Ethical Issues in Transport

Industry
 What are Ethics??

• Principles or standards of human conduct that govern behavior

of individuals and groups.

• Doing right thing

• determines good/evil, right/wrong, just/unjust actions of

individuals

• Branch of philosophy that seeks to address questions about

morality.
 Business Ethics

• art of applied ethics that examines ethical principles and

moral or ethical problems that can arise in a business
environment.

• concentrates on moral standards as they apply

particularly to business policies, institutions, and
behavior.
Transport Industry- an overview
• forms the backbone of infrastructures

• people and businesses rely on an extensive, interrelated

network

• Globally, the logistics industry is valued at US$ 3.5 trillion

• The Indian logistics industry is presently estimated at

US$ 90 billion

• Generates employment for 45 million people in India

 ECONOMIC IMPACT

1. Key component of growth and globalization.

2. Largest drainer of energy.

3. Passenger transport essence of tourism.

4. Important business for commerce.

 LAWS RELATING TO TRANSPORT
INDUSTRY IN INDIA

The law relating to carrying of goods is contained in the following

enactments:
1. In case of carriage of goods by land:
(i) The Carriers Act, 1865.
(ii) The Railways Act, 1989.

2. In case of carriage of goods by sea:

(i) The (Indian) Bills of Landing Act, 1856.
(ii) The Carriage of Goods by Sea Act, 1925.
(iii) The Merchant Shipping Act, 1958.
(iv) The Marine Insurance Act, 1963.

3. In the case of carriage of goods by air: The Carriage by Air

Act, 1972.
 Modes Of Transport
• Human-powered transport
• Animal powered transport

• Aviation
• Rail transport
• Road transport
• Ship transport

• Other:
– Pipeline transport
– Cable transport
– Spaceflight
Ethical issues in Transport Industry

1. Safety and Security

– Overloading
– Drunk driving
– Theft of goods
– Illegal activities by emloyees Eg: transport of drugs,
smuggled goods, etc
– Accidents
– Can be used for terrorists activities
2. Environmental issues

• Air pollution esp. by vehicles

• Which also causes:
- Global warming
- Climate change
- Smog, etc.

• Excessive consumption of fuel

• Water pollution by ships, etc
• Traffic congestion
• Noise pollution
• Oil slicks – shipping industry
3. Documentation issues- Travel logs

• Manipulations in the travel logs and documents that

make room for corruption and unethical activities and
transactions.

• Inefficient transportation services are protected through

corruption which leads to
– barrier to entry of modern operators
– low quality services
– High transportation costs
– inhibits emergence of a seamless supply chains
4. Regulations by government

• Strict regulations and guidelines

– Pollution norms
– Freight weight limitations
– Minimum wage to employees
– Maximum working hours
– Etc.

• These guidelines are seldom followed in transport industry

5. External management issues

• Related to market issues

• Cartels or unions

• Abuse of dominant position

• Attempts to monopolize

• Anti-competitive mergers and acquisitions

 Unethical practices in Road transport

• Inaccurate Travel Logs

• Unsafe Practices
• Air and noise pollution
• Overworked staffs
• Underpaid
• Overloaded trucks and buses
• High prices charged
• Accidents- esp.- Hit and run cases, drinking and driving
cases.
Unethical Practices in Railways
 Unethical Practices in Aviation

• Overbooking.

• Overworked crew members.

• Confusing Ticket Pricing Policy.

• Pay cuts and layoffs during recession

• Used for terrorist activities- 9/11, kandahar

• Cartels are very strong

 SUGGESTIONS TO INCLUDE ETHICAL
BEHAVIOUR IN TRANSPORT INDUSTRY
• Sufficient, rather than maximum profitability

• Provision of safe, efficient and comfortable transport services

• Employment background check

• Supplier/vendor screening

• Substance abuse testing

• Driving records

• Simplification of pricing policy (esp. in Airlines)

 CASE STUDY: Boeing’s unethical
practices

• In December 2003, the Boeing Company (Boeing's) CEO,

Philip Condit resigned amidst widespread criticism against the
company's allegedly unethical practices. Though both Boeing
and Condit denied that the resignation was a result of ethical
lapses in the company, analysts felt otherwise

• In mid-2003, Boeing was sued by its competitor, Lockheed

Martin Co., for possessing proprietary information belonging
to Lockheed.

• Around the same time, Boeing's tanker lease deal with the US
Air Force also came under scrutiny.
• Earlier the US Air Force had agreed to lease 100 Boeing 767s
planes from Boeing.

• The total cost of the deal was reported to be $19.6 billion.

• It was alleged that the deal was awarded to Boeing without

any competing bids

• and to make leasing look cheaper than buying them outright

(although it actually costed more)

• Boeing and the US Air Force did some financial jugglery in

their calculations of the cost of the planes.
• Analysts felt that Boeing managed to pocket the deal by
lobbying with top defense officials at the Pentagon. It was also
alleged that the deal was meant to bail out Boeing from its
current financial crisis.

• The controversy over the tanker deal resulted in two top

executives at Boeing being fired in late November 2003,
followed by Condit's resignation.

• Analysts pointed out that these alleged lapses happened in

spite of Boeing having in place a detailed code of ethics.

• In December 2003, The Economist wrote, "The lesson from

Boeing, meanwhile, seems to be that good governance and
tough, independent board do not guarantee good
corporate behaviour."
QUESTIONS???
THANK YOU!!!