Transportation and Logistics
Transportation services refer to companies that facilitate the movement of goods. Different modes of transport services include maritime shipping, trucking, freight rail, and air delivery. The movement of goods by sea accounts for 80-90% of the volume of international trade, according to the United Nations Conference on Trade and Development (UNCTAD) (United Nations 2018, 4). Generally speaking, shipping by ocean may be less expensive than by air and allows for the movement of a much larger volume of goods. Transport by sea has evolved since Ancient Egyptian civilization.
Around 3,000 вс, the shipping industry allowed for the movement of goods from one region to another throughout Africa, the Middle East, and Asia. The shipping industry was dominated by the ancient Egyptians because of their strong naval force. Egyptian ships evolved into larger, sturdier cargo ships made from wood, predominantly from imported cedar. As a result, the Egyptians could move a higher volume and heavier amount of cargo throughout North East Africa, the Mediterranean, and South Asia.
Eventually, the shipping industry became dominated by the Greeks, especially as pottery and gold were traded between mainland Greece and the Greek islands. The Greeks built ships to move goods throughout the Persian Empire.
Rome became a key player in maritime transport by the 8th century вс, during which it connected the West with southern India and other parts of Asia. The Roman civilization relied heavily on the import and export of goods. Key exports included cereals, wine, and olive oil. Imports consisted of precious metals, marble, and spices. Many goods in the Roman market, especially luxury silk goods, came from China (Galli 2017, 6-7). Commodities moved by land through the Silk Road or by water across the Indian Ocean. However, transport by land was often difficult due to the weak innovative land transport methods (Cartwright 2018). As a result, maritime transport operated much more quickly and cheaply. Ships often carried between 75 and 300 tons of goods (Cartwright 2018). Nevertheless, transport by ocean had its own set of risks such as dangerous weather conditions and piracy.
From the 15th to the 17th century, Spain, Portugal, the Netherlands, and Britain continued relying on both land and water transport to reach the Asian region, set up trading companies, and importing spices, silks, and cottons.
China controlled the trade routes throughout Southeast Asia going as far back as the 13th century, during which Marco Polo visited and documented China’s strength in international commerce. Moving goods between China and the West required the use of shipping services. China often sent large ships carrying up to 120 tons of cargo across the Indian Ocean to engage in commerce with other parts of Asia, the Middle East, and East Africa. Many of these ships included sails made of bamboo to allow for durability and better steering (Griswold 2002). China sent 317 ships with 28,000 Chinese on a trade mission in 1405 (Griswold 2002). Developing its fleet of ships gave China the leverage to participate in international commerce, as well as promote political diplomacy and cultural exchanges. The Chinese economy grew as a result of these commercial, political, and cultural connections.
Britain has also historically relied heavily on maritime trade to build its economy. By the 17th century, Britain began bringing different commodities and resources from the Western Hemisphere, where it eventually began establishing colonies in what has been labeled North America, starting with Virginia, and throughout the part of the Caribbean region referred to as the West Indies. By 1686, over £1 million of goods, which included sugar, tobacco, and tropical foods, were shipped to London (Morgan 2011). Britain’s exports to the colonies consisted mainly of woolen textiles.
Britain began buying and enslaving people from Africa, selling them as property to plantation owners, and forcing them to work on rice, tobacco, coffee, and sugar plantations throughout North and South America. Eventually, the enslaved peoples of Africa, most of whom were transported to the Caribbean region, far outnumbered the indigenous population that had been originally used for slave labor. The Transatlantic Slave Trade involved uprooting and transporting an estimated 12.5 million African peoples on a months-and miles-long journey across the Atlantic Ocean to the Americas (Cohen et al. 2017). The transport and trade of African peoples as commodities as a part of the system of slavery endured from the 15th to the 19th century. During the same time frame, 2.5-5 million Native Americans were enslaved (Cohen et al. 2017). By 1698, Britain was the top slave trader. Shipping services flourished and made such trades of goods and people across larger geographical regions possible.
Protectionism has been a part of the international shipping services industry, as evident during the 17th through the 19th centuries. Because shipping was an important industry for its economy, Britain implemented the Navigation Acts (1651-1854). The Navigation Acts were designed to restrict the trade of goods to English ships. Consequently, shipping costs increased. Nevertheless, the evolution of Britain’s ships from the large sailing ships to those that made use of steam power, iron, and steel made maritime transport much faster and more reliable.
Whereas Asia connected with the West through the Silk Road, ocean transport became dominant for the region by the second half of the 19th century. As a result, the region emphasized the development of its ports and harbors. Japan grew into a significant trading partner with the world during the early part of the 20th century because of its naval strength.
Alternative methods of transporting goods around the world emerged. Eventually, cross-border land transport via railway and trucks emerged. The modern railway system began in Britain with the invention of the steam locomotive designed to transport passengers by the early 19th century. During the Industrial Revolution, the steam engine made it possible to ship goods at a lower shipping cost and with less risk of loss, compared to transport by waterway. Furthermore, the steam engine, in combination with the wider use of railroad tracks, made it possible for goods to be shipped over longer distances at a lower cost than that associated with the precursor—a wagon.
The rail system evolved to the use of freight trains, which moves cargo via freight cars that carry specific types of goods. The rail freight transport allows for the movement of goods more efficiently both in terms of time and use of energy. However, in the case of the United States, heavy government regulation made shipments by rail, particularly for manufactured products, more costly by the 1950 and 1960s, resulting in shippers turning toward delivery by highway (“A Short History of U.S. Freight Railroads” 2019). With the deregulation of the railroad industry by the 1980s, goods and foodstuffs could be transported efficiently. Even those goods that were shipped via maritime transport from one country to another still rely on rail freight transport services to transport large containers to the final destination within the latter country.
Trucking services also help to move goods across borders by land.
During the 1930s, many commercial shipments in the United States were completed by truck, especially as roads underwent significant improvement due to the increased number of automobiles. Also, the enhancement and expansion of the U.S. highway system boosted the ability for the trucking industry to play a key role in commercial shipping (Minard 2015).
Notably, the rail and trucking systems are contemporary methods for land transport. Keep in mind that goods moved on land by caravan, which consisted of camels or horses, via the Silk Road. The transport of goods via the Silk Road for trading included long distances, slow movement, and, in many cases, a dangerous trek (Rodrigue et al. 2020). For this reason, the commodities that were traded via the Silk Road were limited to luxury goods such as silk, gold, jade, tea, and spices.
Finally, cargo could move across borders by air transport. The first demonstration of the effectiveness of air transport of goods across continents came during an international political crisis. Britain and the United States sent supplies, such as coal and foodstuffs, to West Berlin via the Berlin Airlift in response to the Soviet Union’s blockade of West Berlin. The blockade lasted from June 24, 1948, to May 12, 1949- The peak daily amount of goods shipped via the Berlin Airlift reached 12,941 tons on April 15—16, 1949 (Grehan 2019, 157). The air cargo industry really grew following the deregulation of the airline industry in 1977. Private air freight carriers, such as United Parcel Service (UPS) and Federal Express (FedEx), grew and demonstrated the importance of air cargo to the airline industry.
A related services-based industry developed from the transport of commodities, which, in present times, is referred to as freight forwarding. The freight forwarder also handles the logistics associated with shipping a good by contracting with carriers to arrange large volumes of shipments, negotiate fares, assist with documentation, and track shipments. Today’s freight forwarders have been labeled the “travel agent for freight” (Banker 2015). Freight forwarding goes as far back as one of the earlier formal business- to-business organizations established in 1836 by Thomas Meadows and Company Limited in London, England. The company used its local network of carriers to assist with transportation, documentation, and customs-related information.
It is important to mention that it has been recorded that the history of freight-forwarding actually extends earlier than the Thomas Meadows and Company Limited. The first group of freight forwarders were predominantly innkeepers who assisted their guests by holding and forwarding their personal belongings by the early 1800s (“The Rapid Evolving Freight Forwarding Industry” 2017; “What Is a Freight Forwarder” 2020). As mentioned, Thomas Meadows and Company Limited shifted freight-forwarding service into a business that has continued well into the next two centuries.
As the Industrial Revolution throughout Europe and United States during the 18th and 19th centuries resulted in a boom in manufacturing processes and manufactured goods, the need for a way to transport these goods safely to customers became important. Furthermore, the increased trade between Europe and North America increased the demand for freight forwarders.
According to the freight forwarding company Redwood Logistics:
The purpose of freight forwarding has remained essentially the same throughout the centuries. Freight forwarders help get a customer’s goods shipped safely to their chosen destinations. The means employed by freight forwarders has evolved over time to take advantage of the current technology to meet the demands of more shipping routes.
(“The History of Freight Forwarding”)
The freight forwarding industry has expanded and grown in countries all around the world. Freight forwarders do not physically move goods. Rather, they contract with carrier services to arrange shipping via ocean, land, and air and keep track of the shipment to ensure safe arrival to its point of destination.
