TRANSPORTATION: CRITICAL LINK IN THE ECONOMY

TRANSPORTATION: CRITICAL LINK IN THE ECONOMY

1. Transportation is a pervasive and vital function in all industrialized economies.

   • The growth of civilizations is directly associated with the develop- ment of transportation systems.

2. Help determine the economic value of products.

   • The reduction in cost is actually greater for longer distances because of the fixed charges

3. Law of Squares in transportation and trade (also known as Lardner’s Law).

4. Time Utility

   • The demand for a particular commodity may exist only during certain periods of time.
   • Quantity Utility
     • Minimizing safety stock inventories for both shippers and receivers
   • Place Utility

5. Practical Economics to benefit companies

   • Moving
   • Making: Exploring efficient ways to manufacture and export
   • Pricing: Reflecting updated cost-to-serve economics
   • Sourcing: Buying closer to point of use

6. Geographic Specialization

   • Transportation is necessary to exchange
     • Increased market competition
   • Large-scale production or economies of scale
     • Result of more efficient operations
   • Transportation patterns reflect the flow of people and commerce

7. Transportation accounts for about 10.5 percent of GDP

   • Freight transportation
   • Modal split
     • Divides the total transportation market for passenger and freight movements according to use or volume by the major modes of transportation
   • Passenger transportation

8. Social Significance

   • Green Logistics
   • Safety

9. Political Significance

   • Regulations
     • Responsability
     • Emminent Domain
     • Common Carrier

10. Transportation. A Supply Chain Perspective. ISBN 978-0-324-78919-5, 7th edition. Authors: Coyle, Langley, Novack, Gibson, Editorial Cengage. cHapter 2

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