Transportation Cost

12 Key excerpts on "Transportation Cost"

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  eBook - ePub

  Transport Carrier Costing

  • Wayne Kenneth Talley(Author)
  • 2017(Publication Date)
  • Routledge

    (Publisher)

  Chapter 1An Overview of Transportation Costing

  1.1. Introduction

  Transportation (or transport) is an activity that provides for the movement of goods or individuals from one place to another. Freight transportation involves the movement of goods; passenger transportation involves the movement of individuals. Freight transportation allows for bringing together at a given location the resources used in production processes as well as providing access to markets for the resulting products. Passenger transportation provides the means to move individuals from various origin-locations to various destination-locations.

  The demand for transportation is derived, i.e., transportation is a means to an end and not an end in itself. Freight transportation is demanded, since goods are demanded at locations where they can be used. Similarly, passenger transportation is demanded, since individuals demand goods or activities (e.g., recreational and dining activities) at destination locations. Transportation creates value by creating place and time utility. Place utility is created when goods are moved to a place where they can be used and when individuals are moved to a place where they can consume goods, enjoy various activities, and perform various job-related activities. Time utility is created when goods and passengers arrive at the desired time.

  In the movement of goods or individuals from one place to another, various costs will be incurred. The transportation firm (or carrier) that moves goods or individuals will incur cost; the passenger will incur a time cost; the shipper and receiver of the transported good will incur various logistics costs (e.g., inventory and order processing costs); if publicly-owned structures (e.g., highways and airports) are used, transportation movements will share their costs; and, finally, transportation movements may place costs (e.g., congestion and pollution costs) on society. Transportation Costing, as considered in this book, refers to determining the cost of transportation movements (freight and passenger) where all costs are considered. The purpose of this book is to address one of the above areas of Transportation Costing, i.e., transport carrier costing. Transport carrier costing refers to determining the costs to be incurred by a transportation firm (or carrier) in the transport of goods or individuals.

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  eBook - PDF

  Transport Economics NQF4 SB

  TVET FIRST

  • TIDASA(Author)
  • 2013(Publication Date)
  • Macmillan

    (Publisher)

  3.1.2 The use of transport costing Once we have collected the data and created cost curves from this information, we look at the cost curves over different periods to make decisions about aspects such as cost efficiency, pricing, management, strategies and policies. Figure 10: The use of costing to make important decisions Hensher and Brewer (2001) state that transport costing is necessary for transport service providers because it allows them to: x Develop a clear foundation on which to set their prices when providing transport goods and services x Monitor the performance of their goods and services according to different criteria, such as market sector and routes x Assess changes in their service levels, networks and passenger/traffic levels 3.1.3 Transport costs Rodrigue and Notteboom (2013) give us the following definition of Transportation Costs: Transport costs are a monetary measure of what the transport provider must pay to produce transportation services. They come as fixed (infrastructure) and variable (operating) costs, depending on a variety of conditions related to geography, infrastructure, administrative barriers, energy, and on how passengers and freight are carried. Three major components, related to transactions, shipments and the friction of distance, impact on transport costs. Page | 36 TAKE NOTE Refer to the Transport Operations learner guide for a detailed discussion on transport costs. This definition tells us that there are three major cost components in Transportation Costs. These can be illustrated in a figure like this: Figure 11: Transportation between points A and B . (Rodrigue & Notteboom, 2013) The figure shows transportation between points A and B. The three cost components help us to assess the related transport costs.

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  Transport Economics NQF2 SB

  TVET FIRST

  • TIDASA(Author)
  • 2013(Publication Date)
  • Macmillan

    (Publisher)

  T RANSPORT E CONOMICS L EARNER G UIDE P AGE | 5 Topic 1 Introduction to Transport Economics P AGE | 6 T RANSPORT E CONOMICS L EARNER G UIDE Topic 1: Introduction to Transport Economics 2 Transport Economics After you have worked through this section, you should be able to: x Define and describe key concepts in transport economics x Provide a macro-economic view of transport economics and indicate how this view is applied in this industry and in the wider economy x Explain the relation between transport and economics by giving examples of transport as an economic function x Demonstrate with examples the relation between transport infrastructure and transport economics x Explain with examples the link between an effective transportation system and the well-being of an economy When the two concepts transport and economics are linked, they form a science of their own. This science deals with the impact on and importance of transport for a national economy. In this section we start by defining the concepts individually and then as a linked concept. We also explain some basic economic concepts as well as the relation between transport and economics. 2.1 Key concepts SO 1.1 LO 1.1.1 Before we start it is important to understand all the key concepts used in this subject. It will make studying so much easier if you know them well and can explain them in your own words. Try not to memorise the definitions, but use your own words to explain them. 2.1.1 Transport Transport is a system or means of moving people or goods from one place to another. Transport creates valuable links between regions and economic activities, between people and the rest of the world. Transport may include or refer to all the activities directly or indirectly related to the use of vehicles, vessels and aircraft. It includes the related infrastructure, such as highways, railways, pipelines, ports, airports, warehouses, etc. that are used for the movement of goods and passengers.

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  Impact of Trade Facilitation on Export Competitiveness

  A Regional Perspective

  • (Author)
  • 2010(Publication Date)
  • United Nations Publications

    (Publisher)

  Such an understanding could facilitate initiatives to integrate production across Asia as well as those aimed at promoting deeper trade integration in the region. First we explore why it is so important to study Transportation Costs in the context of Asia. Which has a higher incidence on trade in Asia—tariffs or freight costs? This is debated in section A. Since international transport costs, to a great extent, depend on ocean freight rates, the next step is to understand the relative importance of ocean freight rates in trade in Asia. Section B provides an illustration of the trends in such rates in selected Asian countries, leading into estimates of freight costs across countries and 3 See APEC (2002). 4 In the case of a cross-border shipment of goods, transport costs comprise two major elements: (a) international transport costs, which include costs associated with the shipment of goods from one country to another; and (b) the inland (domestic) transport costs, which include the costs of inland transportation of merchandise in both exporting and importing countries. 5 According to the World Bank (2001), for 168 of 216 trading partners of the United States of America, transport costs barriers outweighed tariff barriers. For the majority of countries in sub-Saharan Africa, Latin America and the Caribbean, and a large part of Asia, the transport cost incidence for exports is five times higher than the tariff cost incidence. 21 commodities. We then attempt to measure the movement of Asian countries in the tariff-freight plane in a comparative static framework. Section C draws on the aforesaid discussion for a formal assessment of the relationship between trade costs and trade flows. Econometric results are presented and discussed in that section, followed by conclusions in section D.

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  Transportation Costs and Costing, 1917-1973

  A Selected Annotated Chronological Bibliography

  • Emanuel Benjamin Ocran, Jr.(Authors)
  • 2017(Publication Date)
  • Routledge

    (Publisher)

  The substitution effects of Transportation Costs, by J.P. Gould and J. Segall. (in J. polit e c o n .. vol. 7 7 ( 1 ), Jan./Feb. 196 9 , PP. 130 -1 3 7 ) Topical Headings: More than two goods with income comp-ensation: an algebraic interpretation, a geometric inter-pretation. A summary of urban transport technological innovations. (in Aust. road res, board conf. p r o c .. vol. 5(2), 1970, PP. 283-301) Includes cost analysis, technological forecasting and framework. A survey of factors which affect Transportation Cost. Washington: Pan American Union, Department of Economic Affairs, 1964. v i i , 76 p. Tobbfokozatu szallilasi problema. [ A Multistate transpo-rtation problem, by L.B. Kovacs. (in Magyar tudoaanvos akademia metematikai kutato inteztenek kozlemenvei. B.9, 1964/65» PP· 631 -656 ) Text in Hungarian, with Russian and English summaries# Contends that reduction to a multi-index problem, as well as reduction to a transportation problem with infinite cost for forbidden deliveries, leads to problems with a very significant number of variables. Towards a coordinated approach to the structuring of cost and design models: case example, by L.S. Hill, (in Per. 527 4636 4637 4638 4639 4640 4641 4642 4643 4644 4645 Transport costs in the wholesale trade, by S.L. Edwards, (in J. transp. econ. polio.« vol. 3(3)> Sept. 1969f PP· 272 -278 ) Topical Headings : 1, Expenditure by mode of transport; Share of transport in total costs# Tables ; Estimated co-st of transport in wholesaling and general dealings, I 9 65 » 2, Expenditure on each mode of transport as percentage of total transport costs; 3» Transport cost as percentage of gross margin. Transport: notes and comments, by G.F. Ray and R.E. Crum, (in Natl, inst. econ. r e v ., vol. 24, May I 963 , pp. 23-41) Transport organisation: economic aspects in relation to the light steel industry, by J.E.

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  eBook - ePub

  Logistics Operations and Management

  Concepts and Models

  • Reza Farahani, Shabnam Rezapour, Laleh Kardar(Authors)
  • 2011(Publication Date)
  • Elsevier

    (Publisher)

  [18] , estimations are made for the specific external cost data for different transportation modes.

  Standard vehicle types that can be suitably used in this country are selected for different transportation modes. The selected vehicles are a general cargo ship with a capacity of 3300 deadweight tonnage for the seaway, a freight train with a capacity of 700 tons for the railroad, and a truck with a capacity of 20 tons for the road.

  The mathematical formulation for calculating the Transportation Cost of a unit of cargo derived in this research is:

  (7.31)

  where

  Ck (t) denotes the investment cost per unit of cargo or passenger,

  Cf (t) is the fuel and lubricant costs per unit of cargo or passenger,

  Cm (t) is the operational and maintenance costs per unit of cargo or passenger,

  Cex (t) is the external costs per unit of cargo or passenger,

  Ys (t) is the number of annual cargoes and passengers or the number of cars that can be carried in a ferry,

  UT is the total cargo or passenger cost per unit.

  Results of the Study

  The total cost of a unit of cargo in sea transportation consists of 26% investment cost, 32% fuel cost, 35% operational and maintenance cost, and 7% external cost. These percentages for railroad transportation are 22% for investment, 46% for fuel, 30% for operations and maintenance, and 2% for external costs. For road transportation, these values are 14%, 60%, 17%, and 9%, respectively.

  An analysis of the figures for sea transportation revealed the following points: It is considered that a fullness ratio of 60% is the lower limit for sea-cargo transportation, which may change according to route lengths. Thus, the fleet size and the optimal vessel capacity can be determined by taking into consideration the annual cargo potential on a given sea transportation route.

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  Innovating with Infrastructure

  The Automobile Industry in India

  • S. Gulyani(Author)
  • 2001(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  This is, perhaps, because the (World Bank-led) development literature focuses more on calculating the extent of supply shortages and on removing supply-side constraints than on further understanding the nature of demand. On the demand side, this literature suggests only that poor transportation systems can raise the freight costs for users and that movement of freight is likely to be slow. By contrast, the literature on logistics begins to provide connections between the nature of industrial demand for freight and the supply of transportation infrastructure and services. Logistics is defined as the process of strategically managing the movement and storage of materi- als, parts, and finished inventory from suppliers, between enterprise facilities and to customers. Total logistics costs include freight expendi- tures and the cost of holding inventories and managing material flows. The transportation and logistics literature argues that these costs are often highly significant, and minimizing total logistics costs is an important goal that can lead not only to improved profitability but also to greater responsiveness and better customer service and, there- fore, to increased competitiveness of firms. The task of minimizing logistics costs becomes even more important in the lean production system because it drives the changes that result in continuous (rather than a one time) improvement in costs, quality, and responsiveness. And if transportation systems directly affect logis- tics costs, then, we can begin to see the linkages between competitive- ness and transportation infrastructure. We can also begin to see why the transportation system may have a significant impact on performance Effects of Poor Transportation 85 even in industries for which freight costs, in themselves, do not consti- tute a significant proportion of expenditure.

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  eBook - ePub

  International Maritime Transport Costs

  Market Structures and Network Configurations

  • Gordon Wilmsmeier(Author)
  • 2016(Publication Date)
  • Routledge

    (Publisher)

  Wilmsmeier et al. 2006) .

  Analysis of determinants of transport costs has been driven by economists rather than research in geography (e.g. Hummels 1999a , Micco and Perez 2001, Limâo and Venables 2001). Recent works in the field of transport geography only briefly discuss the topic of international transport costs. Rodrigue (2009) gives a list of determinants of international transport costs (see Table 3.1 ) and states that institutional effects should be analysed further. He does not provide any empirical evidence nor does he elaborate on the importance of each of the factors. Nuhn and Hesse (2006)

  Table 3.1 Conditions affecting transport costs

  Condition	Factor	Examples
  Geography	Distance, physiography, accessibility	Shipping between France and England vs. shipping between France and the Netherlands
  Type of product	Packaging, weight, perishable	Shipping coal Shipping flowers or wine
  Economies of scale	Shipment size	A 747 compared to 737 (passengers) A ULCC compared to a VLCC (freight)
  Trade imbalance	Empty travel	Trade between China and the United States
  Infrastructure	Capacity, limitations, operational conditions	The Interstate
  Mode	Capacity, limitations, operational conditions	A bus compared to a car
  Competition and regulation	Tariffs, restrictions, safety, ownership	The European Union, The Jones Act

  Source: http://www.people.hofstra.edu/geotrans/eng/ch7en/conc7en/table_conditionstransport.html (June, 2009). Copyright © 1998–2013, Dr Jean-Paul Rodrigue, Dept. of Global Studies & Geography, Hofstra University, New York, USA. Reprinted with permission

  Gouvernal and Slack (2012) analyse freight rates of one global carrier for a period of three years on selected global routes. They argue that economic distance as a measure reveals spatial patterns different to physical distance and thus argue in line with Wilmsmeier and Hoffmann (2008) that physical distance is an imperfect proxy for maritime transport costs. Further Gouvernal and Slack (2012) follow the argument of Wilmsmeier and Hoffmann (2008)

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  Transportation Decision Making

  Principles of Project Evaluation and Programming

  • Kumares C. Sinha, Samuel Labi(Authors)
  • 2011(Publication Date)
  • Wiley

    (Publisher)

  However, an increase in transportation supply does not always lead to a decrease in total travel costs. Depending on the shape of the demand and supply functions and the elasticity of demand, a decrease in unit travel costs could lead to a decrease or increase in total user costs (Dickey and Miller, 1984). For example, Figure 4.5 shows that (1) the bene-fits of the transportation system improvement (the area DCBF) are not necessarily equal to the change in total user costs (the area ODFG − the area OCBH), and (2) the total user costs in this scenario actually increases with the decrease in unit travel costs due to the system improve-ment (the area represented by rectangle ODFG is much larger than that represented by rectangle OCBH). 4.4 GENERAL STRUCTURE AND BEHAVIOR OF COST FUNCTIONS A cost function is a mathematical description of the variation of cost with respect to some output variable (typically system dimensions or the level of system use). There are three major aspects of Transportation Cost functions: the dependent variable, independent variables (including the output dimension ), and the functional form of the cost function. 4.4.1 Components of a Transportation Cost Function ( a ) Dependent Variable This is typically the cost of the output, in monetary terms and in a given time period. To adjust for the effects of inflation it is often neces-sary to express the cost items in constant dollar. For facility construction and improvement projects, construc-tion price indices are used to convert current dollars to GENERAL STRUCTURE AND BEHAVIOR OF COST FUNCTIONS 75 constant dollars, as discussed in Section 4.6.2. Generally, the dependent variable can be a total cost or a unit cost (total cost per unit output).

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  eBook - ePub

  Transport and Public Policy

  • K.M. Gwilliam(Author)
  • 2021(Publication Date)
  • Routledge

    (Publisher)

  In practice the railways seem to adopt a much more pragmatic and flexible approach than their own theorizing would suggest. For instance, even in their treatment of track costs they do attempt to assess the costs of the different categories of track and the allocation made between passenger and freight traffic does seem to be based partly on the escapability criterion. The T.C.S., moreover, shows a healthy dislike of averaging, particularly where the multiplicity of products would require the arbitrary comparison of entirely different output units. They showed considerable reluctance to submit the track cost figure for passenger and freight running to the Select Committee, probably because they were aware of the substantial variations between costs in different situations. In Appendix 39 to the Report of the Select Committee it is made quite clear that the T.C.S. attempts, when costing a traffic, to take figures for the items involved which relate to the specific time, place, type of traffic and conditions of service involved in transporting that particular load. Moreover, the operations are broken down in considerable detail.

  Now from the economist’s point of view the ‘real’ cost of any particular operation cannot become apparent simply by analysis of the operation itself unless we also know the conditions of availability of all the factors concerned. Only in this way can we tell whether the use of a crane, a platform, a section of track or a labour hour, represents any lost opportunity or not. Henceforth in this book we shall use the term direct cost to refer to those costs directly escapable in the context of a particular decision and not simply to refer to those costs categorized as direct by the T.C.S. The essence of indirect costs is therefore that there is no objectively unique way of allocating them. The use of averages as estimates for direct costs which cannot be traced in every individual instance may be a very necessary element in costings procedure, but only as an approximation to the true direct costs. In practice railway management shows considerable awareness of this despite the failure to express it satisfactorily to either the Select Committee of the Transport Tribunal.

  The Costs of Road Transport

  Many of the complications which arise in railway costing are not so important in the road transport sector. From the operator’s viewpoint costing is simpler in road transport in three main respects.

  • (1) The typical operating unit, the lorry or bus, is smaller than the railway train. Furthermore this unit combines locomotion and carriage. Hence the problem of costs common to a large range of output is substantially diminished. In road haulage, for instance, the convenient costing unit, the lorry, will much more frequently correspond closely to the charging unit, the load, than in rail transport.

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  Issues in Economic Development

  • Olaniyi, Olayiwola Olubodun(Authors)
  • 2018(Publication Date)
  • Daya Publishing House

    (Publisher)

  On the other hand, undue pricing conservatism, particularly on the part of the railroads, may produce the same results. Unfortunately, the right path is not clearly marked. The zeal for ”cost-finding,” important as it is, digs up only part of the answer; cost measures tell only the scope of rate reductions that is tolerable, not what is socially efficient or privately desirable. All of the ordinary complexities of oligopolistic (and, with the rate bureaus, duopolistic) price behavior are compounded by the intricate interrelationships of transport costs, rates and total distribution systems. As shippers perceive and measure these interrelationships with greater refinement, distribution requirements become the key to transport demand. It seems to be a safe assertion that despite all of the complexities, far more is known about the measurement of transport costs than of demand. It is questionable, indeed, whether the problem of demand measurement has even been fully conceptualized in the specialized context of This ebook is exclusively for this university only. Cannot be resold/distributed. transportation since commodity value lost its meaning. The need for greater understanding of demand, and of transport markets generally, is urgent for both pricing and its regulation. This can be accomplished only by broad-scale research efforts in this sector of the economy. Only through the improved insights thus afforded will there be a reasonable expectation that transport prices–with or without regulation–will produce tolerably efficient allocations. This paper confrms again what has often been remarked about the comparative-statics approach to the theory of cost: the inadequacy of the long-run cost curve of the frm as a tool of economic analysis. Its inadequacies are not in logic but in application. In public utility economics, much more than in analysis of competitive frms, the long-run cost curve repeatedly fails to tell us what we want to know about long-run costs.

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  Location and Competition

  • Harry Garretsen, Steven Brakman(Authors)
  • 2005(Publication Date)
  • Routledge

    (Publisher)

  2   Transport costs, location and the economy

  Jan Oosterhaven and Piet Rietveld

  INTRODUCTION

  Economic activities and welfare are distributed anything but evenly in space. The explanation of the spatial pattern of dispersion and concentration rests on a combination of physical–geographical factors and the systematic impact of transport costs (Von Thünen 1826; Weber 1909; Lösch 1940). Historically, transport costs have put their stamp on the spatial economic structure of cities, countries and continents. But in real terms, transport costs have been falling for a long time. Some authors (for example Cairncross 1997) even claim that the role of transport costs has come to an end, resulting in the ‘death of distance’. Economic activities should have become footloose, implying the emergence of widely dispersed location patterns. However, many economic activities are characterised by strongly concentrated patterns, and that means that this conclusion is premature. Besides, there is no guarantee that the constant decrease in transport costs will continue. Systems of roads, railways and airports are experiencing bottlenecks in various parts of the world and this may well lead to an increase of transport costs in the future. Investments to overcome the bottlenecks are huge, and this calls for a critical analysis of the various effects of these investments.

  The aim of this chapter is to clarify the role of transport costs in the economy generally, and in spatial patterns of economic activities in particular. We start with a review of long-term developments in transport costs. We then discuss the contribution of transport costs to the accessibility of regions, after which we focus on the impact of transport on spatial patterns within metropolitan regions. We then review methods available for assessing the impact of transport infrastructure investments on regional and interregional economic performance and conclude that spatial general equilibrium models represent the best tool. Finally, an application of this type of modelling to a series of rail infrastructure proposals in the Netherlands is shown to provide relevant information.

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