors of the industry. Companies that provide shipping and transportation services in smaller sectors of the industry include
[edit] Passenger Transport
[edit] Aviation
The airline industry is arguably the most important transportation sector in the world. In 2007 roughly 679 million passengers used air transportation in the U.S. alone.[1] Over the first half of 2007 the major airline companies collectively brought in $59.45 billion in revenues.[2] Airlines generally earn the majority of their revenue from passengers, but often also carry out shipping and transportation operations as well. Major airline companies include
Airlines are very susceptible to fuel prices as these costs are almost always the most significant of their operating expenses. The major airlines all have hedging strategies that allow them to lock in fuel prices years in advance to reduce some of the risk involved in the price of oil. The table below gives a comparison of operating metrics for today's major airline companies.
[edit] Automobiles
The United States is the world's largest producer and consumer of automobiles. In 2007 new-car and light truck sales in the United States exceeded $675 billion in revenues with roughly 15.9 million cars and light trucks sold.[3] In recent years China has become the world's largest importer of petroleum products. This has largely been a product of increased automobile demand in the China, which is expected to grow significantly over the next forty years. Some predict that cheaper labor and increased product quality could allow China to steal a major portion of the automobile production industry market share from today's major producers.[3] This trend could be a serious threat to well established companies in the industry (especially the American big 3 producers) who have recently experienced periods of lower performance. Today's major auto producers include
Comparison of profitability and key operational metrics, data from 2003-2006.Source: Company Data and Autodata
|
| Global Unit Sales (USD thousands)
| Revenue/Vehicle
| Product Redesign/Replacement Rate
| Showroom Age (days)
| Incentives/Unit sold (USD)
| 3-yr Retention Rate
|
| General Motors (GM) | 9,000 | 18,000 | 75% | 71 | 3,600 | 55% (Chevrolet)
|
| Ford Motor Company (F) | 6,800 | 22,000 | 60% | 74 | 3,500 | 53% (Ford)
|
| DAIMLERCHRYSLER AG (DAI)* | 4,000 | 32,000 | 76% | 75 | 3,700 | 38% (Chrysler)
|
| Toyota Motor (TM) | --- | --- | 83% | 53 (Asian average) | 1,400 (Asian average) | 64% (Toyota)
|
| Nissan Motor (NSANY) | --- | --- | 77% | 53 (Asian average) | 1,400 (Asian average) | 49% (Nissan)
|
*Sold Chrystler group in 2007.
Beyond the major automobile producers there is a smaller group of companies that provide services directly related to the industry. These companies include car rental services, bus transit companies, and retail sellers, such as:
[edit] Transportation Equipment Manufacturing
The transportation industry relies on the industrial equipment that companies use to transport products around the world. As a result, companies that manufacture and distribute transportation equipment are directly correlated with the industry and its performance. Manufacturers of transportation equipment produce everything from railroad cars, automobiles and planes to ships and heavy machinery.
[edit] Shipping Equipment Manufacturers
Companies that manufacture and distribute automobile parts and technologies include
Companies that manufacture products for railroad shipping include
Companies that manufacture airplanes and parts include
[edit] References
- ↑ 1.0 1.1 www.bts.gov, retrieved March 24, 2008.
- ↑ 2.0 2.1 Airline Data Project, retrieved March 24, 2008.
- ↑ 3.0 3.1 Automobiles and Trucks Research, Plunkett Research, Ltd.
