Strategy Evaluation in the Transportation Services Sector
Strategy Evaluation in the Transportation Services Sector
Improvement in technology
In the transportation service sector, the improvement in technology has increased the productivity within the industry by reducing order picking, and delivery times of good and services provided. Additionally, with the improvements in technology, such as bar coding, radio frequency identification tags (RFID), and route optimization software can allow for better tracking of trucks, shipped goods, and the transportation of people (University of Phoenix, 2014).
Low employee turnover rates
Overall, in the transportation services sector the employee turnover rate is low because of the industry’s use of benefits packages and the fact that most employees belong to organized unions. However, in individual segments of the transportation industry, such as trucking and warehousing, turnover rates are higher than the rest of the transportation service sector. The reason is due to an aging workforce and recruiting practices (University of Phoenix, 2014).
Industry is trending upwards
The transportation service sector is trending upward and is rebounding. It is being led by the for-hire trucking industry, which include services provided through the use trucks, railroads, ships (both inland and ocean going), And airplanes. The transportation service sector has increased 27 percent over the last five years. Additionally, air cargo traffic is projected to double by 2033, and the expected international trade volume will rise 3.1 percent in 2014 and 4 percent in 2015 (University of Phoenix, 2014).
People and goods are transported by this industry
The transportation service sector includes companies that deliver rail, truck, water, and air transportation; transit and ground commuter, postal delivery, courier, pipeline, messenger services, storage and warehousing facilities. The volume of passengers and goods that are transported are ever increasing providing a long-term viability and sustainability of the transportation industry.
Long term relation with suppliers and customers
Once, a provider within the transportation service sector has proven their ability and created and established a value to suppliers and customers; a long-term relationship is possible.A long term relationship is possible providing that the established capacity and value remain constant for both parties involved in a transaction.
Capacity restraints can reduce profitability. When providers from the transportation sector are unable to move people or goods because of capacity constraints the possibility of voided freight contracts, and bad customer service reviews exist. A company that does not look forward and see the capacity requirements of their particular division in the transportation industry can lead to loss of potential growth; thereby decreasing their profits (University of Phoenix, 2014).
Extensive governmental regulation
Transportation service sector businesses are subordinate to many laws and directives dealing with matters extending from safety and labor procedures to ecological policies and restrictions in trade. Such as, the governmental agencies that regulate the airline industry, which is administered by the Federal Aviation Administration (FAA), the Department of Transportation (DOT), and the Transportation Security Administration (TSA), among others governmental agencies. Combined industries such as deep sea shipping and railroads also draw concentrated examination concerning practices of pricing services and goods(University of Phoenix, 2014).
Union influence of workers within the industry
Unions have a substantial voice in labor issues, including wages and benefits levels, in many transportation service sector companies. Many of the segments within the transportation industry are labor- intensive. However, weak union negotiations can lead to strikes by union employees that can harshly impact a company’s undertakings and cash flow (University of Phoenix, 2014).
Growth in local and regional markets
The current growth in population has brought about an increase in city growth. The growth in the towns is opening the demand for more transportation needs for passengers and products in local and regional area that have been lacking transportation and warehousing services due to the lack of population.
Growth in international markets
The demand for transportation and warehousing is being driven by an increase in international trade as new markets are opening up such as China, Asia, South America and the Middle East. These new market currently do not have enough equipment or building space to handle the increase in international trade that provided for a substantial growth in companies in the transportation service sector internationally.
Growth in specialize transportation
As new international market begin to open, there is a growing need for more specialized transportation such as transit of a new workforce in other countries. Furthermore, jobs in the warehousing and transportation industry are opening up; hence the need for passenger transport and the need for more transportation of useful goods.
Improved online technology
As the technology is improved in other areas of the transportation sector, the innovation of online technology has also improved. Therefore, providing for more E- commerce growth in foreign countries than can improve the profitability of companies in the transportation industry.
As the transportation service sector grows to provide for an increase in population, so do environmental constraints such as a rise in pollution created by the addition of more vehicles to the industry worldwide. Likewise, as environment concerns increase so do regulation. A transportation company must be innovative in designing new equipment looking not only at a rise in alternative fuel vehicles but other green possibilities.
As new international market open the possibility of new transportation companies opening their doors to business increases. For companies in the transportation industry to be competitive and profitable; they must be open to change and attack these new markets with innovative ideas and an open mind to diversity.
Increased security needs
As international borders begin to open to trade; so the need to increase security of employee’s persona and company’s assets also is present. Additionally, as more business is crossing borders the needs for stricter guidelines are also required. However, with these more stringent guidelines come increase cost of transporting passengers and goods. As one can see from the SWOT analysis, the transportation service sector is full of potential growth possibilities. However, there are risks and threats that must be avoided when addressing the opportunities that exist in the industry.
While the industry is trending upwardly and the strengths outweigh the weaknesses those companies in the industry must strive to be innovative in their approach to the opportunities at hand. One way a company in the transportation industry can address innovation is by embracing diversity. When a business includes diversity, it opens doors to creativity. Moreover, this creativity can lead to new ideas in transportation and warehousing. Being innovative has brought about many new advances in tracking services, goods, and software to promote productivity and profitability in the transportation service sector.
University of Phoenix. (2014). Transportation Services Sector. Retrieved from the University of Phoenix, PHL/320 website.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 22 September 2016
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