European and North American Freight Transportation Systems and Globalization

European and North American Freight Transportation Systems and Globalization

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European and North American Freight Transportation Systems and Globalization

The technology and infrastructure in the freight distribution system is becoming similar over time. In the forefront of this development is containerization, which has led to the standardization of the cargo distribution systems globally. However, the converging forces come to halt in logistical practices as most strategies take into account the attributes associated to the individual geographical locations. As the geographical features and socio-economic preferences of various localities vary innately, different strategies are deployed (Coelli & Perelman 2000). Dependency on established trade routes is also prevalent. With an increasingly globalized society, the physical trade courses are being restructured accordingly to international competitiveness. A fast response to demand from the market in any part of the world is of the essence (Coelli & Perelman 2000). It follows that the European and North American freight distribution systems adapt different strategies that correspond to their absolute advantages and globalization.

Understanding the fundamental differences and similarities between European and North American freight transportation systems is crucial in knowing the effect of globalization on them. In both regions, railways make up for the cheapest mode of freight transportation. In Europe, virtually all the railway networks are owned by the respective national governments. Conversely, the North American railways have always been privately owned with government involvement limited to regularization. This was aimed at ensuring reasonable freight rates and preventing discrimination of customers. The private ownership of railroads in North America was advantageous as freight trains had their separate networks from passenger traffic. Their European counterparts dealing with freight traffic are faced with a serious conundrum as they share the same network with passenger trains. Furthermore, passenger traffic takes precedence over cargo, leaving freight trains to travel when the passenger traffic is off peak or stand aside on the bypass tracks to pave way for faster passenger trains to overtake them. Owing to the low capacity of these trains, finishing whole cargo traffic even at night is virtually impossible (Rodrigue & Notteboom, 2010). In North America, length restrictions on freight trains are absent enabling companies to leverage the economies of scale. As a result, the price structure of freight transport via rail in North America is ten times cheaper than in Europe, measured in ton per kilometer, making it more globally competitive.

Global trade has increased due to improved freight transport through shipping. Freight transport in Northern America is localized in the coastal areas and its vicinity with minimal economic activities occurring in the hinterlands. They depend on few gateways mainly in Los Angeles in the West Coast that caters for imports from Asia, New York, and Hampton Roads in the Eastern seaboard. The minor ports hardly participate in international trade. In contrast, European gateways serve as intermediaries to the main economic centers that are situated in the hinterland, at a considerable distance from the major shipping lines (Rodrigue & Notteboom, 2010). Success of ports correlates with their history, which predisposes them to succeed in modern day. The first mover advantage helps the port establish long lasting relationships along the shipping lane. European states ensure cargo traffic is dispersed into various ports. In North America, the aforementioned has negligible effect on cargo dynamics.

Increased interdependence is an offspring of globalization. The presence of many nations depending on the same infrastructure puts a political angle to rail transport in Europe. With an increased membership into the European Union manufacturing has shifted to cheaper factories in East European countries, this has given the states impetus to build new freight transport infrastructure. The harmonization of regulations to foster free flow of freight goods also demands that the physical infrastructure be compatible, the United States and Canada both have standard gauge railways for freight traffic. This functional regionalism is beneficial to each participating country; reduction in transport cost lead to economic gains (Hesse & Rodrigue, 2004). Economic integration is geared towards measures to formalize this regional cooperation. Interesting new developments that facilitate global trade are the tracking technologies that provide visibility of the cargo throughout its transit ensuring its safety and increased accountability.

References

Coelli, T., & Perelman, S. (2000). Technical efficiency of European railways: a distance function approach. Applied Economics, 32(15), 1967-1976.

Hesse, M., & Rodrigue, J. P. (2004). The transport geography of logistics and freight distribution. Journal of transport geography, 12(3), 171-184.

Rodrigue, J. P., & Notteboom, T. (2010). Comparative North American and European gateway logistics: the regionalism of freight distribution. Journal of Transport Geography, 18(4), 497-507.