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Productivity Growth In Transportation
- From 1990 to 2000, labor productivity rose in
all transportation modes, but only exceeded the productivity growth rate
for the overall economy in three – railroads, local trucking, and
pipelines.
- From 1990 to 1999, rail transportation
experienced a substantially higher growth of multifactor productivity than
did the private business sector.
- Increases in multifactor productivity in rail
transportation have been affected by improvements in capital inputs (e.g.,
equipment investments) and changes in the organization of service delivery.
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In the 1990s, labor productivity growth in railroads, local trucking, and
pipelines surpassed labor productivity gains in the overall
economy. Meanwhile multifactor productivity (see Box A) gains
for rail, spurred by improvements in capital inputs and
the organization of service delivery, far outstripped those in the
private business sector.
Labor Productivity1
In recent years, several transportation modes
had considerably higher labor productivity increases than the U.S.
business sector. According to the data shown
in Figure 1, labor
productivity of the U.S. business sector (measured in real output
per employee) increased from 1990 to 2000 at an annual rate of
2.1%. By comparison, labor productivity in local trucking grew by
5.2% per year while railroad transportation grew by 5.1%. In
petroleum pipelines, labor productivity increased by 3.3% per
annum.
On the other hand, labor productivity in air
transportation increased by 1.8% per annum; in “trucking
except local” it grew by 1.7% per annum; and for bus carriers
it increased by 1.5% per annum.
The basic factors that affect labor
productivity in the transportation industries, as well as in
others, are increased use of capital in
production—which increases the amount of capital (i.e.,
equipment) per worker—and technical progress.
“Technical progress” is a general term that includes
improvements in the organization of the production process, in the
quality of the inputs, and in the information technology used in
production.
These two basic factors—increased capital
in production and technical progress—are responsible for
labor productivity increases in rail transportation. Higher output
(in ton-miles) has resulted from more frequent and heavier loads
moving longer distances. Labor input is down because of crew
downsizing and because mergers have allowed a decrease in
interchanges between railroads, which means fewer employees are
needed. An index on “employee hours” for railroad shows
a steady decline from 1990 to 2000 (from 91.0 to
71.6).2 Moreover,
other data show significant decreases in employment in
“railroad brake, signal, and switch operators” from
1990 to 2000.3
Increases in labor productivity of “local
trucking without storage” were positively affected by the
increasing use of computer technology (hardware and software)
– such as optimal routing and load matching.4
Increases in labor productivity for petroleum
pipelines likely resulted from increasing pipeline sizes and the length of the
haul.5 These factors affect economies of scale (as
output increases faster than inputs, cost per unit of output
drops).
The relatively slow growth of labor
productivity in air transportation was likely affected by
diminishing returns from factors that in the past positively
influenced air transportation labor productivity, such as the
introduction of larger and faster aircraft, computerized passenger
reservation systems, and the hub-and-spoke flight network.
Multifactor Productivity
The only data presently available on
multifactor productivity, from BLS under the SIC system, for the
transportation sector relate to rail transportation. These data
indicate that from 1990 to 1999 rail transportation experienced a
substantially higher growth of multifactor productivity than did
the private business sector (see Figure 2). Multifactor
productivity in rail transportation increased at an annual
average growth rate of 3.0%, while the private business sector
increased at an annual rate of 0.9%. Thus, the rail industry has
contributed positively and substantially to increases in
multifactor productivity in the private business sector and, hence,
to the U.S. economy over this period.
Technical Progress Spurs Growth in Rail
Transportation
Increases in rail transportation multifactor
productivity can be traced to technical progress, such as improved
capital inputs and technological changes in the form of improved
methods of service delivery. Improved technology for locomotives,
freight cars, and track and structures have increased reliability
and reduced maintenance needs. Reduced maintenance translates into
less downtime for equipment and, consequently, increased output and
productivity. Moreover, information technology, through computers,
improved operational efficiency. Industry restructuring, including
mergers, permitted a more efficient use of labor and rail traffic
moving over longer distances without interruptions. The
consolidation of railroad companies has likely resulted in more
efficient use of equipment and lines.6
Freight railroads also are making more
efficient use of fuel. This is a form of productivity increase and
can result in higher output with a given amount of fuel and, thus,
lower transportation costs. To make their operations more
fuel-efficient, railroads have been moving longer distances between
interchanges, buying more fuel-efficient locomotives, using
innovative equipment (e.g., aluminum freight cars and lightweight
double-stack container cars), and reducing locomotive idling time.
Data show that the number of “Btu per ton-mile” for
Class I freight railroads decreased from 420 Btu in 1990 to 352 Btu
in 2000.7
Currently, work is being carried out at the
Bureau of Transportation Statistics to estimate multifactor
productivity for several additional transportation
industries/subsectors. This includes the development of data on
publicly owned capital stock for airports, waterways, and transit.
The results of estimating multifactor
productivity for transportation subsectors should clarify the
extent to which increases in transportation outputs have occurred
because of changes or increases in inputs (labor, capital,
intermediate inputs) or because of increases in the productivity of
those inputs (e.g., due to changes in the organization of the
industry or improvements in the inputs). Also, this research should
provide information on the relative importance of transportation in
increasing multifactor productivity in the U.S. economy, and thus
estimate an important contribution of transportation to economic
growth.
For More Information:
Anthony Apostolides, Economist
U.S. Department of Transportation
Bureau of Transportation Statistics
Office of Advanced Studies
400 7th Street SW, Suite 3430
Washington, DC 20590
Phone: 202-366-4394
Fax: 202-493-0568
Anthony.Apostolides@bts.gov
1 Labor
productivity is measured by the Bureau of Labor Statistics (BLS) as
output per employee-hour, for industries under the Standard
Industrial Classification (SIC) system. That output is gauged by
quality-adjusted ton-miles and passenger-miles for rail and air
transportation; by quality-adjusted ton-miles for trucking and
pipelines; and by passenger-miles for buses.
“Quality-adjusted” refers to differences in service and
handling—for example, the difference between flying first
class and coach or the differences in the handling requirements of
fragile versus durable commodities. A “ton-mile” is the
movement of 1 ton the distance of 1 mile. Ton-miles are calculated by
multiplying the weight in
tons of each shipment transported by the miles hauled.
“Passenger-miles” are the number of passengers carried
in a vehicle or aircraft multiplied by the number of miles
traveled. BLS data on labor productivity are not presently
available for water transportation.
2 BLS
website, Office of Productivity and Technology,
http://www.bls.gov/lpc/.
3
BTS, National Transportation Statistics, 2002, p. 232.
4
Personal communication with the American Trucking Associations.
5 Association of
Oil Pipelines/AOPL, Pipeline Monthly, Vol. I, No. 7, Dec. 18, 2001.
6 “Railroads,” U.S. Industry and Trade
Outlook 2000, U.S. Department of Commerce,
and The McGraw-Hill Companies, Inc.
7 U.S. Department
of Energy, Transportation Energy Data Book, Edition 22, Oak Ridge
National Laboratory, September
2002, Table 2.15, p. 2-20.
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