Integrated Transport Systems: From Fragmentation to Coordination

The notion of integrated transport systems received a lot of attention, particularly with improvements in freight transportation capacity, efficiency, and reliability. The conventional fragmented and sub-optimal freight transport systems have substantially been improved. A process of coordination of freight transport is emerging and favored by several factors:

  • Technology has been a prime driving force. Containerization is the most significant technological factor behind more efficient coordination of transport modes. Innovations include modes, such as post-Panamax containerships or double-stacking freight trains, but also intermodal equipment to handle significant transshipment demands. Hard (technical) assets require soft (management) assets for their efficient operations. Information technologies have gone a long way to improving the level of control over supply chains, including tracking shipments and managing fleets. E-commerce has particularly received attention since it considers several modes to ensure fast and reliable deliveries.
  • Freight transportation is a capital intensive sector with high entry costs for the maritime and rail segments. The amortization of modes and infrastructures, particularly terminals, has to be spread over a significant time period, sometimes over more than a decade. This environment is prone to risks, and many potential investors are reluctant to commit capital for infrastructure projects unless there is a clear business case. This is a reason why governments are often called to step in and provided related infrastructure investments. Still, freight transport companies are dominantly private entities and must rely on capital markets to finance their ventures. If through a higher level of coordination with other elements of the supply chain, a greater quantity, and stability in utilization can be secured, capital costs can be reduced, and financial returns improved. Thus, intermodal projects potentially have a lower capital risk.
  • Coordination also implies new forms of relationships between freight forwarders. This was favored by the deregulation of many transport modes in the early 1980s. The Aviation Deregulation Act (1979), the Staggers Act (1980), the Motor Carrier Act (1980), and the Ocean Shipping Act (1984) are significant landmarks in this direction. It became easier for different transport operators to establish contractual agreements. Mergers and acquisitions within the same mode started to occur, mainly in maritime and rail transportation, but also modal and intermodal alliances.
  • Globalization has permitted the emergence of a production structure, often known as global value chains or global production networks. This structure production requires a high level of coordination between modes and different transport systems. Under such circumstances, transport demand should increasingly be considered as integrated.
  • Finally, integrated transport systems rely on the respective strengths of each transport network.. Since networks are expensive to build and operate, linking them promotes efficiency and a higher level of control. This can be considered as a multiplying effect where the efficiency of the whole intermodal network is greater than the sum of its parts.