Manufacturers, retailers, and other users of transportation have grown accustomed to thinking of their supply chains (networks of manufacturers, wholesalers, distributors, and retailers, which turn raw materials into finished goods and services and deliver them to consumers) as important sources of competitive advantage. Supply chains increasingly are treated as integrated entities, and closer relationships between the organizations throughout the chain can produce competitive advantage, reduce costs, and help attract and maintain a loyal customer base.
Companies manage their supply chains to achieve strategic advantage, which often requires detailed models of the movements of goods and the flow of information between the organization and its suppliers and customers. The process of supply chain management is often called “logistics.”
Today’s supply chains are increasingly multinational, as companies seek the least costly suppliers consistent with efficient production. This shift has driven a remarkable rise in international trade. Merchandise trade worldwide has doubled in the past decade (Figure 1-2). The United States accounts for nearly one-fifth of the world market by value and a corresponding share of the demand for transportation. The Federal Highway Administration of the U.S. Department of Transportation (DOT) forecasts a further doubling by 2020 (FHWA 2002). This growth will offer economic opportunity but will strain the capacity of the nation’s ports, other intermodal freight terminals, and highways.