Authors: Dr. William Anderson and Dr. Jean-Paul Rodrigue
Cross-border transportation involves the activities, infrastructures, and flows that support the passage of passengers and freight across an international border.
1. International Transportation
The growth of the amount of freight being traded as well as a great variety of origins and destinations underlines the importance of international transportation as a fundamental element supporting the global economy. Economic development in Pacific Asia and China, in particular, has been the dominant factor behind the growth of international transportation in recent years. Since the trading distances involved are often considerable, this has increased demands on the maritime shipping industry and port activities. As its industrial and manufacturing activities develop, China is importing growing quantities of raw materials and energy and exporting increasing quantities of manufactured goods. The ports in the Pearl River delta in Guangdong province now handle as many containers as all the ports in the United States combined.
International transportation systems have been under pressure to support additional demands in freight volume and the distance at which this freight is being carried. This could not have occurred without considerable technical improvements permitting to transport larger quantities of passengers and freight more quickly and efficiently. Few other technical improvements than containerization have contributed to this environment supporting the growing mobility of freight. Since containers and their intermodal transport systems improve the efficiency of global distribution, a growing share of general cargo is containerized.
Consequently, transportation is often referred to as an enabling factor that is not necessarily the cause of international trade but as a condition without which globalization could not have occurred. A common development problem is the inability of international transportation infrastructures to support flows, undermining access to the global market and the benefits derived from international trade. International trade also requires distribution infrastructures that can support trade between several partners. Three components of international transportation facilitate trade:
- Transportation infrastructure. Concerns physical infrastructures such as terminals, vehicles, and networks. Efficiencies or deficiencies in transport infrastructures will either promote or inhibit international trade.
- Transportation services. Concerns the complex set of services involved in the international circulation of passengers and freight. It includes activities such as distribution, logistics, finance, insurance, and marketing.
- Transactional environment. Concerns the complex legal, political, financial, and cultural setting in which international transport systems operate. It includes aspects such as exchange rates, regulations, quotas, and tariffs, but also consumer preferences.
About half of all global trade occurs between locations more than 3,000 km apart. Because of this geography, most international freight movements involve several modes since it is impossible to have a physical continuity in freight flows over long distances. Transport chains must thus be established to service these flows, which reinforce the importance of intermodal transportation modes and terminals at strategic locations. Among the numerous transport modes, two are specifically concerned with international trade:
- Ports and maritime shipping. The importance of maritime transportation in global freight trade is unmistakable, particularly in terms of tonnage, as it handles about 90% of the global trade. Thus, globalization is the realm of maritime shipping, with containerized shipping at the forefront of the process. The global maritime transport system is composed of a series of major gateways granting access to major production and consumption regions. Between those gateways are major hubs acting as points of interconnection and transshipment between systems of maritime circulation.
- Airports and air transport. Although, in terms of tonnage, air transportation carries an insignificant amount of freight (0.2% of total tonnage) compared with maritime transportation, its importance in terms of the total value is much more significant; 15% of the value of global trade. International air freight is about 70 times more valuable than its maritime counterpart and about 30 times more valuable than freight carried overland, which is linked with the types of goods it transports (e.g. electronics). The location of freight airports corresponds to high technology manufacturing clusters as well as intermediary locations where freight planes are refueled, and cargo is transshipped.
Road and railway modes tend to occupy a more marginal portion of international transportation since they are above all modes for national or regional transport services. Their importance is focused on their role in the “first and last miles” of global distribution. Freight is mainly brought to port and airport terminals by trucking or rail. However, there are notable exceptions in the role of overland transportation in international trade for highly integrated economic regions. A substantial share of the trade between Canada, the United States, and Mexico is supported by trucking, as well as a large share of the Western European trade. The development of rail and road connections in Eurasia, spearheaded by China, also involved additional overland international trade. Despite this, these exchanges are regional by definition, although intermodal transportation confers a more complex interpretation of the geographical scale of these flows.
2. International Transportation and Geopolitics
The basic features of international transportation are constrained by its geography, which involves geopolitical considerations. In the past, many conflicts took place to gain control over trade routes, gain control over mineral or energy deposits, gain colonial control over untapped regions, or set trade routes via existing ocean ports. This has been particularly important for maritime nations seeking to support the existing trade, expand it, and secure its circulation. Throughout history, maritime passages were subject to conflicts that generally aimed to assure the control of a strategic location.
“Whosoever commands the sea commands trade; whosoever commands the trade of the world commands the riches of the world, and consequently the world itself”..Sir Walter Raleigh (c1610)
International transport infrastructures, such as ports, airports, and canals were also subject to geopolitical considerations as they can provide access to strategic resources or key markets. The geopolitics of international transportation can be considered from five perspectives.
a. Conquest and Conflicts
Transport technology was initially a means to control and conquer oceans, territories, and resources. From the 16th century, European powers were the first to improve maritime technology significantly in terms of military and commercial potential. They were thus able to establish maritime trading routes and colonies all over the world, a process that accelerated in the mid of the 19th century. This period of early globalization was thus characterized by the usage of military advantages of European colonial powers to access markets and resources to their advantage. The railroad was also meant to achieve territorial conquest, notably in North America (nation-building) and in Africa (colonialism).
The need for efficient transportation and logistics became even more apparent as warfare started to take place on a broader scale in the 19th century. The role of transportation in supporting international conflicts enabled three crucial aspects. First, it allowed a faster mobilization and deployment of military units. Second, it enabled their strategic and operational mobility in theaters of conflict. Third, it allowed their resupply of all the goods crucial for their continuing operation, such as food, fuel, and ammunition.
International transportation allows competition in the global economy. Traditionally, through cabotage regulations, many nations reserved the right to carry national passengers and freight to national transport companies. For freight, this is often associated with empty flows on return trips. Although cabotage regulations are still prevalent for air (air freedoms) and maritime transportation (e.g. Jones Act), competition has become a prevalent force in shaping modern transportation systems. Competition also took place over air transportation as many nations tended to protect their national carriers by only allowing foreign carriers over negotiated routes.
Developing their international transport system has favored exports and transport-related activities such as shipbuilding, trade, and insurance for several countries. For instance, emerging maritime nations in East Asia, such as South Korea, Taiwan, and China, have grown using this strategy. A new form of international transport competition is related to using flags of convenience, where a maritime company can significantly reduce its costs by using the fiscal advantages of another country.
All sovereign nations have jurisdiction over their territories, including internal water bodies such as lakes and rivers, if they do not act as a boundary with another nation. Boundaries are constructed using geographical or arbitrary features. For instance, many boundaries were imposed by external actors. 40% of the world’s international boundaries were traced by the UK and France during the colonial era. Another important jurisdictional issue concerns the concept of extraterritoriality, where a territory is subject to different regulations, particularly concerning trade. Free zones are prevalent extraterritorial constructs designed to promote trade and attract investments.
Any international transportation entering, exiting, or going through a jurisdiction is subject to national regulations. The United Nations Convention on the Law of the Sea Territorial waters in 1982 formally defined different levels of jurisdiction a nation can have over its adjacent sea. The territorial sea, a buffer of 12 nautical miles (22 km) from the coast, is considered sovereign territory, both for the above airspace and the seabed. Foreign ships are, however, allowed passage, but doing so is subject to national regulations. This jurisdiction is partially extended to the Exclusive Economic Zone (EEZ), over which a state has rights to the exploration and use of marine resources (e.g. fishing, oil extraction). By convention, it extends to 200 nautical miles (370 km), but a state cannot prevent free commercial passage through the EEZ. Nations also have jurisdiction over their air spaces and can decide which carrier is able to through. During the cold war, much of the airspaces over Eastern Europe, the Soviet Union, and China were not accessible by western carriers.
Although international transportation mostly involves competition, common interests obviously favor agreements over different aspects involving access to infrastructures or setting standards. By 1792, most countries along the Rhine agreed to free navigation to have access to a wider range of goods and market opportunities. Canada and the United States started in 1871 a long process of negotiation for the common management of the St. Lawrence River that would eventually lead to the development of the St. Lawrence Seaway in 1954. This supplemented prior trade agreements allowing goods produced in the United States to travel through Canada and re-enter the United States without duties. This was particularly relevant along the Great Lakes, that act as a boundary between Canada and the United States.
International trade within Europe was enhanced by adopting a standard over rail gauges (1.435 meters) that eventually replaced different national standards. International air transportation is subject to regulations over security, access to specific gateways (air freedoms), and prices. Furthermore, the emergence of economic blocs such as the European Union leans on common rules about transport standards and prices. The development of continental landbridges, such as the Eurasian Landbridge, represents new and complex forms of collaboration between nations and private companies operating transport infrastructure.
The control of strategic locations is also an important part of international transportation, mainly to reduce vulnerability to disruptions and improve national security. As the global economy becomes more interdependent, economies are becoming vulnerable to disruptions in the supply of raw materials, energy, and food. For instance, the dependence of the United States on external supplies of energy is shaping its foreign policy aiming at securing strategic locations in oil trade. Further, international trade involves the circulation of valuable goods along trade lanes, which can be subject to security concerns such as illicit trade and piracy. Security issues became particularly salient at the onset of the Covid-19 pandemic as international routes and borders were closed or seriously curtailed to the circulation of passengers. Freight movements were allowed, but workers such as ship crews were not permitted to disembark at ports of call.
3. Boundaries and Borders
Globalization implies increasing flows of people and goods across international borders. Thus, an increasing proportion of passenger and freight transportation operations must cope with borders as impediments to mobility. When technologies for identification and surveillance are proliferating, this might seem a significant problem, as borders are more easily crossed than in the past. However, concerns with issues of illegal immigration, illicit trade, and terrorism have led some states to exert more scrutiny at their borders. Thus, crossing borders remains one of the greatest challenges in global transportation for both passengers and freight.
A boundary is an abstract line separating the territories over which two states have sovereignty. Since the boundary is a legal entity, its precise location must be determined in a treaty between the two states. This means that for a state to have a precisely defined territory, it must have boundary treaties with all contiguous states. Even where such treaties exist, the boundary may be delineated on paper but not demarcated on the ground, which means its exact location cannot be found without surveying. The border is a more broadly defined geographical entity, comprising elements of the natural and built environment that define the boundary and control passage across it.
Sometimes the distinction between the boundary and the border is one of precision; for example, one might say that a river defines the border between two countries, while the boundary is a precise line located somewhere on the river. The main point is that the border includes a set of things that facilitate (roads, bridges, ferries), prevent (fences, military installations), monitor (cameras, motion detectors), and control (border crossing facilities) movement across the boundary. Borders also create bottlenecks in transportation networks, which are commonly associated with a concentration of cross-border flows along with a limited number of gateways. Cross-border flows in North America are particularly illustrative since they are intensive and take place at specific points of entry. Due to differences in air transportation regulations, air travel tends to be less expensive in the United States than in Canada, inciting the use of alternative American border airports by Canadians. Further, a customs pre-clearance agreement exists between Canada and the United States, enabling passengers bound to the United States to clear customs at the main Canadian airports.
While boundaries have become more clearly delineated and immutable, it might appear that borders – or more specifically, border functions – are declining in importance. At one time, the most important border function was defense. Since territory increasingly defined the state, defending territory was critical to preserving sovereignty. To some extent, the territorial integrity norm has reduced the importance of border defense. But changes in the technology of warfare that undermine the importance and even the possibility of defending lines on the ground have also reduced the defensive function of borders.
After defense, the main functions of borders are customs and immigration control. With the reduction of tariffs and the application of information and communications technology to both customs and immigration, one might expect that borders as impediments to the movement of goods and people would be a matter of declining importance. Yet, a “borderless world” is far from being a reality. In some places, such as North America, border impediments have increased in recent years, particularly along the US – Mexico border. The same observation applies to Europe in light of migrants and refugees entering from Northern Africa and the Middle East. The pressure to open and expand border crossing facilities is substantial in light of the growth in international traffic. The completion of the Hong Kong–Zhuhai–Macau Bridge in 2018 across the Pearl River delta necessitated the support of a large border crossing facility built on an artificial island adjacent to Hong Kong airport. The border thus remains an important element impacting transportation activities and flows.
4. Cross-border Transportation
Cross-border transportation. The activities, infrastructures, and flows that ensure the passage of passengers and freight across an international border. Cross-border transportation can be facilitated, monitored, controlled, and even prevented.
Unless all goods are unloaded and transferred at the border, cross-border freight movement involves some trade in transportation services. For example, if an American trucking company moves a consignment from an origin in the United States to a Canadian destination, it is providing transportation services in a foreign country as soon as it crosses the border. This brings up two types of challenges:
- The first is compliance with technical standards for transportation operators, which may vary between the two states.
- The second is cabotage restrictions that limit the ability of transportation providers to sell their services in a foreign country.
The classic problem of technical standards is when national rail systems have inconsistent track gauges, making it impossible to link networks directly across borders. While most gauge inconsistencies have been resolved with the adoption of the standard gauge (1435 mm), some still exist, for example, between countries of the former Soviet Union that use the 1520 mm Russian gauge and neighboring EU countries using the standard gauges. Trade imbalances also influence cross-border transportation as it implies different freight volumes depending on the direction of the border crossing as well as empty cargo flows.
A more current problem, especially in North America, is inconsistency in truck size and weight (TSW) standards. Most of the trade within USMCA is in goods moved by trucks. Still, the three countries have widely varying TSW standards, with Mexico and Canada allowing higher gross weights and having more liberal regulations on long combination vehicles (LCVs) than the United States. To complicate matters further, Canadian provinces and U.S. states have their own TSW regulations, leading to 66 different regulatory regimes within the NAFTA area. This presents carriers with the choice between making cargo swaps between trucks with different configurations or operating with the lowest common denominator configuration that will be legal in all jurisdictions – generally a single semi-trailer truck carrying no more than 36,288 kg (80,000 pounds).
Cabotage refers to the provision of transportation service between two points within the same country by a foreign firm. Cabotage is restricted under USMCA in the sense that a Canadian truck could move loads from a Canadian origin to a U.S. destination or from a U.S. origin to a Canadian destination, but not between a U.S. origin and U.S. destination since it would be considered as cabotage. The problem with cabotage restrictions is that they lead to frequent empty backhauls, especially at crossings where cross-border flows are imbalanced. Cabotage restrictions reflect the fact that in the case of USMCA, free trade does not extend to transportation services. In the case of the European Union, cabotage restrictions have been lifted but only after many years of negotiation and legal challenge.
Despite trade liberalization, new technologies for communication and surveillance, and improved border procedures, crossing borders remains one of the main challenges in global transportation. The border effects on freight distribution remain salient, even in areas where levels of economic integration are high. Increased concern about clandestine transnational actors (drugs, illegal immigration, terrorism) has led to a new regime of enhanced scrutiny that has offset many of the institutional and technological changes that once promised to make borders irrelevant. While the threat of international terrorism is very real, the intensification of scrutiny is reinforced by public opinion that is more aware of the benefits of security than of the benefits of trade. The Covid-19 pandemic created additional challenges to borders, creating a temporary trend of border closures and increased border control for sanitary reasons. The border effect was particularly apparent for air travel, with domestic travel bouncing back much faster than international travel because of sanitary restrictions on international travelers.
- 7.2 – Globalization and International Trade
- Interoceanic Passages (PEMP external link)
- 9.3 – Transport Safety and Security
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