Wednesday, December 2, 2009

Transportation Systems: Centralize or Decentralize?

I have commented from time to time on these pages about transportation.  Most recently, my musings have been about the well-understood insight that speed collapses distance. It also increases our sensitivity to time.  We have the railroads to thank for the first modern example of this phenomenon.  The network of rails which crisscrossed the country in the middle of the nineteenth century united the country in a way that would have been impossible just a few years earlier. With the increased speed of transportation, the whole trajectory of the country's development shifted westward and took on an east-west orientation as opposed to the north-south orientation that had dominated the earliest days of independence.

What I hadn't fully appreciated was how the railroads tended to be a centralizing force in the development of the United States.  The huge capital investments and the need to maximize the amount of freight carried on every train led to some cities growing to dominance as the railroad lines coalesced on regional hubs.  Chicago is probably the best example of a city that grew from virtually nothing to a metropolis due to this centralizing effect.  Farmers wanting to get their crops to market needed railroads.  The railroads that fanned out west of Chicago provided just such a transportation network.  The produce (especially grain) from the Western farms was then transported on trunk railroads to the East.  Like Chicago, those cities which had some early advantage in the developing railroad network in a region tended to grow much more rapidly.

Highway transportation networks of the twentieth century had just the opposite effect.  Farmers and manufacturers were no longer governed by the fixed schedule of the railroads.  Trucks could be scheduled to pick up and deliver freight at any time and in any location, even those far removed from the railheads.  As a result, the earlier concentrations of industry began to drift away from the small number of hub cities.  Manufacturers moved their operations to be closer to their sources of supply, or nearer their markets, or to access cheaper labor.  The result has been a rebalancing of the differences between some of the earlier metropolitan leaders and their former junior cities.

Technology creates patterns and just as easily an even newer technology can fundamentally change those patterns.  Over the last twenty to thirty years, we have been living in a different pattern yet again: globalization.  Now the patterns of transport and connections span the globe.  The lure of cheap labor, capital incentives, and the low cost of ocean transport has resulted in industry after industry moving their operations offshore.  And as already mentioned, transportation is again at the heart of some of those influences.  This time, the transportation revolution has been in container ships which have dramatically lowered the cost of shipping manufactured goods of all kinds.

What new patterns will emerge next?  Surely, we will continue to see changes.  Perhaps these changes will span decades and hence be less immediately apparent.  But it is impossible to imagine that we are now living in a static world.  If I was trying to predict what the future patterns might be, I would put some of my money on watching innovations in transportation systems.  No matter how much we move into the Knowledge Economy, we still need physical products and they have to arrive where we can purchase them.


Anonymous said...

Mr McPherson,

What solution would propose to expand the capacity of the US railroads ?


Gregg McPherson said...

Thanks for commenting. I guess I would answer differently depending on whether you were asking about freight or passenger service. I think freight handling is still robust and in relatively good shape (despite all the consolidations of the last decades). Warren Buffet must think so as he just bought the BNSF! Passenger service is another story. This might be a great moment to upgrade tracks and equipments between major cities using government stimulus funding. Passenger trains can't compete unless they can attract riders. Most European countries have some sort of government subsidy or ownership so that passenger trains remain a viable travel alternative.