Industry Overview: Transportation

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Posted by The Editors on December 3, 2012
Overview

The transportation industry is enormous, encompassing everything from municipal bus, subway, and commuter-train systems that get folks to and from work and school to the container ships that transport goods from port to port all around the globe; from the rail and trucking networks that move those containers across states, countries, and continents to the airliners we use to fly to destinations near and far for work and pleasure, to the express shipping companies "for when it absolutely, positively has to be there overnight."

The industry encompasses all those businesses that move people or goods, by land, sea, or air, from one point to another. This is a big industry, employing millions: In addition to the package deliverer, truck driver, and airline attendant-the ambassadors of the industry-there's a beehive of behind-the-scenes workers bustling to load containers, fuel airplanes, coordinate the logistics of thousands of railroad cars, and chart the best routes for truck drivers to take across America.

Virtually everything that surrounds us-including our clothes-comes from somewhere else. Your computer's components, manufactured in multiple countries, all had to be transported to the computer manufacturer, assembled, and then transported to a store or perhaps your front door. The newspaper you read this morning could not have been produced (think of the trucks delivering logs to the paper mill; think of the paper and ink being delivered to the printing press) or delivered without the transportation industry. And then there's passenger travel-the airlines, trains, boats, and buses that people use every day to get from place to place. Transportation may not be sexy, but it pervades nearly every area of our lives. Without the transportation industry, economies, global and domestic, would disintegrate.

Opportunities in the industry can be classified geographically, as local, regional, national, or international. In many career paths, you'll need to pay your dues in a local job before moving up to a regional transportation outfit, and you'll have to work at a regional one before moving to a national one. And if you go into freight transportation, be aware that this sector has been consolidating, as companies seek to become global players by merging into giant, full-service transportation integrators, combining ships, trains, boats, and rail.

Hard Times for Airlines
The airline industry has taken a series of body blows in recent years. First there was 9/11, which resulted in a year or two of reduced numbers of passengers, as well as new costs associated with beefed-up airline security requirements. Then there's been the increase in fuel prices, punctuated most recently by a spike in prices in the wake of 2005's Hurricane Katrina. And through it all, airliners, like companies in all industries in the U.S., have been faced with higher and higher health care costs for employees. The consequences have included lots of strife between labor and management, as workers fight to keep the benefits they believe they've earned while management struggles to cut costs and make their airlines profitable. Ask any insider, and he or she will tell you: The airline industry has been an ugly mess of late. Indeed, US Airways, UAL (which owns United), Delta, and Northwest all either are currently operating under bankruptcy protection or have done so in recent years.

That's not to say that there haven't been any bright spots in the airline industry in recent years. Low-cost carriers Southwest and JetBlue, which keep costs low by offering only bare-bones services, have far outperformed big airlines with more august histories. Some of the bigger airlines have tried to follow their lead by launching low-cost subsidiaries, but these have typically run into problems as many have tended to cannibalize existing offerings.

Consolidation
As in many industries, many of the big players in transportation have been looking to get bigger in recent years, with an eye on lowering costs through economies of scale, among other things. Indeed, in the recent past, AMR (owner of American Air Lines) has absorbed TWA; US Airways has merged with America West; Deutsche Bahn has acquired Bax Global; Canadian National has merged with British Columbia Rail; DHL has acquired Airborne; Exel has been acquired by Deutsche Post; and AP Møller-Mærsk has acquired Royal P&O Nedlloyd.

"Just-in-Time" Technology
Just-in-time technology allows businesses to avoid inventory costs by procuring goods only when they're needed. Take PC manufacturers like Dell or Gateway, which promise rapid delivery. Rather than gathering all of the parts necessary to make a PC, assembling all those parts, and storing the PC in inventory-tying up money that could be used for other purposes before anyone's actually purchased the PC, and increasing costs due to inventory maintenance-just-in-time technology allows PC manufacturers to order PC components, have the components delivered, have the components assembled into a PC, and ship the PC to the customer in a matter of hours. The freight transportation industry has earned new relevance thanks to its implementation of just-in-time technology.

RFID Technology
Radio frequency identification technology, or RFID, promises to be a transforming technology for supply chain management and the transportation industry. RFID is a system of tags (small chips embedded in products) and readers that decode information. In RFID, a tag is encoded with information about a product. As a reader passes by a tag, it emits a radio signal that stimulates the tag and momentarily powers it, allowing it to send back data. A reader can also update a tag with information. Similar technology is used in E-ZPass and FasTrak cards and readers in toll booths on the East and West Coasts. The potential uses for supply chain management include providing increased information about freight shipments, auditing of shipments through the supply chain by automatically adding data to a card every time it is read, and eventually supplying data to allow transportation and logistics companies to more efficiently map shipping schedules to the inventory needs of the retailers or manufacturers at the end of the supply chain.

There are two sides of the transportation industry: companies that move goods (freight and shipping companies) and companies that move people (passenger transportation companies). The biggest of the shipping companies are the ones that integrate several types of transportation services to offer clients efficient door-to-door service, thanks to just-in-time technology and containers that allow goods to be transferred seamlessly from ships to railroads to trucks. (This is called "intermodal" transport.)

Here's how the two sides of the transportation industry look when broken down by the type of vehicle used:

Plane
The biggest shipping players in this segment-FDX Corporation (FedEx), DHL, and UPS-integrate air transportation with other types of transportation.

On the passenger side, the airline industry has consolidated in the years since it was deregulated in 1978. American Airlines, Continental Airlines, Delta Airlines, Northwest Airlines, and United Airlines earn more than half of U.S. airline revenue. The remainder of this sector comprises regional carriers, which fly people between rural areas and bigger airports, and low-cost carriers, like Southwest and JetBlue, which are faring much better than the big passenger airlines when it comes to the bottom line-and are a big reason for the major carriers' recent financial woes.

Ship
About three quarters of all maritime shipping is transoceanic, including tankers that mostly carry petroleum. The biggest shipping companies are based outside the United States: Taiwan's Evergreen Marine, Japan's Nippon Yusen Kabushiki Kaisha, and Denmark's AP Møller-Mærsk move enormous numbers of containers. Although the federal government is revitalizing U.S. performance in this segment through the use of advanced technology, job opportunities are generally better at the foreign companies.

Passenger transportation, which accounts for less than 5 percent of total water transportation revenue, includes ferries and cruise liners. Carnival is easily the biggest cruise company in the world. The ferry business is not as consolidated as the cruise business, with most companies owned regionally. Both businesses are predicted to grow slowly in coming years.

Truck and Bus
The trucking industry carries 80 percent of all consumer goods. The biggest players in this segment are integrated-transportation parcel-delivery companies such as United Parcel Services (UPS), FDX Corporation, and DHL. The sector includes trucking companies like Schneider National and Yellow Roadway Corporation, as well as truck rental companies like Amerco (best known for its U-Haul trucks).

On the passenger side, the biggest bus company in the United States is Greyhound, which also offers express package delivery.

Rail
Freight trains mainly carry coal, grain, and lumber. After a period of intense consolidation in this segment, the four leading companies are Burlington Northern Santa Fe, CSX, Norfolk Southern, and Union Pacific.

Passenger rail transportation in the United States is dominated by the federally funded Amtrak, which makes stops in 45 states. Amtrak has long been a financial black hole, and is in danger of losing funding and ceasing to exist.

Logistics
At the most basic level, the logistics sector of the transportation industry makes sure the trains run on time. Logistics professionals make sure people and freight get from place to place when they're supposed to-and that they don't hold up the next leg of the trip that's waiting on their arrival (e.g. that airline passengers changing planes at airline hubs arrive on time to catch their connecting flights, or that the ocean freight shipment arrives in port in time to be transferred to the railway that's going to move it across the country before the train is scheduled to depart). Most big transportation companies have significant logistics departments to oversee these matters, but there are a number of sizeable companies that don't own the ships and trucks and other means of transportation, but rather just handle the logistics details for the companies that do.

Examples of these kinds of companies include C.H. Robinson Worldwide and Expeditors International of Washington. Other companies that contract to handle logistics for transportation companies include Kuehne & Nagel International, Schneider Logistics, and DHL Worldwide. Other players in this sector also include warehousing companies, such as Preferred Freezer Services, which provide warehousing services for transportation companies.

This is an industry that employs some 10 million people in the United States. If you want to hop aboard, however, you'll want to keep some things in mind.

Be aware that for many positions, you'll need to join a union-and in recent years, strikes and other labor disputes have been a part of life in the industry (just ask UPS, Northwest, American Airlines, and workers and management at U.S. ports). Old-line airlines, in particular, have been putting downward pressure on jobs as they try to fend off or emerge from bankruptcy.

Job seekers interested in having direct contact with cargo and vehicles should think about taking jobs in operations, which are often set outdoors and can involve loud noise and physically strenuous work-for example, loading or unloading boats or trains.

Logistics, which involves planning and managing efficient transportation for everything from individual shipments (such as a book from your favorite e-commerce site) to entire fleets of trucks or planes (think: planning when and where the planes in FedEx's fleet will take off and land), has been growing in recent years as information technology advances have swept the industry. Today, it's possible to track shipments by satellite and thus improve the efficiency of the transportation and shipment process, and ongoing advances in technology should make this an area of strong job growth.

In the air transport sector, the globalization of business and the fact that waves of Baby Boomers are starting to retire from the workforce (many with healthy retirement accounts) both point to growth in the future, even if consumer airlines are struggling currently in response to terrorist threats. Opportunities should be plentiful for flight attendants and aircraft and avionics technicians. Jobs for pilots, on the other hand, are expected to be difficult to get in coming years.

Overall, there should be weak growth in coming years in opportunities for travel agents ( online ticket purchases are here to stay), but solid-to-excellent growth for air traffic controllers, ticket and reservation agents, and the likes, as well as for people in rail, trucking, and water transportation. And right now's a good time to get a job in the industry, as transportation companies are emerging from the bottom of a business cycle, along with the rest of the economy, and beginning to hire new workers.

On a macro level, the U.S. Bureau of Labor Statistics expects the number of jobs in the air transportation sector to grow at a slower rate than the rate of overall job growth between 2004 and 2014, while it projects that the number of jobs in the truck transportation and warehousing sector will grow at about the same rate as jobs overall during that time.

Smells like Team Spirit
As in many other industries, the network of coworkers you develop in transportation will not only be important for your success, it'll be what makes the work fun. But transportation differs from some other industries in that there's very little snobbishness among the people in it. An insider says, "We help each other, wherever we are. This makes work easier and more enjoyable."

The Power of Technology
Technology has changed the face of the transportation industry. If you're in logistics, for instance, expect to work with 3-D graphics or special software to help you arrange the placement of billions of tons of freight onboard a ship, or plan global shipping routes, or monitor shipments by satellite. An insider describes the innovative technology as "awesome," adding, "There are so many cutting-edge tools being developed every day to enhance tracking performance that it's a great challenge to be working with them."

Join the Industry, See the World
As you might expect, opportunities to see the world abound in this industry. If you steer the plane, train, or ship, or if you assist on board, you'll definitely get to see new places. As an added bonus, family members can come with you or do their own traveling-for free.

The Hours
This is a 24/7 industry; as a result, the work can be unusually strenuous. People at the corporate level talk of 12-hour days that keep them in the office until late at night, while people in operations highlight the stress of working night shifts. "I hate the hours," says one insider who otherwise likes his job. If you like to keep vampire's hours, this industry might be the perfect place for you; if you find yourself nodding off at 10:00 every night, it most likely isn't.

Tons of Pressure
Managing huge operations, solving problems on short notice, multitasking-this typical transportation industry job description may appeal to some, but sound like a nightmare to others. Deadlines in transportation come fast and are inflexible, and the pressure to meet them can seem huge-you're dealing with millions of dollars in cargo or cranky passengers who needed to be in Des Moines three hours ago. "There are so many things to do that sometimes I get on the verge of losing my cool," says an insider.

Join the Industry, See a Blur
Although insiders in this industry usually think the travel's great, there are times when they're more likely to hate it. Often, people in the transportation industry are moving around too much and too fast to really see any of the new places they visit. Some find too much travel positively depressing. "I wouldn't want to be on the road all the time anymore," says one insider. "You're away from your family and friends too much of the time."

Opportunities in transportation generally fall into the following six categories:

Sales
Sales representatives work closely with clients that have something to transport. They spend a lot of time visiting clients, developing relationships, quoting prices, and working with their company's pricing department to determine fees for deliveries based on weight, volume, and delivery time. Charisma and confidence are more important in sales positions than a college degree. Salary range: $25,000 to $75,000 or more, depending on commissions.

Documentation
People in these positions work on pricing and rating. Pricing personnel determine the rates clients will pay, which vary based on the weight and volume of freight, transit time, and other factors. The rating department steps in once goods reach their destination; rating department personnel deal with bills of lading-final computation of the price charged to clients. Documentation personnel working with international accounts also deal with customs-related issues. Entry-level documentation positions require a college degree. Salary range: $20,000 to $90,000.

Information Technology
Jobs in IT involve database management, the development and maintenance of warehouse systems, and supply chain management. Many companies outsource the management of their IT systems, so these jobs aren't always technically within the transportation industry. IT work requires a strong background in programming; a degree in computer science is often a requirement. Salary range: $35,000 to $100,000 or more.

Logistics
Logistics personnel manage the movement of people and goods-they make sure the plains and trains arrive and leave on time. At the field level, dispatchers schedule pick-ups and deliveries. In more strategy-intensive positions, logistics people use computer systems to track shipments around the globe or to limit the amount of time products stay in warehouses or distribution centers. Jobs in logistics generally require a college degree or military experience; some positions require an MBA. Salary range: $40,000 to $90,000.

Marketing
People in marketing promote their company to current and potential clients and investors. Most often, marketers cite either the efficiencies their company can bring to shipping processes or their lower prices. An insider stresses the importance of imagination, strategic thinking, and keen perception for people in these jobs. A college degree is required, as is a marketing portfolio. Salary range: $30,000 to $100,000 or more.

Driving and Piloting
People in these positions do everything from driving a UPS truck or an 18-wheeler to piloting a train, boat, or airplane. Truck drivers and bus drivers need a commercial driving license (CDL), which can take a few weeks to obtain, while pilots require a commercial pilot license (CPL), which can take up to three years to get. Train engineers usually start as yard crew, then work for at least ten years before driving a train. Although truck and bus drivers usually work alone, ship captains and plane pilots generally require assistance from at least one other person. Salary range: $20,000 to $120,000 or more.

There are a lot of different people doing a lot of different jobs in transportation, so qualifications for entry-level positions vary. In general, even though training programs exist at all levels, the more advanced positions nearly always require an MBA or prior experience in the field. Many insiders say that sales is the quickest way into transportation-once you're in the industry, it's possible to jump from one career track to another. Whatever job you're looking for, expect to start in the field-at the local level-and keep the following in mind:

  • Research the company you're applying to and its competitors. It will impress an interviewer if you demonstrate knowledge about the company and how it's different from others.
  • If you want a job in marketing, learn how the company presents itself to its clients and what strengths it emphasizes by studying its marketing collateral, then prepare a portfolio that shows how you would sell the company's strengths to potential clients and investors.
  • Understand the basic measurements used in logistics, and have a good grasp of geography.
  • Timeliness is something people in the industry strive for, so be punctual for your interview.