The U.S. Economy: Impact on Transportation and Logistics Management

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Table of Contents

Introduction
Literature Review
Fuel Prices
Import Substitution and Outsourcing
Pandemic and Recession
Economic Growth
Discussion of Possible Solutions
Conclusion
References

Introduction

This introduction includes the definition of terms used in work and shows the relationship between economics and logistics, and defines the nature of their interaction. The introduction defines the problem that requires research and the main directions considered in this work. They include a study of the impact of the economy on transport and logistics in its two different states – recession and recovery. The introduction is for informational purposes only; a more profound analysis of the issues voiced lies in the following chapters.

Literature Review

This chapter examines in detail the categories of transport, logistics, and the economy in general and their interaction through various influencing factors. As a rule, the transport infrastructure gravitates towards megalopolises or large cities. The larger the population of the city, the better the transport system is. Such causes and consequences of clustering are considered in this chapter first of all, as they lead to the idea of an inextricable link between transport systems and the economy due to a large number of jobs, the use of technology, and much more (Kumar et al., 2017). Logistics, in turn, is inextricably linked with transport.

The chapter further examines the basic logistics processes that are relevant to linkages with the economy. Description of routing processes, supply chain, development in the international market is touched upon as one of the main processes within logistics (Krishnaraju, 2021). An explanation of the reasons for this connection and differences in the approaches of global companies in different countries are also presented in this review.

Fuel Prices

The reverse influence of the economy on transport is considered in the literature quite rarely, and therefore this study is being carried out. The primary issue addressed by this study in the literature review is fuel prices, which depend on many factors outside the operations of transport firms (Hofmann et al., 2018). The impact is proven by citing the income statistics of one of the largest transport companies and the correlation with fuel prices (Marcrotrends, 2021; Statista, 2021). However, this correlation is far from always linear. This study aims to find out the main factors that have a particular share of influence on transport companies from the economy in terms of fuel prices. A more detailed estimate is also planned, including more large companies whose revenues can be compared with fuel prices. When finding other correlated dependencies in other factors, the chapter will provide visual confirmation.

Import Substitution and Outsourcing

The factor of import substitution was also influential. In the United States, this process is developed insignificantly compared to some other countries, the cases of which are understood in the scientific literature. On the economic side, import substitution is often dictated by political decisions, sometimes even legislative ones, which can complicate the work of transport firms (Cooper et al., 2020). It discusses companies’ possible ways and strategies in such situations, which include working for export and developing competitiveness within their country.

In addition, logistics outsourcing is being considered, which companies are forced to resort to not experience problems with delivery. In this case, networking opportunities or experience in supply chain development are lost (Zhu et al., 2017). It is also planned to consider logistics outsourcing during a recession and recovery of the economy. Regarding the main topic of the study, it is necessary to consider the economic reasons that force companies to resort to such activities and whether in the situations considered such delegation always has more advantages than disadvantages.

Pandemic and Recession

As a separate section, the case with the COVID-19 pandemic, which has affected absolutely all areas of human activity worldwide, will be considered. The spread of the virus led to a reduction in the activities of many companies, the imposition of certain restrictions by the state, which in total had a significant impact on the US economy. Transport companies in the conditions of closed borders suffered certain losses, which is confirmed by the graph of net incomes above. However, a complete and voluminous classification of all factors and consequences of the pandemic impact on the logistics and transport industry is not yet available in the scientific literature. This section will highlight these issues through the prism of the impact of the US economy.

The pandemic was the result of the economic crisis; therefore, certain economic factors are reflected in logistics and transport companies. This influence is explored in this section. The recession leads to a drop in fuel prices, which, on the one hand, has a beneficial effect on the costs of transport companies, but on the other hand, leaves potential and regular customers unable to use their services. This section will also look at other economic reasons accompanying the downturn and their impact on logistics and the strategies undertaken at the state level.

Economic Growth

With economic recovery, developing regions benefit, where the transport system and transport companies are better developed. Like the US economy, the global economy experienced a period of recovery before the pandemic, and this segment will be discussed in this section. The positive dynamics of the economy affect many areas, including transport and logistics. Therefore, it is necessary to assess the factors that affect the economic recovery and their reflection on transport systems. During the upswing, competition grows, which contributes to the technological and geographic development of transport companies.

Therefore, through the prism of economic recovery, the main economic factors of influence will be assessed, such as prices for fuel, oil and import substitution, and outsourcing. Moreover, during the upswing, various government funding programs that encourage entrepreneurs and companies to grow in different remote regions also have a particular impact. This section will also provide graphical information with fuel prices in the specified period, freight traffic index, after which the data will be compared with the period of economic downturn.

Discussion of Possible Solutions

Solutions are developed in several planes at once, each of which has its pros and cons. This section discusses possible ways to manage transport and logistics during periods of economic recovery or recession. The information will be helpful for both companies and analysts since the management task is often multi-criteria and complex enough to find a solution quickly. It will also provide examples of technologies and approaches that have already been used but are not yet widely adopted. In the literature review, many papers will refer to different approaches applied in different transport systems that use technologies for primary logistics purposes. Electrification and automation seem to be inevitable processes of progress, but they also carry many positive aspects.

First of all, this can be attributed to the development of the transition trend to electric transport. This fact applies to both the automotive industry and public transport in many countries. This technology is more environmentally friendly and does not depend on the usual fuel (Holland et al., 2021). It should not be expected that fuel will not be as much in demand as it is now, as air transportation still uses it. Moreover, electric vehicles are being developed with self-driving technology, which threatens many of the jobs in the modern transportation system. Moreover, new specialists of specific qualifications will be required, which can completely change the job market in the field of logistics and transport, as well as launch the transformation process within many companies and organizations. Within this period, the impact of economic factors will be assessed, and the possible outcomes for transport companies in the current period of recession will be considered.

Automation is a significant event in many business sectors. In transport systems, it is possible to automate up to 71% of professions; in addition, research in this area is also focused on cluster regions, for example, Memphis (Liu et al., 2021). However, these developments will lead to decreased energy consumption and an improved environmental situation by reducing emissions.

Conclusion

The analyzed data makes it possible to classify factors dictated by the economy and affect the transport system and logistics. Current trends reflect the effects of the pandemic and, as a consequence, the economic downturn. The information obtained will be helpful in the current situation for many transport companies. Further development of this work consists of a more detailed description of solutions and strategies that will effectively manage transport systems and logistics. The development of other theoretical foundations and aspects of the issue of this topic also stands out as a task for future research.

References

Cooper, D. R., Ryan, N. A., Syndergaard, K., & Zhu, Y. (2020). The potential for material circularity and independence in the US steel sector. Journal of Industrial Ecology, 24(4), 748-762.

Hofmann, E., Solakivi, T., Töyli, J., & Zinn, M. (2018). Oil price shocks and the financial performance patterns of logistics service providers. Energy Economics, 72, 290-306.

Holland, S. P., Mansur, E. T., Muller, N. Z., & Yates, A. J. (2021). The environmental benefits of transportation electrification: Urban buses. Energy Policy, 148, 111921.

Krishnaraju, V. (2021). Incremental System for Identifying Prime Routes in Logistics Transportation Services (No. TRBAM-21-04389).

Kumar, I., Zhalnin, A., Kim, A., & Beaulieu, L. J. (2017). Transportation and logistics cluster competitive advantages in the US regions: A cross-sectional and spatio-temporal analysis. Research in Transportation Economics, 61, 25-36.

Liu, Z., Guo, H., Zhao, Y., Hu, B., Shi, L., Lang, L., & Huang, B. (2021). Research on the optimized route of cold chain logistics transportation of fresh products in context of energy-saving and emission reduction. Mathematical Biosciences and Engineering: MBE, 18(2), 1926-1940.

Lundvall, B. Ä., & Johnson, B. (1994). The learning economy. Journal of Industry Studies, 1(2), 23-42.

Macrotrends. (2021). Crude Oil Prices.

Murphy, P. R., & Knemeyer, A. M. (2018). Contemporary logistics. Faculty Bibliography Press.

Statista. (2021). United Parcel Service of America, Inc.’s revenue and net income from FY 2009 to FY 2020.

Zhu, W., Ng, S. C., Wang, Z., & Zhao, X. (2017). The role of outsourcing management process in improving the effectiveness of logistics outsourcing. International Journal of Production Economics, 188, 29-40.

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