Us Freight System Essay

1273 words - 6 pages

General Environment

Each American requires the movement of approximately 40 tons of freight per year across the freight network. This includes everything from shirts to lawn mower to orange juice.

• As the U.S. population expands, the U.S. freight system will be called upon to meet the demands of a larger population
• Between 2010 and 2035, the system will experience a 22 percent increase in the total amount of tonnage it moves
• By 2050, with an estimated 420 million people in the U.S., the increase is projected to be 35 percent
• Essentially, goods can move on the U.S. freight rail network anywhere there is active rail.
• Internationally, the U.S. freight rail network connects with ...view middle of the document...

In these days the League doesn’t have those advocates any more, which has reduced the credibility within its members.

The League most valuable asset is the knowledge and broad experience of its members. Fifteen years ago was easier for NITL members to recognize this value. Nowadays, the technological advances, like internet and video conference has created new knowledge available, faster and cheaper in the web, and video conference has reduced the traveling costs making the consulting services for transportation matters cheaper. These technological variables are a significant threat for NITL that attacks its main strengths.

Industry Environment

“Free Riders” are part of the business. When the Supreme Court decides a case that NITL has analyzed and promoted from the beginning, that decision applies across the land, everyone benefit from it. Bruce J. Carlton

The League members pay a membership due every year, and they expect as a return a benefit, and whenever NITL accomplish goals, its members benefit but all the other shippers benefit as well. This is a threat that open the door for new entrants, or close the door for NITL to continue in the market.

The League lacks of product differentiation, or it is not clear for its current and potential future members. This has brought new entrants to the market. These new entrants focus their strategy in a specific transportation segment, like the American Transportation Association (ATA), that has been the leading advocate for the trucking industry.

Capital requirements is a barrier for new entrants, but this is hitting the League that, without enough members, it is being threatened to go out of the market due to the lack of economic resources to sustain the organization.

The switching cost is another significant threat for the League; it happened a couple years ago, during the last economic recession, where some large NITL members decided to cut this investment or to decide to be members of only one association. If the League members don’t see important results that impact their businesses, it is easy for them to decide to go and pay the same money to a different organization that can supply them with relevant results.

NITL is suffering of competitors’ retaliation. Some organizations and interested transportation parties are pushing to prevent the League to succeed in any regulation discussion.

In analyzing the power of buyers, if NITL doesn’t accomplish expected goals that could produce good economic results for its members, these members become very powerful over the League, and vice versa. The “Free Rider” issue impacts this matter, giving the NITL customers the opportunity to cancel their memberships at any time.

As mentioned, there are organizations focused on specific segments of transportation, and they produce constant results to its members. This is a threat of substitute products or services, which the League needs to overcome by differentiating its services in the market.

The...

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