Summary

The Transportation Satellite Accounts (TSAs) provide a means for measuring the contribution of transportation services to the national economy. Prior to the TSAs, the magnitude of transportation services had long been underestimated, as most national measures counted only the value of for-hire services. Measurement of services provided only by for-hire firms misses the sizable contribution of transportation services that take place within nontransportation industries, termed as in-house transportation (see box A).

To more accurately measure transportation services, the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation and the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce, jointly developed the Transportation Satellite Accounts (TSAs). The TSAs, as a supplement to the U.S. Input-Output (I-O) Accounts, measure the contribution of both for-hire and in-house transportation. The TSAs include all seven of the for-hire transportation industries reported in the U.S. I-O accounts and four in-house transportation modes as described in table 5 on p. 13.

This report describes the TSAs in detail and provides both summary and detailed tables for the 1997 benchmark TSAs.¹ The 1997 TSAs show the:

• Contribution of Transportation to Gross Domestic Product: Transportation services contributed about $367.9 billion of value-added in 1997, or about 4.4 percent of gross domestic product (GDP):
• The value-added by in-house air, rail, truck, and water transportation services was $122.7 billion, or about 1.5 percent of GDP.
• The value-added by for-hire transportation for the same modes (air, rail, truck, and water transportation) was $245.2 billion, or about 2.9 percent of all GDP (see table 1).
• Truck transportation services contributed the most to the value-added by all transportation services. The value-added by for-hire truck transportation was $81.4 billion, and the value-added by in-house transportation was $116.7 billion.
  
  
• Use of Transportation by Industry: The importance of transportation to the production of goods and services can be measured through the use of transportation by industries. Use can be represented both as an absolute dollar value and as a requirement per dollar of industry output. The latter estimates the importance of transportation relative to all other inputs in producing output and hence the intensity to which transportation is used in the production process. In many cases, the intensity of transportation use leads to a different conclusion about the importance of transportation than the one indicated by the absolute dollar value. This can be seen in the 1997 TSAs. In the 1997 TSAs, manufacturing, wholesale/retail trade, and construction were the largest absolute users of for-hire and in-house transportation services.
• Manufacturing used the largest amount of transportation services in absolute terms ($148.9 billion) but of the nontransportation industries, required only the seventh largest amount of transportation services per dollar of output (4.0).
• Wholesale/retail trade was the second largest user of transportation services in absolute terms ($121.1 billion) and required the fourth largest amount of transportation per dollar of output (8.2).
• Construction was the third largest user of transportation services ($109.3 billion) in absolute terms and required the largest amount of transportation services per dollar of output (14.5), making it the most intensive user of transportation services in the production process. The intense use of transportation in the construction sector results primarily from the sectors' significant use of in-house trucking. This significant use reflects the fact that in-house trucking captures more than freight transportation. In-house trucking includes truck transportation services rendered by all truck chassis and the resources required to support them (see table 2).
  
  
• Direct Cost of Transportation Services by Commodity: Many industries produce more than one commodity, and many commodities are produced by more than one industry. Because of this, the importance of transportation costs in the purchasers' price of commodities, such as construction, differs from that revealed by the use of transportation on an industry basis. This can be seen in the 1997 TSAs where, among nontransportation commodities, transportation contributed the most to the cost of producing construction products. In producing construction commodities, in-house transportation accounted for a larger share of the total transportation cost than for-hire transportation costs. This follows from the intense use of in-house trucking in the construction industry.
  
  
• Total Cost of Transportation Services: The total cost of transportation services is measured through the direct and indirect effects of transportation on the economy. The direct effect is the change in transportation output caused by a change in demand for another product; the indirect effect is the change, induced by a change in the demand for transportation, in the output of another industry or industries.
  
  In the 1997 TSAs, transportation costs had the greatest direct effect on a per-dollar basis on construction prices. The second greatest effect was on natural resources and mining products. A $1 increase in the final demand for construction required 20.2 in transportation services; while a $1 increase in the final demand for the products of natural resources and mining required 16.7 of transportation services. These requirements reflect the intense use of transportation services within each industry.
  
  The second component of the total cost of transportation services can be measured through the indirect effect of transportation on the economy. This indirect effect is captured in the total industry output multiplier for each transportation industry. These multipliers show that the economy's response to changes in demand for transportation was larger than that for trade, utilities, information, and all service sectors except leisure and hospitality but smaller (except for pipeline transportation) than that for natural resources and mining, construction, and manufacturing.

The 1997 TSAs additionally show the continued contribution of transportation services to the national economy when compared to the previously published TSAs. The contribution of transportation services in the previously published TSAs cannot be compared directly to that in the 1997 TSAs because of:

1. several methodological changes made in the process of estimating in-house transportation services, and
2. the change in the industrial classification system used in the I-O accounts.

The 1992 and 1996 TSAs are based on the Standard Industrial Classification (SIC) system, and the 1997 TSAs are based on the North American Industrial Classification System (NAICS). To minimize the effect of the change in the industrial classification system, comparisons can be made only at the major group² level after recategorizing the detailed TSAs tables. Recategorization was performed on the 1992 TSAs after re-estimating them under the procedure used for the 1997 TSAs. The re-estimation process did not correct for differences in the modes included in the measure of in-house transportation³ but rather, corrected for the effects of significant changes in the industrial classification system. No recategorization or re-estimation was performed for the 1996 TSAs due to the lack of sufficient detail in the inputs required for the processes (see the full report for details and table 13 on page 38 of this document for a summary).

After accounting for the industrial classification and methodological changes, the TSAs show the:

• Change in the Contribution of Transportation to GDP: The contribution of for-hire and in-house transportation services to GDP declined in real dollars between 1992 and 1997 even though a greater proportion of in-house transportation services was measured in 1997. In 1997 dollars, transportation services contributed $409.1 billion, or 5.5 percent, to GDP in 1992 (based on the 1997 procedure and classification system) and $367.9 billion, or 4.4 percent, to GDP in 1997. The measured decline is due to a decrease in the value-added by for-hire and in-house truck transportation (see table 3; for further detail, see table 14 on p. 39).
  
  
• Change in the Use of Transportation by Industry: In 1992, the manufacturing sector used the most transportation services ($134.0 billion in 1997 dollars) followed by the services sector ($113.5 billion in 1997 dollars). In 1997, this relationship reversed, with the services sector using more transportation services than the manufacturing sector ($166.0 billion and $148.9 billion respectively in 1997 dollars). The third largest user was the construction sector in 1992 and the trade (wholesale and retail) sector in 1997.
  
  In both 1992 and 1997, the construction sector required the largest amount of transportation per dollar of output, making it the most intense user of transportation services among nontransportation sectors. The construction sector also became more reliant on transportation in the production process as it experienced the largest increase in the use of transportation per dollar of output. Per dollar of output, 11.1 of transportation services were required in 1992 (based on the 1997 procedure and classification) and 14.5 in 1997. This increase follows from a greater use of in-house truck transportation, which more than offset the decline in the use of for-hire truck transportation (see table 4; for further detail, see tables 15 and 16 on pp. 41-42).
  
  
• Change in the Direct Cost of Transportation Services by Commodity: Among nontransportation commodities, transportation content tended to increase more for those commodities produced primarily in the sectors that used significantly more transportation services in 1997 than in 1992. The in-house truck transportation⁴ content of construction commodities increased most significantly, growing from 9.1 percent in 1992 to 12.4 percent in 1997. In both 1992 and 1997, for-hire transportation and in-house trucking together contributed the most to the cost of producing construction products.
  
  
• Change in the Total Cost of Transportation Services: The total cost of transportation services consists of two parts. The first part captures the direct effect of transportation on the economy, which grew between 1992 and 1997. This growth indicates a greater dependency on transportation services in the production process. This can be seen in the increase in total transportation output caused by a dollar increase in the demand for nontransportation commodities, particularly construction commodities for which this multiplier effect increased the most. In 1992, a dollar increase in the demand for construction commodities caused an increase of 16.2 in total transportation output and in 1997 caused a 20.2 increase. This increase reflects the intense use of transportation in construction.
  
  The second part of the total cost of transportation services captures the indirect effect of transportation on the economy. The change in the indirect effect of transportation can be seen through the total sector output multipliers for each for-hire transportation sector and in-house truck transportation. The for-hire air, truck, and water and in-house truck transportation⁵ sector multipliers grew between 1992 and 1997. This growth indicates that an investment in any of these modes has a greater economic impact in 1997 than in 1992. In contrast, the for-hire rail and warehousing multipliers declined and the total industry output multiplier for for-hire pipelines remained nearly constant.

In all, the 1997 TSAs show the significant role of both for-hire and in-house transportation services in the national economy. The measured contribution is more complete than that made in the 1992 and 1996 TSAs as it includes the in-house contribution of private air, rail, truck, and water transportation (the 1992 and 1996 TSAs counted only the in-house contribution of private bus and truck transportation). However, the picture is not yet complete as other transportation services, such as in-house use of automobiles, have not been measured by the TSAs. In addition, the TSAs do not capture the economic contribution of personal transportation. These are two possible future directions for the TSAs.

¹ The 1997 TSAs and the previously published 1992 TSAs are based on benchmark I-O data (the 1996 TSAs are based on annual I-O data). The Bureau of Economic Analysis (BEA) has produced benchmark data for every fifth year beginning with 1958 (the BEA also produced benchmark data in 1947). Usually, there is a lag of several years before the benchmark data is released. At the time of this publication, the 1997 and 2002 benchmark data are the most recent available to the Bureau of Transportation Statistics for creating the TSAs. The 1997 TSAs are being developed first so as to form a complete series. The 2002 TSAs are forthcoming.

² Major groups differ from the sectors used in the TSAs in that they classify all service sectors into a single service group. Additionally, the utilities and communications sectors are classified as a single group. The major groups are: natural resources and mining, construction, manufacturing, trade (retail and wholesale), utilities and communications, services, for-hire transportation, and in-house truck transportation.

³ In 1992, in-house transportation includes in-house truck and bus transportation; while in 1997, it includes in-house air, rail, truck, and water transportation.

⁴ In-house truck transportation in 1992 includes the in-house bus transportation. Contribution of in-house bus transportation is negligible.

⁵ Ibid.