TRANSPORTATION - BTS - Bureau of Transportation Statistics

Japan and Korea are still our major western Pacific trading partners, but the Asian market hasexpanded to encompass China and some Southeast Asian nations as our top tradingpartners. Despite the recession in East and Southeast Asia in 1997, the volume of freight inthe Pacific trade continues to grow and is triggering additional port expansions around thePacific Rim.The North American Free Trade Agreement (NAFTA) has increased trade between the UnitedStates and Canada, and between the United States and Mexico. The European Union (EU)and NAFTA experience has spurred the formation of the MERCOSUR (Southern CommonMarket) free-trade agreement among the major South American economies, as well as a seriesof ongoing negotiations to integrate the Caribbean and Latin American economies into abroad trade zone of the Americas.Manufacturing to Service-Based EconomyThe types of commodities moved on the freight system are directly related to the structure ofour economy, which determines production and consumption patterns. Over the past25 years, the U.S. economy has expanded its industrial output while evolving to aninformation and service-based structure.The U.S. economy in 1975 was transitioning from a manufacturing economy to a serviceeconomy. It was recovering from the economic and social impacts of the Vietnam War, butgrowth alternated with periods of sharp recessions. Unstable fuel supplies and prices sentshock waves through the economy, dampening domestic and international trade.The U.S. economy was losing manufacturing jobs to the booming, low-wage Asian economies.Traditional manufacturing jobs were being replaced by jobs in the growing service industries(i.e., business services, health services, and finance), and in the technology sector. Theresultant economic pressures resulted in a massive restructuring of the U.S. businessenterprise. By 1975, businesses were lobbying for lower freight transportation costs and betterfreight services to facilitate establishment of manufacturing facilities abroad.Today, the economy’s service sector is larger than all other sectors in output and growthpotential. It also has fueled the longest period of economic expansion in U.S. history. Theservice-producing sectors of the economy now account for about two-thirds of the nation’seconomic output and three-quarters of its jobs. This economy is slowly shifting from massmanufacturing and distribution toward custom manufacturing and retailing—a world ofmail-order houses and overnight delivery.These changes in the U.S. economy have transformed the nature of the freight moved in bothdomestic and international markets. More freight is being moved over longer distances. Thisfreight is lighter (with more frequent shipments) and higher in value, on average, than it was25 years ago (figure 2-51).The cost per unit of moving freight has dropped significantly from 25 years ago. Totallogistics costs (e.g., transportation, warehousing, administration, and insurance) account for asignificantly smaller proportion of the GDP than in 1975. Inefficient freight operations havebeen reorganized and new logistics practices adopted.The relative shares of U.S. domestic versus U.S. international freight movement have alsochanged. Domestic freight still accounts for the dominant share by volume and value, but theshare of international freight by value is growing.2-54