by Elliott Morss
- Where can you fly for 18 hours without the sun setting;
- Where can you fly for 18 hours starting in daylight, then dark, and land in daylight?
Hint: You can do both on the same route. Answer later.
As a development economist, I have spent most of my life in planes going to or returning from assignments. I have often sat next to people who know far more about global travel than I. Take cargo. I learned the following from 747 cargo pilot: Cargo planes going from the US to Asia always stop in Alaska to refuel. Why? 747s can get to Asia without refueling. But fuel is heavy: the less fuel, the more cargo planes can carry. Piloting cargo planes sounded quite boring: auto-pilot is almost always on. Pilots only land planes to practice; in bad weather, auto-pilot software is always used.
Thoughts on cargo economics follow.
Global Cargo Economics – What Do We Know?
Let’s start with a broad brush:
- The global economic downturn that began in the latter half of 2008 produced the worst decline in freight transport in 80 years.
- Most cargo crosses oceans in ships or planes. A small amount of high value cargo goes in planes.
- Over land, cargo is transported by railroads, trucks and lakes/canals/rivers.
How much is carried by each cargo vehicle? Table 1 provides data on metric tons loaded. Trucks lead all other vehicles with very little loaded on planes.
While cargo loaded is one commonly-used freight term, another is ton kilometers. This latter measure takes account of distance moved as well as weight.
Data using this measure is presented in Table 2. I could not find distance shipped data for shipping, so I assumed an average shipping distance of 2,000 kilometers. Using this assumption, shipping was the leader. I could not find global trucking data, but I believe it would be close to railroad cargo. International air shipments are less than freight carried on inland waterways.
What is actually carried in ships? UNCTAD categorizes shipments as crude oil, five major bulks (iron ore, coal, grain, bauxite and alumina and phosphate) other dry and container. Shipments using these categories are presented in Table 3. It is notable that raw materials (oil and raw materials are more important than “value added” products. Many of the raw materials shipments went to Asia.
And speaking of Asia, take a look at Table 4 – amazing! Most of the shipments to developing nations went to Asia and Asia received more non-oil shipments than the developed nations combined!
The American Association of Port Authorities reports that seven of the ten largest ports in world measured by cargo weight are in China. Two others are in Asia (Singapore and South Korea). Rotterdam was the only other port to make the top ten.
Container ship sizes continue to grow. The latest ones can carry the equivalent of 4,000 20-foot containers.
The economics of air cargo are interesting. Cargo payloads in general generate about half the revenues generated by passenger payloads of equal weight. And because acquisition costs relative to expected revenues fall as plane size grows, there are far more purchases of large planes designed initially to carry freight than smaller planes. In fact, Boeing estimates that nearly all the new standard body freighters (737, 757, A320) will by conversions from passenger planes. In contrast, only one third of the wide body freighters (747, 777, 767 and A330) will be conversions.
A personal aside – the 747 has always been my favorite plane. When I was flying regularly to Hong Kong a few years back, United adapted a 747 to carry more freight. The adaptation – the 747SL, had only 100 passenger seats. It was very cozy for such a large plane. The 747 freighter is interesting. While it is the largest freighter in service, it represents only 18% of the freighter fleet. But its size, high utilization, and high load factors allow it to provide more than half of the world’s total freighter capacity.
China continues to amaze: it will develop 45 new airports by the end of 2010. Another 52 new airports will be developed by 2020, bringing the total to 244. This will require a total investment of $67.1 billion. Of the 97 total new airports, 50 will be developed in the northern and northwest regions, including the second Beijing airport.
It is interesting – we think of the high speed rail passenger rail systems of Europe and Japan.
Table 5 provides data on the importance of railroads in the cargo systems of large countries and regions. What explains these differences?
Economics explains the differences. An economic rule of thumb is that for trips of 300 miles or less, use trucks. For such distances, it is not worth taking the cargo to the train, loading it on, unloading it at the other end, etc.
Europe and Japan do not have the wide open spaces of the US, Russia, and India. And in Europe, every country (very small regions) developed their own train systems. The thinking behind the European Union was that it would make these small states into a large whole. It has not happened yet.
China is in the middle. And again, it is interesting. China’s new high-speed rail network, covering 13,000 km, is scheduled to be completed by 2012. Forty-two lines overall with eight trunk lines—four north to south and four east to west—will serve most major cities in China’s east, west, and central regions. The high-speed train will run at 350 km/h on 8,000 km of network track and at 250 km/h on the remaining track. Why this rush to high speed trains? To make the older rail system available for more cargo transport.
A couple of rules of thumb about energy use: Just under 40% of global energy is used to heat, cool, and light buildings. Just under 30% goes to transport. Fuel uses in transport are presented in Table 6.
For reasons explained in an earlier article, the dependency on oil for transport will not end soon.
Answer to the opening question: Fly Chicago to any address in Asia. You fly over North Pole. In summer, the sun never sets. In winter, it never comes up so you fly in and out of darkness.
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