Transporting people and goods has become one of the biggest and most complex businesses in the world. It also has become a proving ground for the most powerful business trends of the past 20 years – including deregulation, privatization and global consolidation. As their investors grow more restive and their customers push to better integrate global supply chains, the world’s transport and delivery companies are coming under increasing pressure to perform. In addition, the economic future of the entire industry is complicated by issues of national pride and homeland security.

Each segment of the industry – including air, truck and rail operators, post and parcel express services, logistics and shipping companies, travel and tour providers, airports, ports and urban transit authorities – faces particular challenges. But a few business imperatives – e.g. achieving scales, defining the scope of the business, and managing increasingly complex networks and partnerships – will likely determine success across the industry.

The current woes of commercial airlines are well known – the industry has endured terrorist attacks, SARS epidemic and a global recession. What’s less recognized is that the business model for most major airlines has shifted, too. Traditionally, industry executives focused on managing the economic cycle – making enough money in good times to carry them through the next downturn. Today, the challenge is different: how to compete in a time when turbulence is a permanent part of the environment.

The special demands on logistics faced by the biggest sectors of the industry – airlines, railroads, and post and parcel services – are forcing them to develop more innovative service offerings and a more disciplined approach to operations. Some companies in these and other sectors are radically redefining the business model. In the last 10 years, for instance, some companies have moved into the fast growing, R10 billion businesses of third party logistics, providing ware housing, distribution, transportation and other supply chain services to shippers in a variety of industries.

Transport and logistics companies are unlike most the businesses they serve. They cannot produce inventory: they have to excel at managing pricing, capacity and network economics. Service providers must be able to sell essentially the same product - an airline seat or shipping slot – to different customers at different price points, depending on the market and the needs of each customer. Operational excellence is key, but so is pricing and service differentiation.