GTS_Chapter_3_WS-converted.pptx

Copyright©1998-2021,Jean-PaulRodrigue,Dept.ofGlobalStudies&Geography,HofstraUniversity,
Hempstead,NY
,11549USA.
Jean-Paul.Rodrigue@hofstra.edu
Y
oumayusethefigureswithinforeducationalpurposesonly.Nomodificationorredistributionpermitted.
Formoreinformation: https://transportgeography.org/
Copyright©1998-2021,Dr.Jean-PaulRodrigue,Dept.ofGlobalStudies&Geography,HofstraUniversity. ForpersonalorclassroomuseONLY.Thismaterial(includinggraphics)is notpublicdomainandcannotbe
published,in wholeorinpart,in ANYform(printedorelectronic) andonanymediawithoutconsent.Thisincludesconferencepresentations.Permission MUSTberequestedprior touse.
Transport,Economyand
Society
CHAPTER3

UsageConditions
• DONOTCOPY
,TRANSLATEORREDISTRIBUTETHISDOCUMENT
.
• Thecontentsof this documentcanbefreely usedfor personal orclassroomuseONL
Y
.
• Althoughthematerialcontainedinthisdocumentisfreelyavailable,it isnotpublicdomain.Itscontents,inwholeorinpart (including
graphicsanddatasets),cannotbecopiedandpublishedinANYform(printedorelectronic)without consent.
• If youhaveaccessedthisdocumentthroughathirdparty(suchasacontentfarm),keepinmindthatthispartyisillegallyredistributing
this content. Pleaserefer to the true source(https://transportgeography.org/) instead of the third party.
• Permission to useanygraphicmaterial herein in anyformof publication, suchasanarticle, abookor aconference presentation, onany
mediamustberequestedpriortouse.
• Informationcitedfromthisdocumentshouldbereferredas:Rodrigue,J-Petal.(2020)TheGeographyofTransportSystems,Hofstra
University,DepartmentofGlobalStudies&Geography, https://transportgeography.org/.

Tableof Contents
• 3.1–TransportationandEconomicDevelopment
• 3.2–Transportationand Society
• 3.3–Transport Costs
• 3.4–TheProvisionandDemandofTransportationServices

TransportandEconomic
Development
Chapter3.1

FactorsbehindtheDevelopmentofTransport Systems
Environmental Historical Technological Political Econom
ic
Scale
Local
Regional
National/
T
ransnational
Global
Hydrographyand
geomorphology
Climate
Distance
Cultureand
settlementpatterns
Urbansystem
Nation state /
Colonialism /
Imperialism
Globalization
Roads
Railwaysandcanals
Corridorsandsea
routes
Airtransportandtele-
communications
Zoning
T
axationand
regulations
Tradeagreements
Multilateral
agreements(WTO)
Employmentand
distribution
Modalcompetition
andcomplementarity
Markets
Interdependencyand
comparative
advantages
Oceanicmasses
©GTS

ServicesandtheirAssociated Infrastructures
Service SupportingInfrastructures
Roads,bridges,tunnels,railtracks,ports,harbors,airports,
distributioncenters, etc.
Dams,reservoirs, pipes,treatmentplants, etc.
Transportation
Wa
te
rsupply
Wa
te
rdisposal
Irrigation
Garbagedisposal
Telecommunications
Power
Sewers,usedwatertreatmentplants, etc.
Dams,reservoirs, canals,sprinklingsystems, etc.
Landfills,incinerators,recyclingfacilities, compostunits, etc.
T
elephoneexchanges,telephonelines,oceaniccables,
cellulartowers,fiberopticcables,webservers, etc.
Powerplants,transmission&distributionlines,pipelines, etc.
©GTS

EconomicImpactsofTransportation Infrastructure
Intermodal
Modal
Infrastructurelevel
Local Regional Global
Timeframe
Infrastructurelevel
Capacity Costs
Tim
e Reliability
Accessibility Location
©GTS
CORE
OPERATIONAL
GEOGRAPHICAL

SocioeconomicBenefitsof Transportation
• Timeandcost savings.
• Incomefromtransport
operations.
• Formationofdistribution networks.
• Attractionofeconomicactivities.
• Increasedcompetitiveness.
• Improvedmobility.
• Increasedsocial
opportunities.
• Timeandcost savings.
• Incomefromtransport
operations.
• Accesstolaboror customers.
• Rentincome.
• Goodsandservicesto users.
andeconomies
ofscale
Multipliersand
opportunities
SCOPE
Passengers
Direct
Capacity
and
efficiency
Indirect
Accessibility
Ind
uced
Users
Freight
Operators
Employers&Retail Customers
©GTS
Society
• Productivityandadded gains.
• Rentincome.
• Goodsandservicesto operators.
• Rangeofsuppliersand markets.
Economy

DiminishingReturnsofTransport Investments
• Newinfrastructure builtoverlimitedexisting infrastructure.
• Benefitsfromnewconnectivityand capacity.
•Neweconomicopportunities(labor,resources,markets).
• Expansionofexistinginfrastructure;emergenceof corridors.
•Expandedconnectivity,capacityandreliability.
• Productivity improvements.
HighMultiplyingEffects
AverageMultiplyingEffects
LowMultiplyingEffects
•Highinfrastructure maintenanceandupgradecosts.
•Nicheconnectivity.
•Peakcapacityandreliability.
•Limitedproductivity improvements.
A
B
C
MultiplyingEffects
NetworkDensity
A
B
C
©GTS

TransportEconomicIndicators
Type Measures Relevance
Transportationprices Aggregatepriceoftransportationservices
bymodeorcommodity
Inputcostsbyeconomicsector.Market
competitiveness.
Transportationproductivity Laborproductivityandtotal-factor
productivity(laborand assets)
Levelofreturnoninvestment.Economic
impactsby sector.
Logistics costs Supply-chaindistributioncostrelativeto
GDPortotalcosts.
Efficiencybylogistics function.
Transportationcapacity utilization Shareofmodal(vehiclesandlinks)and
intermodal(terminals) capacity
Assessmentofinvestmentneedsfor
maintenance,upgradeandexpansion.

TransportEconomicIndicators
T
ype
TransportationPrices
TransportationProductivity
LogisticsCosts
TransportCapacityUtilization
Relevance
Inputcostsbyeconomicsector.Market
competitiveness.
Levelofreturnoninvestment.Economic
impactsby sector.
Measures
Aggregatepriceoftransportation
servicesbymodeorcommodity.
Laborproductivityandtotal-factor
productivity(laborand assets).
Supply-chaindistributioncostrelativeto
GDPortotalcosts.
Shareofmodal(vehiclesandlinks)and
intermodal(terminals) capacity.
Efficiencybylogistics function.
Assessmentofinvestmentneedsfor
maintenance,upgradeandexpansion.
©GTS

EconomicMultiplier Effectsof Transportation
Type Effect Context Source
Transittime Onedayintransitequivalent
toatariffof0.6to 2.1%
OECD Hummels(2012)
Port 10%increaseinport
efficiencyleadsto3.2%
increaseinrealtrade
betweenacountrypair
USA BlonigenandWilson
(2006)
Port 1%increase in port efficiency
leads to a 0.38% reduction in
tradecosts
WorldBank (2017)

TransportSpendingasShareofGDP,SelectedCountries2005
12
16
13
14
14
13
10
12
9
11
14
11
11
13
11
14
18
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Austra
lia
Austr
ia
Belgiu
m
Canada
Fran
ce
Germa
ny
Gree
ce
Ita
ly
Jap
an
Kor
ea
Mexi
co
Netherlands
Spai
n
Swed
en
Turk
ey
UnitedKingdom
UnitedStates
Transport Other

TransportInfrastructureInvestmentandMaintenanceSpendingasShareofGDP,2015
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Canada China France Ger
m
any India Italy Japan K
orea R
ussia Spain Turkey United
Kingdom
United
States

CompositionoftheGDP,UnitedStates, 1991-2013
9.5
9.5
9.7 10.1 10.3 8.8
30%
20%
10%
0%
40%
50%
60%
100%
90%
80%
70%
1991 1995 2000 2005 2010 2013
Other
Education
Transportation
Food
Healthcare
Housing

EmploymentinTransportation,UnitedStates, 1990-2018
0
1,00
0
2,00
0
3,00
0
4,00
0
5,00
0
6,00
0
1990 20
0
0 20
0
5 2010 20
15 20
18
Thousa
nds
Other
Railroad
Transit
Air
Couriers
Supportactivities
Warehousing
Trucking
©GTS

EmploymentintheTransportSector,SelectedCountries, 1996
0.0
2.0
4.0
6.0
8.0
10.0
12.0
0
1
2
3
4
5
6
7
8
9
Canada Italy UnitedKingdom UnitedStates
Millio
ns
Percentage
of
the
Labor
Force
France
%ofT
otalLaborForce TransportationEmployment

InfrastructureLevelandEconomic Development
Road
Water/ Sewage
Electricity
Radio CellPhone
PerCapita Income
Infrastructure
Level

CumulativeModalContributiontoEconomicOpportunities
Horses Canalshipping
Telecommunications
1750 1775 1800 1825 1850 1875 1900 1925 1950 1975 2
0
0
0 2025 2
0
5
0
EconomicOpportunities
Air
Roads
Maritimeshipping
Railways
IndustrialRevolution MassProduction Globalization
Introduction

TheOceanEconomy
Harvestingof
livingresources
Extractionofnon-
livingresources
Maritimetradeand
commerce
Fisheries
Aquaculture
Pharmaceutical,chemicals
Seabedmining
Oilandgas
Renewables
Desalination
Shipping
Ports
Cruising
Resorts
Urbanization
Energydemand
Freshwatershortages
Seabornetrade
Globaltourism
Coastalurbanization
S
S
e
e
a
a
f
o
f
o
o
o
d
d
Biotechnology
Minerals
Energy
Freshwater
Transport
Tourism
Settlements
ACTIV
IT
Y OCEANICRE
G
IO
N D
R
I
V
E
R
Foodsecurityand
demandfor food
Pharmaceuticaland
industrialdemand
Mineraldemand
©GTS
Coastal Deepsea

WorldBankAverageAnnualLendingbyMode,2007
62%
4%
1%
13%
20%
Roads & Highways
Ports & Waterways
Railways
Aviation
GeneralTransportation

AMulti-LayerPerspectiveaboutTransportandEconomicDevelopment
TransportChain
Organization
TransportService
Operations
Transport
In
frastructure
Location
Organization of the (multimodal) routing of passengers
andfreight through the transport system using amixof
transportservicesandtransport infrastructures.
Busservices,railservices,bargeservices,maritime
transportservices,trucking,airlineservices, etc.
Freightandpassengerhandlingintransport nodes.
Transportnodes(e.g.airport,seaport,railwaystation,
intermodalterminal,etc.)andtransportlinks
(highways,waterways,railtracks,pipelines, etc.)
Geographicallocationoforiginanddestination of
movements(multimodaltransport chain).
©GTS

ImpactofRecessionsonConsumption,ProductionandTrade
None
Significant
Decline
Demand
A–BasicGoods
B–DiscretionaryGoods
C–DurableGoods
D
–CapitalEquipment
E–LuxuryGoods
A E
ProductCategories
B C D 1 3 4
Supply
1–FuturesIndexes
2–Production(bysector)
3–ContainerVolumes(bytradelane)4
–ValueofTrade(bytradegroup)
Lightrecession
Severerecession
Sequence
2
©GTS

SelectedSupplyChainandTradeIndicators,2007-2021 (2007=100)
30
50
90
70
110
130
150
170
190
210
230
Jan-
07
May-
07
Sep-
07
Jan-08
May-
08
Sep-
08
Jan-09
May-
09
Sep-09
Jan-10
May-
10
Sep-10
Jan-11
May-
11
Sep-11
Jan-12
May-
12
Sep-12
Jan-13
May-
13
Sep-13
Jan-14
May-
14
Sep-14
Jan-15
May-
15
Sep-15
Jan-16
May-
16
Sep-16
Jan-17
May-
17
Sep-17
Jan-18
May-
18
PMI
Oil (WTI)
MNODG
CTI
CPB(WTI)
3 4
Sequence 1 2
P
M
I
W
T
I
M
N
O
D
G
CTI
CPB(WTI)
Internalshock Externalshock
P
M
I
:PurchasingManagersIndex
W
T
I
:WestTexasIntermediate
M
N
O
D
G
:ManufacturersNewOrdersofDurableGoods
CTI:ContainerThroughputIndex
CPB(WTI):WorldTradeIndex(volume)

LifespanofMainTransport Assets
8
10
15
2
0
2
0
2
0
3
0
50
50
70
0 20 40 60 80
Y
ears
100 120 140 160
Car
Container
Containership
Jetplane
Locomotive
Highway
Bridge
Airport
Railway
Port
AverageLifespan
OptimumLifespan

LongWaveCyclesofInnovation
1785 1845 1900 1950 1990
W
aterpower
Textiles
Iron
Mechanization
Commerce
Steam
Rail
Steel
Cotton
Electricity
Chemicals
Internalcombustionengine
Petr
ochem
icals
Electronics
Aerospace
Digitalnetworks
Software
Ne
wMedia
Biotechnology
6
0years 55years 50years 4
0years 3
0years
Pace
ofinnovation
1st Wave 2n
dWave 3r
dWave 4thWave 5thWave
2
0
2
0
6thWave
Automation
Robotics
Digitalization
Sustainability
25years(?)

TheFiveWavesofDevelopment
Firstwave(1785-1845) Beginningoftheindustrialrevolution(England).
Agricultural surpluses,savingsandinvestment.
Productivitygrowthinagricultureandinnewindustrial activities.
Textiles,ironandwaterpower.
Secondwave(1845-1900)
Thirdwave(1900-1950)
Fourthwave(1950-1990)
Fifthwave(1990-2020?)
Accelerationinthegenerationof surpluses.
Growthintheinvestmentlevel(5to10%ofthenationalincome).
Coal,steamengineandrailways.
Phaseofmaturity(investmentlevelsat20%ofnational income).
Electricity,chemicalsandinternalcombustion engine.
Massconsumptionsociety(surpluses,savingsandinvestment).
Tertiarysector taking agrowing shareof theeconomy.
Petrochemicals,electronicsand aviation.
Technologyandinformationarethedrivingforces.
De-industrializationofseveraldevelopedcountries.

ContainerizationasaDiffusionCycle:WorldContainerTraffic(1980-2020)
0
100
200
300
400
500
600
700
800
900
198
0
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
MillionTEU
Adoption
1966-1992
1993-2001
Acceleration
PeakGrowth
2
0
0
2
-
2
0
0
8
M
aturity
2
0
0
9-
New(niche)services
Productivitygains
Networkdevelopment
Productivitymultipliers
Massivediffusion
Networkcomplexities
Nichemarkets
DiffusionLevel
T
im
e
©GTS

RelationshipbetweenTEUandGDPGrowth
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
1985-1989 1990-1999 2000-2008 2009-2015
TEU-to-GDPMultiplier

Technology“Hype” Cycle
V
isibility
Utility
HypePhase RealizationPhase
Introduction Inflated expectations Delusion Learningcurve Productivitypeak
Abandonment
©GTS

MainStagesina Bubble
Time
ManiaPhase BlowoffPhase
Valuation
Beartrap
Bulltrap
Returnto
themean
Takeoff
“NewParadigm”!!!
Capitulation
D
espair
Mediaattention
Delusion
Enthusiasm
Greed
FirstSelloff
SmartMoney
Institutional
investors
Public
Fear
Denial
Returnto “normal”
StealthPhase AwarenessPhase
Source:Dr.Jean-PaulRodrigue,Dept.ofGlobalStudies&Geography,HofstraUniversity.

FactorsbehindtheDevelopmentofTransport Systems
Scale Environmental Historical Technological Political Economic
Local Hydrographyand
geomorphology
Cultureand
settlement
patterns
Roads Zoning Employment
Regional
Continental
Global
Altitude Colonies Railwaysand
canals
Taxationand
regulations
Modalcompetition
and
complementarity
Distance Colonialism/
imperialism
Corridorsandsea
routes
Tradeagreements Markets
Oceanicmasses Globalization Airtransportand
tele-
communications
Multilateral
agreeme
nts (WTO)
Interdepende
ncy and
comparative
advantages

TransportImpactsonEconomic Opportunities
TransportInfrastructureInvestments
Capacity
TransportImprovements
Efficiency Reliability
LowerTransportCosts ShorterTransitTimes BusinessExpansion
IncreasedProductivity
LaborMarket CommodityMarket
IncreasedCompetitiveness
EconomicGrowth ©GTS

Movingstorageunits
JustinTimeandits Logistics
Movingstorageunits
Assemblyline
Warehousing
DeliveryUnitsforParts ProductionUnit DeliveryUnitsforGoods
©GTS
PAR
TS
GOO
DS
Assemblyand
warehousing
SupplyChain
Logistics Logistics

TransportationandSociety
Chapter3.2

PassengersMobility Transition
EconomicDevelopment
Individual
Collective
Motorized
Non-motorized
R
ur
al Industrial Post-Industrial(Services)
Share
of
Mobility

ShareofConsumptionbySectorandIncome,DevelopingCountries,2010
18
.7
9.9
6.9
4.3
10%
0%
20%
30%
40%
50%
60%
70%
80%
100%
90%
Higher Middle Low Low
est
Others
FinancialServices
ICT
PersonalCare
Health
Education
Utilities
Transport
Energy
Housing
ClothingandFootwear
Foodand Beverages

TransportFatalitiesbyMode,UnitedStates, 1970-2017
0
10,000
20,000
30,000
40,000
50,000
60,000
1970 1980 1990 2000 2005 2010 2015 2017
Waterborne
Transit
Railroad
AirCarriers
Highway

RoadFatalitiesper100,000People,SelectedCountries
0 5 10 15 20 25 30 35 40
France
Canada
Belgium
Australia
Germany
Italy
Japan
SouthKorea
UnitedStates
UK
Sweden
SouthAfrica
Malaysia
2016
2000
1990
1980
1970

TransportCosts
Chapter3.3

ComponentsofTransport Cost
A B
TransactionCosts
FrictionofDistance
Shipment

HouseholdExpendituresonTransport,UnitedStates, 2005
42
52
6
0%
20%
40%
60%
80%
100%
Transport
services
Operationof
vehicles
Purchaseof
vehicles
6
11
15
22
46
Vehiclefinancecharges
Othervehiclecharges
Maintenanceandrepairs
Vehicleinsurance
Gasolineandmotor oil
55
43
3
Othervehicles
Carused
Carnew

FixedandOperatingTransport Costs
Mode Fixed/CapitalCosts OperatingCosts
Railor Highway Land,Construction,RollingStock Maintenance,Labor,Fuel
Pipeline Land, Construction Maintenance, Energy
Air Land,Field&TerminalConstruction,
Aircraft
Maintenance,Fuel,Labor,Airport
Charges
Maritime LandforPortTerminals,
CargoHandlingEquipment,Ships
Maintenance,Fuel,Labor,Port
Charges

ConditionsAffectingTransportCosts
Condition Factors Examples
Geography Distance,physiography, accessibility ShippingbetweenFranceandEnglandvs.shippingbetween
Franceandthe Netherlands
Typeofproduct Packaging,weight, perishable Shippingcoal
Shippingflowersor wine
Economiesofscale Shipment size A777comparedto737 (passengers)
Post-PanamaxcomparedtoPanamax (freight)
Tradeimbalance Emptytravel TradebetweenChinaandtheUnitedStates
Infrastructure Capacity,limitations,operational
conditions
TheInterstate
Mode Capacity,limitations, operational
conditions
Abuscomparedtoa car
Competitionandregulation Tariffs,safety, ownership TheEuropeanUnion,TheJones Act

TruckTransportCostComponents,NorthAmerica,2005
CostComponent CostShareRange
Driver 27to 36%
Fuel 18to 24%
AdministrationandInterest 13to 14%
EquipmentOwnership 7to 12%
Repairs 7to 12%
Insurance 3%
Tires 2to 4%
Miscellaneous(Licenses,Cleaning, etc.) 2to 3%
Margin 5%

FreightTransportationService Spectrum
High Low
AirCargo Truck RailIntermodal RailCarload RailUnit Wa
ter
$4.50/kg $1.00/kg 50¢/kg 5¢/kg 2¢/kg 1¢/kg
• Fastest,mostreliable
andmost visible.
• Lowestweight,highest
valueandmosttime-
sensitivecargo.
• Fast,reliableand
visible.
• Rangeofweightand
value.
• Railintermodal
competitivewithtruck
overlonger distances.
• Slower,lessreliableand
lessvisible.
• Highestweight,lowest
valueandlesstime-
sensitivecargo.

TotalFreightMovedbyDistance,UnitedStates, 2007
0
10
20
30
40
50
60
Below100 100to249 250to499 1,000to1,499 1,500to2,000 Over2000
500to 749
Weight
750to999
Ton-Miles

FreightTransportRevenueperTon-Mile(in2006dollars)
$0.27
$0.01 $0.02
$0.80
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
$0.90
Water Rail Road Air

FirstandLastMileUnitCostStructure
“FirstMile” “LastMile”
UnitTransportCosts
Transportsequence
UrbanArea
International/ Intercity

LettersofCreditandBills ofLading inCommercialTransactions
Seller
Shipper
Seller’s
Bank
Buyer’s
Bank
Buyer
Contract
LetterofCredit
Shipper
Seller’s
Bank
Buyer’s
Bank
Buyer
Consignment
Billoflading
Seller
Shipper
Seller’s
Bank
Buyer’s
Bank
Buyer
Billoflading
Payment
Seller
Seller’s
Bank
Buyer’s
Bank
Buyer
Consignment
Billoflading
1 2
3 4
Seller
Shipper

Cost/ PerformanceRelationshipsforInlandFreightTransportationModes
Cost
Performance(Speed,Reliability,Flexibility)
Barge/ShortSea
Intermodal
IntermodalPotential
Air
RailCarload
L
TL
Truckload

ShipmentSizeandInlandTransport Costs
1
10,000,000
1,000,000
100,000
10,000
1,000
100
10
Parcel LTLTruck Truckload
ShipmentSize(lbs)
Multi-railcar
Railcarload
TransportCharges($/ton)
Unittrain Bargeload

Top10CommodityGroupsRankedbyValuePerTon,UnitedStates, 2002
$0
$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000
Pharmaceuticalproducts
Electronic,electrical,andoffice equipment
Transportationequipment
Precisioninstrumentsand apparatus
T
obaccoproducts
Textiles,leather,andproducts
Machinery
Motorizedandothervehicles andparts
Miscellaneousmanufacturedproducts
Furniture,mattressesandlighting products
Average

Top15CommodityGroupsRankedbyValuePerTon,UnitedStates, 2017
$0
$5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000
Articlesofmetal
Chemicalproductsand preparations
Meatandseafood
Printedproducts
Mixedfreight
Furniture
Motorizedandothervehicles
Miscellaneousmanufacturedproducts
Machinery
T
extilesandleather
Electronics
Othertransportation equipment
T
obaccoproducts
Precisioninstruments

TransportCostsbyIndustryType, 1999
0
1 2 3 4 5
Transportcostsperoutput (%)
6 7 8 9
Finance,Insurance& RealEstate
Communications&Utilities
Services
Manufacturing
Mining
Wholesale&Retail
Construction
Agriculture,Forestry&Fishing

ShareofTransportCostsinProduct Prices
0
5 10 15 20 25 30
Leatherproducts
Electronics
Printingandpublishing
Apparel
Instruments
Machinery
T
obacco
Rubberandplastics
Transportequipment
Fabricatedmetals
T
extiles
Primary metals
Paperproducts
Furniture
Food
Lumberandwood
Petroleum
Stone,clayandglass

ShareofTransportCostsin ProductPricesandAverageHaulLength
27
24
18
13
12
1
1
9
8
8
8
7
5
5
4
4
4
4
0 5 10 15 20 25
3
30
0 200 400 600
Length(km)
800 1000 1200
Leatherproducts
Electronics
Apparel
Instruments
Machinery
T
obacco
Rubberandplastics
Transportequipment
Fabricatedmetals
T
extiles
Primary metals
Paperproducts
Furniture
Food
Lumberandwood
Petroleum
Stone,clayandglass
Share(%)
Averagehaul length(km) Share(%)

ShareofTransportCostsin ProductPricesandAverageDomesticHaulLength
Stone,clayand glass
Petroleum
Lumberandwood
Food
Furniture
Primarymetals
T
extiles
Fabricatedmetals
Transportequipment
Paperproducts
Rubberandplastics
T
obacco
Machinery
Instruments
Apparel
Electronics
Leatherproducts
R²=0.3988
500
0
100
200
300
400
600
700
0 5 10 15
ShareofTransportCosts (%)
20 25 30
Average
haul
length
(km)
©GTS

AverageLengthofHaulbyMajorCommodityGroup,2002(in miles)
0
100 200 300 400 500 600 700
Gravelandcrushedstone
Gasolineandaviationturbine fuel
Fueloils
Wasteandscrap
Alcoholicbeverages
Fertilizers
Basic chemicals
Woodproducts
Coal
Cerealgrains
Machinery
Plasticsandrubber
Electronic,electrical,andofficeequipment
Textiles,leather,andproducts

TypicalOceanFreightCostsforsomeProducts(Asia–UnitedStatesorAsia–Europe)
TypicalShelfPrice ShippingCosts ShippingCosts
Share
LCDTVSet $700 $4.00 0.5%
DigitalCamera(high
range)
$450 $0.15 0.03%
VacuumCleaner $150 $1.00 0.6%
ScotchWhisky (bottle) $50 $0.15 0.3%
Coffee(1 kg) $15 $0.15 3.3%
Biscuits(Tin) $3 $0.05 1.7%
Beer(Can) $1 $0.01 1.0%
Apple $0.75 $0.04 5.3%

MaritimeTransportationRatesfor a40FootContainerbetweenSelectedPorts,2010
Shanghai
LA/LB
NewYork
Rotterdam
2,620
1,400
Eastbound/
Northbound
$1,000
$1,200
Westbound/
Southbound
3,700
1,830
1,810
2,520
Santos
Melbourne
1,570
3,690
3,060
3,060
1,070
4,340
Durban
Pathsareapproximate
1,770
3,670
2,750
2,550
2,880
3,480
3,810
3,340

AverageCostperTEUbyContainershipCapacityandBy Route,1997
100
200
300
400
500
600
700
0 1,000 2,000 3,000 4,000
CapacityinTEU
5,000 6,000 7,000 8,000
Costs
per
TEU
($US)
Europe-FarEast(11,500miles)
TransPacific(8,000miles)
TransAtlantic(4,000miles)

ContainerShippingCosts
55
20
20
40
25
10
20
10
0
20
40
60
80
100
Port-to-Port Door-to-Door
Percenta
ge
MaritimeShipping
Porttransshipment
Containerandinlandtransport
Management

CosttoImporta20 FootContainer,2015

LogisticsCostsandAverageTransitTimeofa20FootContainer,Mombasa–Nairobi
(Kenya)
0
2
4
6
8
10
12
14
16
18
0 100 400 500
200 300
Distance(km)
Time
(hours)
AverageTransitTime(29.8hoursfor430k
m
)
17%
3%
15%
4%
13%
3%
4%
41%
TotalLogisticsCosts(9,844USD)
SeaFreightShipping
ShippingLinesCharges
InlandRoutingCosts
DirectCostsof Delays
PortHandling
ContainerFreightStationCharges
ClearingAgentFees+VAT Indirect
Costsof Delays
Policechecks(+2hours)
Otherdriverdelays(+11 hours)
Weightstation(+3 hours)
Weightstation(+3 hours)
Unloading(+2hours)
Nairobi
Mombasa

EstimatesofTotalImportsFreightCostsRelative toImports(CIF),1997
14
12
10
8
6
4
2
0
T
otal Developed Developing Africa Asia Europe SouthAmerica Oceania

FixedandVariableCostsandServicein theTransportationSystem
Characteristic FixedInfrastructure VariableCosts
Examples Highways,railtracks,airports, ports Trucks,railcars,planes, ships
Ownership Mostlypublic Mostlyprivate
Lifespan Verylong(decades) Shorttoaverage(5to20years)
Rateofchange Slow Rapid redeployment
Impactonservice Shapes accessibility Shapeslevelofservice
Competition Leveltheplaying field Sourceofcomparative advantages

CompositionofLogistics Costs
Other 1.2%
Supplies 2.2%
Administration 2.7%
Rent 4.3%
CustomerService 7.8%
Labor 9.5%
InventoryCarrying 21.8%
Transportation 50.3%
0% 10% 20% 30% 40% 50% 60%

TheProvisionandDemandof
TransportServices
Chapter3.4

TransportSupplyand Demand
i
i j
Tij
RealizedDemand
PotentialDemand
ModalSupply
j
Intermodal
Supply
TransportSupply
Aij
TransportDemand

Ton-MilesofTransportedFreight,UnitedStates,1960-2011(millions)
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
0
500000
1000000
1500000
2000000
2500000
3000000
1960 1970 1980
IntercityTruck
1990 2000 2010
Rail Coastal Air(RightAxis)

Passenger-MilesTransportedwithintheUnitedStates, 1960-2014
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
1960 1970
HighwayTotal
1990 2000
PublicTransit
2010
Millions
ofPassenger-Miles
Car
1980
Utilityvehicles Air IntercityRail

GrowthFactorsinTransport Demand
Quantity
of
Passengers
orFreight
AverageDistance
K
M
Passengers
Freight
Growthinproduction
andconsumption
Incomegrowth
Outsourcing/
Offshoring
Economicspecialization
Suburbanization

FactorsbehindFreightTransport Demand
Economy
Generalderiveddemandimpact.LinkedwiththeGDP
.Functionofthestructureoftheeconomyintermsofresources,goods,and
services.
Industriallocation Effectonton-kmsandonmodalchoice.
SpatialStructure Effectonton-kms.Functionofinternationaltradestructure.Containerizationandintermodaltransportation.
InternationalAgreements Bothconcerningtradeandtransportation.Economicspecialization.Increasedtransbordertraffic.Simplifiedcustom procedures.
JITpracticesand warehousing Decreasedinventories.Moreshipments.Smallerlinehauls.Shifttofasterandmorereliablemodes.Useof 3rdpartylogisticsproviders.
Strategicalliances Betweencarriers, shippersandoften producersandretailers.Lowerdistributioncosts.
Packagingandrecycling Increasedtransportabilityofproducts.Lowerfreightdensity.Reverse distribution.
Regulationandderegulation Increasedcompetition,levelofserviceandlowercosts.Growthof intermodaltransportation.
Fuelcosts,taxesand subsidies Largeandvolatilecostcomponents,specificallyforenergyintensivemodes. Preferredmodeorcarrier.
Infrastructureandcongestion Efficiency,operatingcostsand reliability.
Safetyandenvironmental policies Operatingspeed,conditionsandcosts.Capacityandweightlimits.
T
echnology Containerization,double-stacking,automationandrobotics,handlingandinterchangesystemsandautomatedterminals.Information
systems(IDE).Lowercosts,increasedefficiencyandreliabilityandnewopportunities.

FactorsbehindFreightTransport Demand
Economy
Generalderiveddemandimpact.LinkedwiththeGDP
.
Functionofthestructureoftheeconomyintermsof
resources,goods,and services.
Industriallocation
Effectonton-kmsandmodalchoice.Outsourcingand
offshoring.
Spatialstructure
Effectonton-kms.Functionofinternationaltrade
structure.Majorhubs,gatewaysandcorridors.
Internationalagreements
Concerningtradeandtransportation.Economic
specialization.Increasedtransbordertraffic.Trade
facilitation.Simplifiedcustom procedures.
JITpractices
Lowinventorylevels.Moreshipments.Smallerline
hauls.Shifttofasterandmorereliablemodes.Useof
3rdpartylogistics providers.
Strategicalliances
Betweencarriers,shippersandoftenproducersand
retailers.Lowerdistribution costs.
Packagingandrecycling
Increasedtransportabilityofproducts. Lower
freightdensity.Reverse distribution.
Deregulation
Increasedcompetition,levelofserviceandlower
costs.Growthofintermodal transportation.
Fuelcostsandsubsidies
Largeandvolatilecostcomponents,specificallyfor
energyintensivemodes.Preferredmodeor carrier.
Infrastructure
Efficiency,operatingcostsand reliability.
Safety
Operatingspeed,conditionsandcosts.Capacityand
weightlimits.
Technology
Containerization,automationandrobotics.
Informationsystems.Lowercosts,increased
efficiencyandreliabilityandnewopportunities.
©GTS

ShareofTotalDomesticFreightActivitybyMode, SelectedCountries,1996
0%
20%
40%
60%
80%
100%
Canada France Germany Italy Japan United
Kingdom
UnitedStates
%
of
total
domestic
metric
ton-km
Road
Rail
OilPipeline
Water
Air

ShareofTotalDomesticPassengerActivitybyMode,G7Countries, 1996
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Canada France Germany Italy Japan United
Kingdom
UnitedStates
%
of
total
domesticpassenger-km
Air Road Rail

StaticandDynamicCapacityofTransportInfrastructure
StaticCapacity
DynamicCapacity
Optimumnominal
capacity
FacilityExpansion
Technicaland Managerial
Improvement
A

MajorSupplyVariablesforTransportation Modes
Road Rail Air M
aritim
e
Routes
T
erm
inals
V
eh
icles
•Lanes
•Width
•Speedlimit
•T
r
acks
•Grade
•Yards
•Transshipment
•Corridors
•Aircontrol
•Canals
•Locks
•Parking
•Runways
•Gates
•Docks
•Transshipment
•Speed
•Capacity
•Speed
•Capacity
•Speed
•Capacity
•Speed
•Capacity

ImpactsofModalCompetitionandIntermodalCapacityonTransportSupply
Traffic
Assignm
e
nt
ModeA
ModeB
C
Capacity
C(A)
TerminalA TerminalB
C(B)
T(AB)=C(B)
T(A)
T(B)
C=T(A)+T(B)
ModalCompetition
IntermodalCapacity

ClassicTransportDemand/ SupplyFunction
𝑇
2−𝑇
1
𝐸
𝑙
𝑎
𝑠
𝑡
𝑖
𝑐
𝑖
𝑡
𝑦
=
𝐶
2−𝐶
1
Traffic
Cost
Dem
and
Supply
C
1
C2
D
T1 T2
Equilibrium
S1
S2

RoadTransportElasticityby Activity
Traffic
Cost
100%
0
%
Emergency
Com
m
u
ting
MajorPurchase
SpecialEvent
SocialActivities
Recreation

GTS_Chapter_3_WS-converted.pptx

Recommended

Recommended

More Related Content

More from Chandrasen Sharma

More from Chandrasen Sharma (20)

Recently uploaded

Recently uploaded (20)

GTS_Chapter_3_WS-converted.pptx