Transport Division Transport Services in the 21st Century Seamless Market or Choiceless Churning?

i. Growing efficiency and falling costs of passenger and freight transport services have been major factors underlying the increasing globalization of the world economy and the widespread welfare gains it has yielded. Accommodating new technologies, new markets and new organizational structures has required major changes within the sector. Some transport modes in some countries have maintained a steady process of adjustment, generating new opportunities for the manufacturers, traders and consumers they serve, and minimizing disruption for their own employees. In other cases, political and social forces have so bottlenecked change that when it could no longer be postponed, it took more cataclysmic form, imposing much greater human hardship. ii. To help them respond to the pressures they face from globalization, the transport sector's customers are now demanding creation of a Seamless Transport Market, in which national and modal boundaries neither delay movements nor hinder the choice of the most appropriate route/mode combination for the movement required. Meeting this challenge will occupy most if not all of the 21st century, but great progress can be made on it in the first third if the industry will take the lead in responding to the opportunities offered by globalization, the new information technologies and the need for fuller coverage of its costs by users. iii. Liberalization of national transport markets, to permit easy entry and exit, and open competition on the basis of costs that reflect externalities as well as market values, is partially underway in many countries. It has yielded good initial results, and needs to be deepened and extended. The most difficult issues are: activating exit (whether by internal reform or bankruptcy/restructuring) for large state-owned transport companies; maintaining competition in face of enterprises' naturally oligopolistic aspirations; and incorporation of externalities— such as costs of accidents, pollution and congestion— in transport prices. But recent years have seen root-and-branch reform of some dinosaurs, and reinforcement of competition authorities' supervision of trends in the transport services sectors. As regards externalities, considerable work is underway to measure them more accurately, and new electronic techniques open opportunities for much more precise pricing of transport services than was previously possible. iv. A major thrust of the coming generation will be the extension of open markets for transport services to the regional and international level. Pathbreaking achievements of the 1990s have been the grant of cabotage rights throughout the European Union to air transport and road freight operators previously largely limited to carriage of their own countries' trade, and the effective unification of the Australian and New Zealand air transport markets. Good results from the operation of these new regimes should lead on to widening those regional markets, and application of similar approaches in other regions and also at the wider international level (possibly first in air freight). v. Development of the Seamless Transport Market will also be assisted and supported by deepening, and wider spread, of the integrated "logistics" approach to management of movements and inventories that has had so much impact in Japan and the USA. It puts a premium on reliability, flexibility, and full information provision for transport services, in iv Abstract Transport Services in the 21 Century: Seamless Markets or Choiceless Churning addition to cost-competitiveness. It is helping to generate sharply increasing activity to reduce border-crossing delays and to overcome the multiple obstacles, often above all connected with lack of allowed competition and innovation, that have restricted the growth of multimodal transport. Resolution of these problems offers large potential economies in most of the transition and developing countries. vi. Growing inclusion of hundreds of millions of people in the world economy through electronic communications will increase pressures for reduction of their physical isolation. While transport services to them will not achieve the degree of seamlessness possible on developing countries' major routes, much can and must be done to improve their physical access: improved law and order, better maintenance of basic infrastructure, and promotion of competition in service provision. In countries with strong social services and information systems, the transport disadvantaged can be assisted with specific subsidies. In other countries subsidies cannot be so well targeted, but their burden on public revenues can be minimized by tendering the provision of relevant public transport services on a competitive basis, structuring the subsidy as an incentive to performance, and installing effective complaint resolution procedures. vii. The sea-change that has been underway almost throughout the world from direct governmental management of transport infrastructure to regulation and supervision of private-sector fulfillment of these responsibilities will go on spreading and deepening. Governments will continue, however, to carry main responsibility for most road networks and many multimodal facilities. Europe shows considerable confidence that privatization, use of public-private partnerships and application of increased revenues from transport users will put transport as a whole on a self-financing basis, imposing little or no net budgetary burden. To maintain infrastructures adequate to secure best results from service liberalization and competition, the developing and transition economies face much greater financial difficulties. The most promising approach to solution is to commercialize what cannot be privatized, introducing combined public-private management and increased customer orientation, and steering towards full coverage of expenditures by revenues from users. viii. The pace of change in transport promises to be no less in the coming decades than over the past twenty years, and in many developing and transition economies it should be greater. To stimulate initiative in responding to the opportunities, minimize churning in public decision making, and reduce disruption to the sector' s workers, it is important for countries to promote wide discussion of the likely broad directions of change and how they could best be applied in local circumstances. When major labor adjustment comes into prospect, extensive management-labor interaction should be promoted from the earliest opportunity. Transport Services in the 21 Century: Seamless Market or Choiceless Churning? 1 TRANSPORT SERVICES IN THE 21 CENTURY: SEAMLESS MARKET OR CHOICELESS CHURNING ?