Transportation

In recent years, the hub-and-spoke concept has found wide usage in the various modes of transportation, which operate in increasingly competitive and market-oriented environments (Hsu & Hsieh, n.d.).

The hub-and-spoke concept basically denotes a system of connections and interconnections set in the same manner as the chariot wheel, whereby all traffic progresses along spokes attached to the hub at the center (Wei & Yanji, 2006). The present paper aims to describe and illuminate some of the advantages the hub-and-spoke concept brings to the various modes of transportation practiced in the United States and globally.

In the maritime mode of transportation, available literature demonstrates that hub-and-spoke structures have assisted greatly in reducing shipping costs as well as inventory costs due to increased efficiency. Major shipping lines using the hub-and-spoke concept have experienced the efficiency and competitiveness associated with a reduction of inventory cost, which undoubtedly represents opportunity cost or loss of value going by the fact that goods cannot be utilized or sold in the shipping process (Hsu & Hsieh, n.d.).

These authors also acknowledge that hub-and-spoke structures are associated with a reduction in waiting for time costs related to sailings frequency, implying that they are more profitable to use than direct structures.

In commercial passenger air transport, available scholarship demonstrates that hub-and-spoke structures “have been instrumental in helping to reduce the overall costs of air travel to the U.S. public and to increase the travel options that are available” (Wei & Yanji, 2006, p. 211).

Indeed, as demonstrated by Goudreau (n.d.), “the hub-and-spoke system has been the guiding operational framework for airlines in the United States since they began operations about 70 years ago” (p. 9). Commercial air flights using this model are able to provide their customers with a competitive choice of flight schedules and route prices, leading to a reduction in the overall costs of air travel.

In truck and rail transportation, it is documented in the literature that the hub-and-spoke concept provides the capacity to utilize larger vehicles or wagons, hence not only considerably minimizing costs per unit through bundling flows on a hub but also ensuring lower total network costs and stronger competitive advantages (Bontekoning, 2006).

Indeed, according to this author, the spoke-and-hub structures allow “intermodal operators and railway companies to focus on the reliable and time- and cost-effective point-to-point bundling concept” (p. 1).

Many hub-and-spoke structures all over the world provide transport and logistics companies with the capacity to organize road or track services as batches (groups) of trucks or trains with highly coordinated arrival and departure times for compact exchange operations at a hub, leading to significantly reduced operational costs and elevated customer satisfaction levels (Bontekoning, 2006).

In nearly all modes of transportation (e.g., maritime, air, truck, and rail), the spoke-and-hub concept has been closely associated with increased economic development owing to its capacity to facilitate the movement of goods and services (Wei & Yanji, 2006). It is a well-known fact that opportunities for economic development are enhanced when efficiency and competitiveness are introduced into the various modes of transportation using the hub-and-spoke method.

This paper has successfully described and illuminated the major advantages or benefits that the hub-and-spoke concept brings to the various modes of transportation not only in the United States but also globally. Overall, it has been demonstrated that hub-and-spoke structures are able to reduce operational costs significantly, inventory costs and waiting times, while at the same time enhancing competitive advantages, economic development, as well as customer satisfaction levels.

References

Bontekoning, Y.M. (2006). Hub exchange operations in intermodal hub-and-spoke networks: Comparison of the performance of four types of rail-rail exchange facilities. Web.

Goudreau, K. Hub and spoke system: A good idea…again. Web.

Hsu, C.I., & Hsieh, Y.P. Direct versus hub –and-spoke routing on a maritime container network. Web.

Wei, S., & Yanji, M.A. (2006). Hub-and-spoke system in air transportation and its implications to regional economic development. Chinese Geographical Science, 16(3), 211-216.

Does the article appear to be making a clear point, expecting the reader to draw a particular conclusion? If so, what is that thesis or main conclusion?

The article by Thompson (2011) appears to make a valid argument on why there is no bubble in the aviation industry globally. There is a clear point that the conditions for forming a bubble in any economic situation are yet to emerge in the airline industry, specifically for the airplane construction industry, the aircraft leasing business, and the aircraft replacement demand by the existing airlines.

The author also moves the reader away from a section of the industry that would be very vulnerable to a recession in the global economy. Even then, the author provides reasons why a recession and the maintenance, repair, and overhaul business should not be used as reasons to justify a bubble.

The author uses facts about the demand for aircraft over the last few years to bring out a trend. Afterwards, the author presents several scenarios of demand changing on the leasing business side or on the airlines side to show the possible effects on the manufacturing companies, such as Boeing.

Even then, the article offers information to show that in the current state, such disruptions in demand for any economic reason are unlikely to cause a significant bump in production. The presentation of the facts helps the reader to draw the conclusion that supports the thesis of the article.

The thesis of the article is that fundamental assumptions and forecasts for the aviation industry remain reasonable and going with a disciplined approach to rate increases in whatever production or operation parameter will ensure that no bubble occurs. Its conclusion is that the aviation industry will absorb any turbulence that emerges in the global economy (Thompson, 2011).

Does the author appear to have a particular point of view or approach to the topic? Does this seem to be persuasion or does the author seem to be making a relatively objective effort to answer reasonable questions readers may have about the topic?

The authors have a point of view and an approach to the topic. The article is presented in a way that first shows the potential of a bubble and the reasons that cause an economic bubble. It then relates the criteria for a bubble to the aviation industry and displays the vulnerabilities in the aviation industry that can lead to a bubble. The authors then describe the issues that would be most devastating in case a bubble happens.

The manufacturers of aircrafts will have production schedules and resources interfered with, while leasing companies could find themselves with large fleets that are unsustainable. After presenting these facts about the bubble, the authors then move on to present the article’s point of view that a bubble is yet to occur in the aviation industry, and is unlikely in the coming few years.

The conditions of the bubble introduced earlier in the article are quashed with new facts, where the authors present facts that promote a sustainable demand for aircraft such that there would be no slump in production or leasing business. The authors give information about risk and the sources of risk that players in the aviation industry would consider as part of their business planning. Adler and Gellman (2012) have supported these facts about the need to consider both persistent risks and the emerging risks such as competition barriers.

Based on this discussion, the authors make a relatively objective effort to answer questions that readers might have relating to the sustainability of growth in the aviation industry.

What are the key issues or topics that make up the article? What conclusions does the author draw concerning each?

The key topics that make up the article are the increase in demand forecasts for new aircrafts, the potentials of a bubble should there be economic turbulence on a global scale, and vulnerability of manufacturers of planes. These topics combine to form a concern for the aviation industry’s growth.

A number of sub-topics emerge in the respective topics, such as the need for replacement of the old fleet in the next decade and the change of forecast by major manufacturers in the aviation industry. The topics highlight the working of the supply chain in aircraft manufacturing and the market forces’ effect on pricing and production schedules.

Supply chain’s efficiency should arise from better collaboration and information management with supply chain partners. An example highlighted in the article is the reliance of the aircraft leasing companies on the demand forecast of the global airlines to determine their demand in aircraft. Since the two levels of the industry work in partnership, the forecasts by one party influence the decisions made by the other party.

After highlighting the topics, the article concludes that the increase in demand for new aircraft is sustainable when looking at it from the manufacturer’s point of view. Manufacturers have a backlog of 7 years and there are aircrafts that need replacement annually. An economic turbulence globally can occur, but even if it does, the aviation industry will not wither as long as currently disciplined production decisions and strategies are maintained.

On the last topic of the vulnerability of manufacturers, the author concludes that the manufacturers are vulnerable, but only to a small extent when they significantly increase their production capacity beyond the current levels. It is unlikely that they will eventually expose their businesses to the harsh realities of an economic bubble because they relate their investment and production decisions of supply chain risk-management frameworks.

Such businesses are integrated throughout the supply chain, such that they can conduct production planning precisely to take care of increases and decreases in demand and alter their forecasts accordingly, without losing too much business competitiveness (Harms, Hansen, & Schaltergger, 2013).

What sorts of evidence and reasoning does the author use to support each of his/her main conclusions? Note specifically, all facts the author cites in the article. Can you determine if they are accurate?

The author presents the leasing business orders for new aircraft as a source of demand that manufacturers use to forecast their businesses. On the other hand, the article uses the current forecast demand for aircraft at 1600 annually against a supply of 1200 annually as numbers showing no evidence of a bubble (Thompson, 2011). The author also justifies the increasing demand in new aircraft because of cost advantages that airlines have with new models that are efficient.

The volatility of the oil process is also presented as another impetus for increasing demand. The author has also touched on the issue of double counting, where lease companies could be ordering more airplanes to meet the demand of airlines while manufacturers count the leasing demand and the airline demand as separate. However, other authors have pointed that leasing companies also consider the business segments that need smaller aircraft, and these numbers are unattached to the major airlines (Esler, 2006).

What kind of general impression(s) would you expect the typical reader to take away from the article after reading it?

After reading the article, the reader gets a general impression that the aviation industry is well cushioned against a bubble. Any skeptical outlook of the industry is misplaced. On the other hand, turbulence in the economy is average, and investments in the aviation industry have to take considerations of a global economic turbulence. The reader is convinced of the conclusion by the author.

References

Adler, N., & Gellman, A. (2012, July). Strategies for managing risk in a changing aviation environment. Journal of Air Transport Management, 21, 24-35.

Esler, D. (2006, July). Business aircraft. Business & Commercial Aviation, 99(1), 32-42.

Harms, D., Hansen, E. G., & Schaltergger, S. (2013). Strategies in sustainable supply chain management: An empirical investigation of large german companies. Corporate Social Responsibility and Environment Management, 20, 205-218.

Thompson, S. (2011, October 3). Is there an aviation bubble? Aviation Week and Space Technology, 173(35), 70-70.

Since its inception into mainstream logistical discourse, there have been several attempts to define and conceptualize the term intermodal transport. As a result, it has been variously used to refer to a gamut of activities involving the transportation of people or cargo (Dewitt & Clinger, 2000). In this paper, the focus will be on intermodal transport in the context of cargo freight rather than passengers.

For this purpose, Intermodal transportation is loosely defined as a system where two or more modes of transport are consequently employed in the process of transmitting cargo from one terminus to another (Dewitt & Clinger, 2000). These modes could include road, rail, water, and even air depending on the nature of the goods in transmission. Intermodalism in the movement of goods is based on a number of factors such as, the infrastructure, the products, data shared, and any other logistical element that applies to a bill of single freight.

Chief among the factors driving intermodal transport today is the container, which facilitates smooth and seamless transfer of goods from one mode to the next. Containerization has been instrumental in facilitating intermodal transportation as it ensures easy “transmodal” cargo handling. Admittedly, intermodal transport can exist in the absence of containers, but the process would be cumbersome and very expensive (Panayides, 2002). The container is a massive but a standard sized vessel or box in which freight is packed for shipment across the specially configured vehicles (Egyedi, 2000).

Containers are designed in such a way that they can easily be handled using conventional equipment, which is used across the various modes and ports. Since they are in containers, goods do not require to be unpacked as the boxes are designed for flexibility in movement and can fit in most haulage vehicles (Naim, Potter, Mason & Bateman, 2006). Case in point, assuming that one wants to ship car parts from the US to the UK, they can apply intermodal transport to ensure the goods are safely and efficiently moved.

A truck can carry the container to the train station where the same kind of crane that was used to load it in the truck will be used to put it on the train. The train will then haul it to the docks were similar equipment would load it on the ship for the sea journey, on arrival the same process will be repeated again until the container arrives at its destination. The containerization of goods ensures that they will not be moved around or unpacked en-route, and, as a result, it is both efficient and safe.

The use of universal containers engenders a complementarity among the various modes and allows for the smooth flow of goods as well as standardized loads (Panayides, 2002). The amount of time spent unloading goods from one mode to another is significantly reduced, not to mention the labor and risk of damage. Intermodal transport and containerization have been especially critical in the face of globalization. In fact, were it not for containerization, the import and export business would be much slower and less efficient than it is today.

Through intermodal transport, tens of challenges such as warehousing and security of freight are addressed using a simple and cost-effective technique. Ultimately, the term intermodal stands for more than just a unification of various means of transport. It personifies a combination of factors and standards that have, over the years, been streamlined and adjusted to ensure goods are conveyed as safely, cheaply, and flexibly as possible.

References

Dewitt, W., & Clinger, J. (2000). Intermodal freight transportation. Transportation in the New Millennium.

Egyedi, T. M. (2000). The standardized container: gateway technologies in cargo transport. Homo Oeconomicus, 17, 231-262.

Naim, M. M., Potter, A. T., Mason, R. J., & Bateman, N. (2006). The role of transport flexibility in logistics provision. The International Journal of Logistics Management, 17 (3), 297-311.

Panayides, P. M. (2002). Economic organization of intermodal transport. Transport Reviews, 22 (4), 401-414.

The economic downturn in the United States over the past few years has influenced all spheres of everyday life of the society. Most industries have experienced changes in their financial strength during the recent decade. Air transportation industry has gone under significant changes based on the outcomes of the economic decline. Unionized labor has also contributed to the changes in the system of functioning of airlines in the United States.

The economic downturn in the United States and the Air Transportation Industry

Air Transportation Industry plays an important role in promoting the social and economic growth of the country. It influences the lives of a great number of household people and is a huge employment generator. Therefore, civil aviation has a significant impact on the gross domestic product. The problems experienced by the major financial institutions in the USA over the past years influenced the aviation heavily.

There is a strong connection between the stability of economic growth and the demand for air transportation. Recent failures in economics in the United States led to lower demand for air traveling. Besides, airlines in the USA tend to reduce capacities and delay previously planned constructions and renovations. Rising fuel costs, caused by the economic downturn, led to the significant increase in total operating costs.

This tendency resulted in lower profitability of the airlines. Fall in total profits made the airlines cut jobs and produce severe fall in employment. Besides, the economic downturn caused the rise of popularity of low-cost air carriers. Low-cost carriers offer low ticket costs and no-frills flights. The rise of low-cost carriers’ competitiveness led to declining prices and made air carriages more affordable for common people. In the same time, the airlines are forced to seek new solutions for modernizing their services to attract customers.

Unionized labor and the financial viability of the industry

Unionized labor plays an essential role in controlling the financial viability of the air transportation industry. There is a popular opinion that labor unions inside American aviation have caused the increase in the cost of labor. It led to the inability of American air carriage providers to compete with foreign airlines. Collective bargaining arrangements have a strong influence on the modern aviation.

In my opinion, unionized labor in the USA has a significant impact on air transportation industry. Over the past few years, it has promoted the ability of employees to control the appropriate level of rewards received for the provided services. Therefore, airlines in the United States have experienced lower profit.

Some people consider it to be a disadvantage of an unionized labor and criticize the labor unions for causing financial damage to the companies. I support this position, as labor unions can easily manipulate the employers. Labor unions in aviation are craft unions, and a strike by one craft union can cause a breakdown in the functioning of the whole air carrier (Wensveen, 2012, p. 416).

The airlines cannot stock their inventory and, therefore, there is no opportunity to prepare for the strike. As the demand for air transportation is influenced by the season, labor unions can also press the employers to meet their requirements by organizing strikes on the peak of the season (Wensveen, 2012, p. 416).

The economic downturn in the United States over the past few years has shifted the face of modern aviation in the country and led to the decline in airlines’ profitability. Unionized labor has also contributed to the decreased financial viability of the industry.

Reference

Wensveen, J. G. (2012). Air transportation: A management perspective. Aldershot, United Kingdom: Ashgate Publishing Limited.

One of the major roles of commercial aviation is to link different people and help them reach different areas. This aspect also affects the US as well as global economy (Wensveen, 2011). As far as the US economy is concerned, people can cover significant distances within hours, which facilitates their business activities.

Clearly, technology provides various tools to communicate but, in many cases, personal contact is crucial and many business people have to meet in person to make agreements. Thus, doing business with foreign partners has become quite easy for American business people. More so, products can be transported within short periods, which also favorably affects the development of companies and the entire economy. Apart from business activity, easy transportation solutions also favorably affect distribution of workforce.

Thus, companies can hire talents from other states and these employees can be sure that they will be able to work and visit different places (including their homes) easily. At the same time, exchange of employees within companies is also easily implemented with the help of commercial aviation. Companies can have any employee in any part of the USA within hours. This may be important for many organizations.

As for the global economy, this aspect of commercial aviation also contributes greatly to its development. It is noteworthy that the way it affects the global economy is similar to the impact it has on the US market. First of all, companies can easily operate in the global market as they can deliver goods across the globe within quite short periods.

Importantly, commercial aviation is becoming affordable and developing countries are now able to enter the global market as providers of products rather than providers of natural resources. Obviously, appearance of new agents in the global market makes it more competitive and facilitates its development.

Apart from, production and distribution of goods, commercial aviation provides many opportunities for a more complex distribution of the workforce. On the one hand, western expatriates can come to developing countries and train the staff or complete certain tasks to improve the place of the organization in the market.

On the other hand, high-profile and talented employees from developing countries can also enter labor markets of developed countries. They may start work within hours after the first meeting with a representative of a company. Again, this increases diversity and competitiveness of the global labor market.

Of course, commercial aviation contributes greatly to the globalization of the world. People from different areas intermingle. This leads to development of new ties and can potentially eliminate misunderstanding and even conflicts among people pertaining to different ethnic, religious, social and other groups. Thus, the role commercial aviation performs has a significant cultural value as well. It is noteworthy that development of cultural ties positively affects development of business links as well.

In conclusion, it is possible to note that one of the most important aspects of commercial aviation is its ability to help people reach different destinations. People develop business and cultural ties. Products can be delivered to the most distant areas and developing countries can also obtain various opportunities to enter the global market.

Employees find new job opportunities and the global labor market becomes more diverse. Notably, availability of commercial aviation services has contributed to development of the global economy as well as economies of different countries.

Reference List

Wensveen, J. G. (2011). Air Transportation: A Management Perspective. Burlington, VT: Ashgate Publishing Company.

Since the invention of the airplane, airports have become an integral part of modern life. Airports comprise a significant constituent of the transportation infrastructure. There are different types of airports that serve various needs on the local and international levels.

The future of airport development is predetermined by the freight and passenger needs as well as by the possibility of the acts of terrorism. It is not essential to build new airports because of the terrorist-driven declines in the air traffic though the demand for airports expansion varies in different countries due to the necessity to meet freight and passenger needs.

The development of the airport systems concerns three important aspects: runways, business hours, and warehousing. The length of runways is directly connected to the ability of the airport to serve large jumbo jets. Usually, this type of airplanes is used for international flights. Many airports face the problem of their expansion due to the processes of globalization. With the growth of cities, airports become landlocked.

Authorities have to build new airports far from the city centres to satisfy the freight and passenger needs. For instance, Malpensa airport in Italy is almost fifty kilometres far from Milan. The number of runways is another fact that influences the development of airports. Busy airports have more than four runways to keep the traffic at its regular rate. The increasing number of passengers makes airport build more runways than they have now.

The working hours is the second concern of airports. As far as most of them are located in large cities, they can work only during the business hours. However, cargo airplanes fly at night. There are cargo airports that operate twenty-four hours every day, and they are built far from cities. The last aspect refers to the existence of proper warehouses where cargo can be protected and stored (David & Steward, 2010).

The danger of terrorists’ attacks also influences the future of airport development. The events on 9 September in 2001 unsettled the airports’ assuredness of their protection systems. The authorities of all airports focused on the improving of the security. Currently, the statistics show the decline in terrorist-driven air traffic.

Modern airports employ systems of baggage and passengers screening to avoid the possibility of the acts of terror. Thus, before going to the airplane, passengers have to pass the individual screening. One has no right to take into the airplane particular items as well. Airports also work on the advancing of the baggage-screening systems (Travel Tips n.d.).

The globalization promotes the growing number of passengers and cargo flights. Because of these changes, airports have to find ways of expanding their capacity and improving working facilities.

The number and length of runways, business hours, and warehousing represent the most urgent problems concerning airports’ adequacy for passenger and freight needs. Some passengers find screening processes to be rather frustrating and stressful. Airport security systems are steadily improving. In my opinion, the future airports will modify security systems in such a way that makes them more efficient for security check and less stressful for passengers.

One may conclude that there is no need to build new airports, especially in large cities where airport infrastructure is well developed. There is a need to expand the existing airports to enhance their adequacy to meet the passengers and freight needs.

References

David, P., & Steward, R. (2010) International Logistics. Mason, USA: Thomson. Travel Tips. (n.d.).