The Effect of Globalization on the Automotive Transportation Industry

Submitted by Tori Troen on 20/01/2020

For the first time in history, you can know the exact moment when something happens on the other side of the world. The amazing technology that we hold in our pockets is revolutionary, even though the lightning-fast exchange of information is now considered normal. A small device in our pocket connects us to nations we have never been to and people we have never met. This technological revolution has created a global community, where interacting internationally is commonplace. The globalization caused by this interaction has impacted nearly every industry in the United States and will gain even more influence in the future. By examining the increase of interaction on an international scale, connected with recent movement and migration statistics, one begins to see a dramatically different future, especially for the automotive transportation industry.

Throughout the last twenty years, interaction on an international scale has grown exponentially. For the purposes of this analysis, globalization can be defined as the expansion of international influence, mainly brought about through interactions between countries. According to the Harvard Business Review, the world is now “more globalized than ever before.” The author of this report, Pankaj Ghemawat, noted that the world is becoming one international community due to the connectedness provided by technology. Technology has played role in the expansion of interactions between nations. For the most part, this has taken the form of exchanging information, which has risen over 275% since 2001 (Ghemawat). Furthermore, The DHL Global Connectedness Index, which records the level at which the world is becoming a global community, recorded an all-time high in globalization in 2017. Additionally, they found that 2019 was yet another year where “flows of trade, information, and people [between nations]

intensified.” They also predict this increasing trend will continue in the coming years (DHL International GmbH). Through these statistics, it becomes abundantly clear that an increase in international influence has become more and more commonplace; this change has caused the world to become more globalized.

Globalization results in individuals being exposed to different cultures. Consequently,

there has been a rise in the desire to move internationally. According to a Gallup poll, more than 750 million people worldwide would permanently move to another nation if the option was made available to them. These desires have been increasing at a similar pace of globalization. The same survey found that the percentage of the United States’ population that want to move internationally rose by 4% from 2016 to 2017 (Esipove). This increase can be directly correlated with the increase in globalization. When an individual repeatedly interacts with other cultures, they begin to form emotional connections with other nations. This, in turn, improves the chances of that individual wanting to move to that nation. As the amount of interactions rise, this desire to move also rises. In fact, one company who analyzed more than 350,000 moving inquiries found that “people have never been more curious and proactive about wanting to experience life abroad” (Movehub). This curiosity stems from a globalization. The same study found that people seem to be basing their decisions to move on “viral social trends.” This proves that exposure to other cultures, via globalization on the internet, is causing this increase in desires to move internationally. Furthermore, this familiarity with other cultures has resulted in widespread approval of immigration, with 88% of people stating that it’s beneficial to live abroad (Movehub). Therefore, one can clearly see the connection with globalization and the desire to move abroad.

However, this connection doesn’t end with desire. In all actuality, the increase in exposure to other cultures has already caused a trend in moving internationally. According to The Guardian, “We are now witnessing the highest levels of movement on record. About 258 million people, or one in every 30, were living outside their country of birth as of 2017.” This trend is only expected to continue, with a prediction of 230 million people immigrating annually in 2050 (Hill). It is not a coincidence that both globalization and immigration are increasing at the same time. As previously mentioned, exposure to other nations through technology has become one of the central parts of globalization. This exposure results in familiarity with other cultures and, eventually, a physical move to be a part of a ‘liked’ culture. Therefore, globalization is causing exponential growth in populations moving abroad.

This exponential growth has major implications for moving companies and services. Simply put, more people want to move abroad because of globalization and require companies to aid them in this process. As the demand for moving abroad increases, so does the demand for moving services, including the automotive transportation industry. The rise in immigration has already affected the automotive transportation industry. A market research report, published by IBIS World, has calculated a rise in demand over the last five years in the automotive transportation industry. Between 2015 and 2019, the industry has grown an average of 1.2% annually, with revenues increasing alongside globalization and immigration. In 2018, the automotive transportation industry produced a revenue exceeding $12 Billion in the United States alone (IBIS World). This growth in the automotive transportation industry is partially caused by globalization. More people are moving internationally, meaning that more people are seeking and using companies in the automotive transportation industry. Therefore, it is abundantly clear that globalization has already impacted the automotive transportation industry.

This concept paints a beautiful picture of the possible future of the automotive transportation industry. In the coming years, immigration and globalization are expected to continue their growth. As exposures to other cultures increase through globalization, so does the desire to move abroad and the demand for automotive transportation. Because these upward trends are predicted to continue, this industry has the opportunity to grow continuously throughout the next few years. Third-party analyses have already approximated the expected growth in the industry caused by globalization. One such approximation, calculated by IBIS World, states that the vehicle shipping services industry is expected to grow at a rate of 2.6% annually for next five years (IBIS World). Companies in the industry who recognize this trend have a distinct competitive advantage; accounting for growth in immigration and the necessary transportation needed for individuals who plan to move internationally will allow a company to prepare for the future. An adaptable company will be able to cater to the needs in the growing sector of international movers and will attract more customers. Consequently, companies who change in anticipation of this trend will have a higher likelihood for profits in the future. Thus, the effect of globalization on the automotive transportation industry has the potential to be positive, as long as companies are able to adapt to a rapidly growing customer base.

A thorough analysis of the statistics globalization and immigration leaves no room for doubt: the rise in interactions between nations is causing an a larger amount of individuals to move abroad. This, in turn, has resulted in a period of steady growth for the automotive transportation industry. As the globalization continues to increase, the desire to move internationally and the demand for automotive transportation is only going to rise. If companies can adapt to the growing demand of international movers, they have a unique competitive advantage. It’s simply amazing to see how globalization can impact an industry so profoundly.

It’s become clear that our international society in an interactive world has a major influence on nearly all aspects of life. Fortunately, it is a positive influence for the automotive transportation industry.

Submitted by Tori Troen on 20/01/2020