Centuries ago, hauling services spread by water as population centers developed along rivers and coastlines. Improvements in rigging and sails and the advent of the mariner's compass enabled ships to ride the open seas. Steam-powered and, later, motorized vessels in the 19th century solidified shipping’s role in passenger and freight hauling, while accelerating the growth of the shipbuilding and repair industry. The oldest, largest maritime companies operate outside US borders -- Taiwanese shipping company Evergreen Marine (#1 in the world) battles Denmark’s AP Moller to hold the largest container shipping fleet, and the Hyundai Group and Samsung Group are leading shipbuilders. The $5.9 billion US maritime industry is beset by aging fleets that must be replaced by double-hulled tankers in order to meet strict US environmental laws, worldwide overcapacity that is depressing rates, and dehabilitating union strikes and slowdowns. US shipping lines hope that improved methods for container ships carrying cargo -- standardized aluminum containers allow efficient packing -- and for tankers carrying petroleum will help them survive in a market based on volume shipping. To help US shipbuilders compete with the lower-cost Japanese and South Korean shipbuilders, the federal government gives the US companies aid that includes assistance with technology and process improvement; meanwhile, shipbuilders have streamlined construction by preassembling large sections of the ships, using new welding techniques. As of 1996, the US was exporting commercial vessels for the first time in 30 years.

Ground transport kicked into gear in the US in the late 1700s, thanks to a venerable government agency, the United States Postal Service. Under the direction of the first postmaster, Benjamin Franklin, the service resembled an unstructured horse race around the country to deliver letters, which at the time had no need for stamps or envelopes. Then, in the early 1800s, Europe's Industrial Revolution arrived in the eastern US in the form of the steam locomotive. Fashioning gun barrels into steam tubes, Baltimore merchant Peter Cooper built the first North American locomotive in the 1830s. Northern rail lines helped the Union defeat the South in the Civil War; the end of the Civil War saw the rise of rail freight giants such as Union Pacific, Canadian Pacific, and Burlington Northern Santa Fe (then called the Great Northern and Santa Fe). These giants came of age in an era when government land grants and subsidies spurred one of the greatest rail expansions in history. Coast-to-coast railroad transport and travel became a reality in 1869, and J. P. Morgan, Cornelius Vanderbilt, and other empire makers built their robber baron reputations making behind-the-scenes railroad deals, manipulating stocks, and draining companies' assets to further their fortunes. By 1896 Charles Dow's index of 11 stocks that investors could use to gauge the market included nine rail transport firms. But even as railways spread, both rail and shipping companies were shortly to be over taken by two new methods of transport: the automobile and the flying machine.

The new century saw the rise of bus companies such as Greyhound Lines (which mainly delivers passengers but supplements its revenues with inexpensive package delivery as well). Mail and freight shipping took to the skies in the 1920s. As air passenger traffic grew, parcel services became less important to commercial airlines, speeding the dominance of air and ground transportation integrators, which today generate 85% of market revenues. Leaders include the world's largest package delivery firm, United Parcel Service (UPS), which had a nationwide delivery by 1975, and FDX's overnight master Federal Express, founded in 1971 and reaching the entire US by the 1980s. Ironically, FedEx founder Fred Smith had the idea for next-day delivery service while a student at Yale in the late 1960s, but the concept didn't exactly bowl them over in New Haven: Smith's term paper on the subject earned a "C." These delivery corporations have been eroding the business of the US Postal Service; though the post office is a masterpiece of reliability, delivering 43% of the world's mail, business customers rely on the just-in-time delivery of Federal Express and UPS. Meanwhile, because air freight delivery isn't as profitable as truck delivery, the delivery companies have now set their sights on the trucking industry. For example, FDX gained the #2 ground-express trucking company, RPS, as part of a 1998 acquisition.

On-demand air freight companies such as North American leader Kitty Hawk took flight to cater to large corporations that required door-to-door delivery. Management consulting firm MergeGlobal, which tracks the $40 billion national and international air freight industry, predicts total US international air trade will grow from 5.5 million tons in 1996 to 8.5 million tons in 2002. More trade translates into hotter competition. Regional and national air carriers are scrambling for the latest technologies, from smart drop boxes that "tell" their owners when a package should be picked up to Web sites that give customers the ability to track status instantly. FDX, for example, spends about $1 billion annually on shipping technology that enables it to act as a warehouse and distribution center for semiconductor and computer companies.

Remember the railroads, which first offered bicoastal delivery? By the 1970s, railroads had grown bloated and were losing business to the rising $360 billion trucking industry. Trucking companies such as Consolidated Freightways, Schneider National, and Yellow Corporation's Yellow Freight, as well as do-it-yourself firms such as AMERCO, owner of U-Haul, and business specialist Ryder System, have come to dominate the freight industry, largely at the expense of the railroad companies. Trucks now carry 80% of all consumer goods and receive about three-quarters of freight shipping dollars. Trucking companies aren't without their problems, however. A shortage of drivers fueled the rise in double- and triple-trailer trucks and led carriers such as J.B. Hunt Transport (the #1 publicly held truckload carrier) to hike wages by one-third. Other truck carriers have yet to recoup business lost during a devastating 1994 Teamsters strike, which has, in turn, led to industry consolidation.

Though rail mergers are nothing new -- the Canadian National Railway has merged more than 220 railroads since the 19th century -- they may have a rough ride on the rails, at least in the early stages. Notably, the 1996 merger between Union Pacific and Southern Pacific resulted in transportation delays that have cost US companies, such as wheat and coal producers, $2 billion as of early 1998. Glitches in the two companies' integrated tracking systems caused trains and railcars to be stranded and deadlines to be broken; some shippers view these problems as a black eye to the rail industry as a whole. The shortage of railcars at West Coast shipping yards also has hamstrung the shipping industry by slowing cargo handling.