The Importance of Freight Transportation Modes to the US Economy Growth
The U.S. Department of Transportation estimates that different freight modes facilitate the annual movement of 15 billion tons of goods worth over 9 trillion dollars. The U.S. economy primarily depends on the different types of freight transportation. There are four major freight transportation modes in the United States – road, rail, air, and sea – which play different roles in the country’s economic growth.
From a macroeconomic viewpoint, Freight transportation accounts for the United States’ G.D.P with a much significant share. According to the U.S Department of Transport, freight modes increase the value of commodities by distributing them to factories for value addition. Freight transport encourages production and competition in the market by expanding the market boundaries of the commodity and facilitating the availability of labor. The different modes of freight transport also influence infrastructural development, which is a significant component of the nation’s productive capacity and wealth. Therefore, all freight transportation modes are essential for U.S economic growth because they allow for the circulation of production commodities to factories and enable large-scale dispersion of the finished merchandise to the consumers.
The Importance of Freight Transportation Modes to the U.S. Economy
Different freight transportation modes play significant roles in the expansion of the U.S economy. For example, road transport is ideal for small-scale enterprises that require an affordable means of transport for bulk consumer goods or raw materials. Engström (2016) refers to road freight transportation as the “lifeblood of modern society.” This freight mode allows small-scale traders to collaborate with other entrepreneurs who require freight services for small goods (Engström, 2016).
Unlike the sea freight mode, the road option is cheaper and can carry smaller loads. This freight mode is also suitable for shorter distances and goods that have a shorter lifespan. Therefore, the ground mode of freight transportation supports the growth of the U.S. economy by enabling small-scale traders to move raw materials and finished products to their destinations.
Fig.1 above shows how freight transportation contributes to the growth of various sectors in the country. Evidence shows that freight transport industry comprises a significant portion of the GDP. Purchasing the transport merchandise and services constitutes approximately 11% of GDP (U.S. Department of Transport, 2021). Housing, health care, and food warehousing were the only ones accounting for more shares in the GDP. These statistics mean it is the fourth entity with large percentages of the U.S. GDP. Many companies and businesses depend on transportation in their operations to move their goods.
It means that freight transportation is essential in the economy of the country. The movement of raw materials from source to factories and transportation of the finished products to the market contributes to the economy’s growth (Sprung, 2018). Firms use natural materials for the production process, which employs a significant portion of human resources. The employees earn salaries and wages that enable them to purchase goods and services for consumption. The method of money exchange supports the U.S economy by enabling economic activities.
Freight transportation also improves the economy of the country by encouraging production and competition in the market. This is mainly done through expanding the market boundaries of the commodity and labor (Sprung, 2018). Goods are transported primarily in the markets unless they are raw materials for industry. Where there is easy transportation of goods, the sectors and businesses will be encouraged to produce more. This also proves that the products will be able to reach more markets hence promoting the expansion of the market in the country. It will also encourage competition in the market when relating products that can compete in the market. Therefore, healthy competition will be promoted because the industries producing the relating products have the same opportunity to take their products to the market.
Freight transportation also influences the development of transportation infrastructure, which consequently contributes to the economy’s growth.
Because of the heavy use of infrastructure in freight transportation, it is necessary to improve and develop more advanced infrastructure. Technological innovations have facilitated the development of faster infrastructures that improve speed and reduce costs (Mrowczynska et al., 2017). Infrastructure forms a vital portion of any country’s assets because of the role it plays in driving business and wealth creation.
The Bureau of Economic Analysis estimated that as of 2000, the public transport network alone was worth $1.42 trillion (U.S. Department of Transport, 2021). The stock worth proves that the transport network in the United States plays a crucial role in supporting business and wealth creation. When transportation infrastructure is efficient, it provides social and economic opportunities and may also result in positive effects like improved accessibility to the market and other investments.
The modes of freight transportation also contribute to the economy through job creation. The operation of vehicles such as trucks is labor-intensive, making it a significant source of employment. Wang et al. (2021) reported that the freight transport sector employs more than 10 million people in 2000. However, this number has increased exponentially over the last two decades due to the expansion of the transport sector and the emergence of new employment vacancies. The graph below describes further how freight transportation has contributed to providing jobs to people, especially in trucking, from in the ears between 1990 and 2018. Therefore, freight transportation contributes to economic growth by enhancing the infrastructure, which supports business.
Conclusion
Modes of freight transportation play a critical role in the economy of the United States. As explained above, it is evident that is a key factor to be considered when growing the nation’s economy. It is also evident that in the country, the most used mode of freight transportation is trucking. For the country to meet its future economic needs, the system need to grow, become more adaptable, and ensure sustained funding.
References
Engström, R. (2016). The roads’ role in the freight transport system. Transportation Research Procedia, 14, 1443-1452. Web.
Mrowczynska, B., Ciesla, M., Krol, A., & Sladkowski, A. (2017). Application of artificial intelligence in prediction of road freight transportation. Promet-Traffic& Transportation, 29(4), 363-370.
Sprung, M. J. (2018). Freight facts and figures. U.S. Department of Transportation, Bureau of Transportation Statistics. Web.
U.S. Department of Transport. (2021). Freight transportation today. Web.
Wang, H., Han, J., Su, M., Wan, S., & Zhang, Z. (2021). The relationship between freight transport and economic development: A case study of China. Research in Transportation Economics, 85, 100885. Web.