Transportation
With a strong global economy, prosperity is growing across Asia, Europe and the Americas - and with it, demand for transportation services. In these market conditions, scaling up capacity may seem like an appropriate choice for many transport carriers; however, there are many factors and hidden costs at play that need to be carefully considered. Three such factors are supply trends, demand trends, and technology-based innovations.
On the supply side, one of the emerging challenges is network bottlenecks. As transport fleets grow, gridlock in ports and roadways become more frequent. For carriers, extracting maximum value from a larger fleet will require parallel investment in capacity and network planning, logistics and risk management, and helping governments to accelerate infrastructure expansion.
On the demand side, each market segment - whether classified by region, mode of travel, class of service or other measure - requires its suppliers to deploy a particular mix of fixed assets. For example, a low-end air travel service requires different types of fleet and infrastructure than does a high-end service. Since the useful life of such assets can span decades, firms need to correctly anticipate long term trends in their targeted market segments. Future industry leaders will build capabilities in marketing, sales and product management in accordance with their capacity expansion goals and investments.
New technology also plays a role in creating new markets and altering the economic fundamentals of the industry. Examples include: record low per-unit costs achieved by oversized aircraft and container ships; new levels of operational intelligence provided by RFID; tighter and more efficient security enabled by biometrics and chemical detection; and breakthrough economic and emissions performance delivered by "green" vehicle engines and fuels. Technology deployment can be costly and risky; the challenge lies in identifying what to invest in, and when.
As the industry landscape continues to evolve, a key challenge for transportation executives is to position their firms for long term profitable growth. We work with transportation companies and their suppliers to identify and evaluate strategic options, and make sound choices grounded in data and rigorous thinking. We have helped carriers and suppliers to develop and implement supply chain partnership strategies enabling profitable top-line growth, and designed network and asset planning models essential to managing risks and costs.