Case for Smarter Transportation Cost and Risk Impact, Essay Example

Smart Transportation

The advent of globalization and the population growth with rampant organization has brought on the age of smarter transportation.  The consensus opinion that the United States will flourish and move forward with the building and delivery of smarter technology and transportation. (IBM,2015). The perception of smart transportation discussed by Samuel Palmisano (2010) on page 8 stated that the United States faces a plethora of technology and transportation challenges in building smarter transportation systems. Palmisano is confident the United States will rise to the challenge. The optimism of Palmisano is refreshing however, the cost and risk must be a consideration in this process. The improving mobility in the 21^st century is exciting and project to exceed any civilization in the area of advance technology in transportation. However, we must have consider the cost and risk of transportation advances even with the world’s population increasing to 11 billion and the entire globe becoming interconnected(Palmisano,2010). Air Canada is a great example of smarter technology which has developed smart phone applications that allow travelers to check in using the mobile application. The mobile application has increase mobile check-ins by 60% and the customers are saving 80% of their cost(IBM,2015). There is no doubt that smarter transportation and its advantages are here to stay in the United States however, the cost and risk must be considered in any of the modes of transportation.

The smart transportation is urged forward because the demand for smart cities that have grown with fast advancing technology. To keep up with the smart transportation needs the technology industry must work with the needs of advance travel needs into the future. The question must be asked about the readiness of smart transportations along with the potential risk and cost associated with this growth. The development of traditional transportations systems is crucial for the population growth that will demand an increase in availability of all types of transportation modes.  The article by Palmisano (2010) addresses the future of smart transportation and how our infrastructures are growing by leaps and bounds preparing to work with the revolutionary smart transportation explosion. The smart transportation has been explained by Palmisano in the best light because all the future technology is based on the infrastructure growing exponentially.  In addition, Palmisano points out how the advent of mobile technology and cell phones that society has become dependent demands smart transportation.  The risk associated with smart transportation is has come to the forefront because the growth and demand has almost exceeded and grown as fast as the smart transportation technology. Once again, the unforeseen risk must be considered before making a large investment of any kind. It is clear that the transportation risk is not always able to predict however, there should be some type of contingency plan in case the smart technology unknown risk.

Cost

The cost of transportation is complex formula that must be addressed based on the types of travel systems such as vehicles, ships, planes which move product and goods. The pathways transportation cost which are roads, rail lines and shipping. The terminals cost which are train stations, airports and seaports. The transportation mode must calculate the customer profitability analysis to understand the cost to serve. The cost to service is all the cost associated with the operating transportation cost involved with bring the transportation to the customer. The best example is the revenue from the rail is 20 million per year from customers but the overall operating cost and labor is 30 million each year. This means the transportation logistic teams has to find ways to even out the cost so the transportation mode makes enough profit to operation in the green.

The formula that can be used concerning the cost is Return on Investment(ROI) for profit divided by capital employee and the expanded cost ROI profit divided by sales divided by capital employees(Pearson,2015).  This is cost simplified but is a more complex in nature but this is a baseline to look at the cost and risk snapshot. The consideration of smarter transportation means new advance technology that will naturally incur high cost with trained engineers, certification of specialized workers and training on all the new technology associated with smart technology and transportation(Pearson,2015). The cost for airports with smart transportation will grow each year with the technology to prevent attacks and the security of the United States travel.

The cost for train lines that develop new smart technology that require new technology workers to run the trains. Once again, not to simply all the cost that are involved, one must consider other costs such as American spent 18 cents for every dollar on transportation, drivers spent 186 billion on fuel cost and Americans will spend $260 billion on gasoline by 2020 (Smart Growth America,2015).  Smart Growth American (2020) that any consideration of smart transportation must consider the energy cost that have a direct impact on the operational cost of that travel mode. The cost of a growing population cannot be ignored because the cost will surely increase because soon the planet will be approaching 11 billion in five years. This means the future will be filled with more smart transportation because they have to deliver more people around the world.

Risk

The risk associated with smart transportation is relevant because some risk is unforeseen just has the state of New York rail transportation learned the lesson. The transportation risk is not always preventable but nonetheless there should be some type of contingency plan in case of unpredictable risk. The unpredictable risk for the New York rail transportation was the federal government reallocating a large portion of funding to the busing project which may cause delays, lay-offs and project New York rails transportation revenue loses. The federal government decided to amend 80 highway and rail amendments that directly impacted the New York rail facing over 95 million in federal rail funding(Tumuffy,2015). The known risk is the world becoming reliant on data, disk and thousands of technological advances that cost to repair, cost to repair and cost to maintain the technology staffing to operation the smart technology. The technology risk is real because today in the United States we have over 3 million technology positions unfilled. The smart transportation industry must take into consideration that over time will the United States will be able to training enough qualified technical smart transportation workers(Forbes,2015). There is great potential in smarter transportation in the United States that is growing everyday adapting to the new technology demands of the digital age, however, the risk concerning new and advance smart transportation should be examine closely before endeavoring in long term transportation projects that cost will be too expensive to maintain.

The risk is great concerning smart transportation which can be quantified because past lessons have taught us that the risk is always looming around the corner. There are trends that show transportation can become risky and expensive quickly while jeopardizing entire cities, countries and economies. Here are some examples of unexpected risk that can be devastating to smart transportation such as the airline industry that had over 1/3 of their flights delayed in 2008 costing millions in lost revenues(IBM,2015).  The traffic congestion in Europe union it was estimated loss to equal one percent of the Gross Domestic Product(GDP). The cost was unknown until the population reach an increase population point that cost the Europe Union millions. The vessels that travel from port to port did not deliver the goods or freight on time once again costing additional transportation cost. The risk continues to get scary such as the United States drivers wasted billions of hours waiting in congested traffic that is equivalent to 87.2 billion of gasoline lost in congestion. (IBM,2015)  Traditionally, most cities experience risk from congestion because of the traffic transportation which is a known risk to smart technology. However, the risk can be lessen by the application of the smart technology because of the technology advances already driving the market such as cell phones, mobile applications and advancement in technology. The smart technology comes with those risk but it is undeniable that that smart transportation is the way of the future development of urban infrastructures.

 The cost and risk must be considered on the other side of smart transportation system that are not capable of replacing the rail and highways travel including emergency transports. However, the risk associated with smart transportation such as the repair and maintenance cost that could exceed the profits because vendors may bid for the contract. In many situations, the maintenance contracts outlive the contract leaving the state or city to pick up future maintenance cost. The smart transportation can limit some of the risk by applying the smart transportation to airline industry or train transportation. The airline industry can take advantage of the perceive risk of smart transportation by tracking the success of the smart applications that have increase the mobile check-ins. The smart traffic can take out some of the risk for highways departments and maintenance because they help run the traffic with efficiency without losing revenue to traffic jams and congestion. The reason why smart transportation will work because transit can take advantage of smart growth and transportation advances. The smart growth transportation system can contribute improving all modes of transportation. The bottom line there are risk and cost to be considered in the bright future of the smart transportation but the industry must be aware of the potential problems that may bankruptcy a city of state transportation budgets. There is no doubt that the states will be more careful in the future looking at expensive smart transportation projects because there is enough data to show the risk.  The government has enough data as well to make better decisions on which states can afford and maintain the smart transportation projects of the future.

Works Cited

IBM.The case for smarter transportation. Retrieve from http://www.ibm.com/innovation/my/exhibit/documents/pdf/2_The_Case_For_Smarter_Transportation.pdf

Palmisano, S. (2015). A smart transportation system: Improving mobility for the 21^st Century.

Samuel J. Palmisano, Intelligent Transportation Society of America, 2010

Pearson, (2015). Measuring logistics costs and performance. http://www.pearsoned.com/news/pearson-and-smart-technologies-develop-innovative-interactive-whiteboard-program-for-the-inquiry-based-classroom/

Tumuffy, B. (2015, Nov). New York would lose $95 million for transit under House bill. Retrieved from http://www.lohud.com/story/news/2015/11/09/ny-would-lose-95-million-transit-under-house-bill/75461920/