In a short time, artificial intelligence has evolved from an ambiguous, futuristic buzzword to a crucial element in the technological advancement of nearly every industry. While the transportation sector was generally not among the earliest adopters of AI, it has become clear that embracing this transformative technology is crucial for the growth and long term success of the industry.
AI’s increasing integration is optimizing operations and enhancing efficiency. Companies have leveraged AI to streamline processes, reduce operating costs and lower emissions, particularly in road freight transportation. Its applications range from scanning traffic patterns to reduce accidents to optimizing sailing routes to minimize emissions, reduce time in port and consolidate freight loads.
Despite the significant benefits, AI also presents challenges within the industry. AI-driven innovations, though rapidly progressing, are still in their early stages. Further testing and development is necessary to understand how, when and where these tools can be most effective. The investment required to shift operations platforms and best-practices is significant, and the transportation industry must balance the risks of early adoption and being ‘late to the party.’
Looking ahead, AI's role in transportation and logistics is expected to expand, driven by predictive analytics and autonomous technologies. Machine learning capabilities, enhanced data collection and analysis, and large language models can work in tandem to identify pain points in the supply chain and suggest novel solutions that may assist in remedying those problems.
As AI continues to evolve, business leaders, scholars and regulators will need to balance innovation with practical and ethical considerations, ensuring that AI improves operations without overwhelming budgets and best-practices.
While much of the attention in freight transportation focuses on air, rail and road infrastructure, the country's inland waterways freight transport market is anticipated to have a compound annual growth rate of 6.4% in 2025, outpacing the projected rate for all other modes of transportation in that time. Waterway transport is well suited to move the raw material required for large-scale advanced manufacturing operations and infrastructure projects at a fraction of the cost of alternative methods of delivery.
The technology revolution taking place within other modes of freight transit is less visible, though still present, in waterway transport. A significant portion of the innovation is taking place beyond the vessels themselves, as public and private operations look to accommodate and expand waterway freight offerings by building and integrating port infrastructure into the existing transportation network.
The Kansas City region is strengthening its position as a hub for inland waterway freight shipping by taking steps to prepare for an emerging industry practice: transloading shipping containers from large coastal vessels directly to river barges that can reach inland ports. Buy-in from shipping industry stakeholders and increased infrastructure investment may usher in an inland waterway freight shipping resurgence.
The challenges of the industry are well understood: slow transit times, fluctuating water levels and limited range. But, inland waterway’s primary payload, particularly products from mining and drilling operations in the American heartland, do not require the same speed of delivery as other freight goods. The continued growth of inland waterway freight is predicated largely on restoring perceptions on the viability of water transport in the U.S. market and continued investment in port infrastructure.
The rail industry is currently in a transformative phase, driven by technological advancements, strategic partnerships and shifting cargo demand. As of 2023, the global rail transport market is valued at approximately $468.6 billion and expected to grow significantly by 2025. This growth is fueled by a resurgence in economic activities post-pandemic, the increasing demand for e-commerce and a rise in mining activities. However, the industry also faces challenges such as driver shortages, stringent regulations and aging infrastructure.
Freight rail is well positioned to thrive in an increasingly sustainability-focused environment. The tremendous load capacity of modern locomotives has led to the operation of longer freight trains than any other point in the history of the industry. Increased train length generally results in lower emissions and cost to transport goods, but negatively impacts the speed of delivery and limits the feasibility for smaller operations to rely on freight rail for their day-to-day needs.
The industry has begun to address these challenges by incorporating automation, the Internet of Things and data analytics to enhance operational efficiency, and by strategically partnering with other public and private entities to reduce costs for short line transportation.
A substantial realignment of the global supply chain is also taking place. Near-shoring and reshoring have begun to condense goods movement from a multi-hemisphere operation to a more continental and regional scope. This shift is not likely to substantially decrease rail freight demand, but it has already begun to force operators to establish business relationships and enhance or construct infrastructure in emerging North American manufacturing and distribution markets.
Looking ahead to 2025, long-distance rail transport is expected to emerge as an even stronger player in the global supply chain, while more flexible transportation methods will continue to absorb short line traffic. Strategic collaborations and realignments within the industry are expected to enhance logistical efficiency and streamline operations. Overall, the industry is on a promising growth trajectory, with technological and strategic advancements shaping its future.
Ground freight operations were responsible for moving more than 70% of the United States’ freight by weight in 2023, although the total tonnage transported fell slightly from its 2022 peak. However, the decrease in gross tonnage transported should not be understood as a sign of an industry on the ropes. Instead, it may be an early sign of a significant shift in the role that ground transit plays in the national supply chain.
Often derided as an industry reluctant to embrace operational changes, recent months have seen ground freight carriers begin to adopt a more pragmatic approach. New technologies, public policy and climate goals, and shifting consumer demands are driving a market shift towards efficiency, expediency and sustainability.
Heavy freight that used to travel primarily by truck and trailer is now increasingly being moved by other methods. This shift is driven by an increased focus on last-mile delivery and shorter delivery routes, aimed to make better use of resources, reduce empty miles and improve overall efficiency for shippers and carriers. In the past year, industry giants including FedEx and UPS, as well as regional last-mile providers, have all implemented operation consolidations, combinations and strategic partnerships to serve the evolving market.
The industry’s shift to meet new demand expectations will continue progressing rapidly in 2025. To adapt to its evolving role, the industry is embracing green practices such as alternative fuels and renewable energy, utilizing shared freight platforms and adopting technologies including AI-powered dispatch systems and electric trucks.
However, implementing these improvements will require substantial investment, presenting a significant challenge, especially given current obstacles including supply chain barriers, high fuel costs and limited access to capital. Optimism exists that enhancements from the Bipartisan Infrastructure Bill may help address some of these issues.
Air cargo transportation remains crucial to the global supply chain, ranking just behind container shipping in terms of the total value of goods transported internationally over the past year. In 2023, the industry faced challenges such as fluctuating fuel prices, evolving regulatory requirements and increased demand for faster delivery times. Despite these hurdles, air cargo is indispensable for transporting time-sensitive and high-value goods. To maintain its competitive edge, the industry must adapt to changing market dynamics and technological advancements.
The evolution of air cargo is being significantly driven by automation and digitization. Automated processes are improving product delivery schedules, while predictive maintenance, demand analytics and network modeling are accelerating operations and enhancing customer service. Additionally, strategic alliances are becoming more common, with carriers, airports and forwarders partnering to create interconnected networks and reduce costs.
In 2025, the air cargo industry is expected to continue evolving with a strong focus on sustainability and technological integration. Airlines and cargo operators are likely to invest in greener technologies, such as more fuel-efficient aircraft and alternative fuels, to meet stricter environmental regulations. Advanced logistics solutions, including AI-driven platforms for better cargo management and intermodal transport integration, will further boost efficiency and service levels.
The industry will need to tackle ongoing challenges, such as regulatory compliance, maintaining strained air infrastructure and adapting fleets for temperature and time-sensitive products, in order to continue on its strong growth trajectory.
Over the last 50 years, supply-chains have grown to stretch across entire hemispheres. Though cracks in this system had manifested well before 2020, the global pandemic exacerbated substantial vulnerabilities and prompted a rethink on how these intricate networks may be simplified. The next twelve months will likely be spent reactively repairing broken links in the chain, while also proactively constructing a flow of goods that is more geopolitically, climatologically and economically resilient.
Investments in advanced technologies have often been dismissed in favor of material infrastructure because physical projects are more visible and easier to understand. New roads, bridges, or buildings can be seen and appreciated by the public, making it simpler to convey the idea of growth and progress.
In contrast, technological investments, such as AI software and data systems, are less tangible and harder for the average person to fully grasp. This makes it challenging to generate enthusiasm and support for these projects. Convincing investors and stakeholders of the value of technological investments is difficult, especially when capital is scarce and costs are high, posing a significant hurdle for operators across the transportation industry.
Technological advancements, while necessary, are not capable of remedying other threats to transportation networks. Warfare, natural disasters and labor strife are just a few of the external factors that have regularly disrupted operations and fuel supply-chain realignment. Concentrating and shortening supply-chains to operate on a continental, rather than global scale, will be a prominent industry de-risking strategy for the years ahead.
These challenges will bring change to many markets, but will likely do little to hinder the Kansas City region’s most significant advantages: a centrally located position for both domestic and continental transport, access to rail, trucking, air and water freight transit channels, and lower operating costs compared to other national transit hubs. E-commerce demand has surged in recent years and is projected to continue growing. Advanced manufacturing operations and reshoring efforts are driving a manufacturing renaissance both in Kansas City and nationwide. The raw materials moving into these facilities and the products leaving them will heavily rely on all modes of freight transit operating in the region.
Though these advantages drove early operators to the region, Kansas City’s continued growth is sustained by a willingness to embrace change. Regional pride is both a cultural and economic phenomenon in Kansas City. This pride drives industry-wide camaraderie, opens doors for new businesses to enter the market and creates an ecosystem that allows operators to invest in the region with confidence.
Throughout the industry, previous efforts to maximize the efficiency of long-standing transportation practices have yielded only incremental improvements. However, the supply chain disruptions and infrastructure challenges brought about by the global pandemic and shifting consumer demands have underscored the need for substantial innovation. This period has prompted a reconsideration of whether past systems are best suited to meet the freight transportation needs, and the industry's forward-thinking operators are already demonstrating a willingness to evolve.