Price Elasticity

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06 Transport Economics Cost (4)
Logistics and Supply Chain Management-The Future of Changing Skill Sets and Smart Career Choices (4), sw nl july 2021 english

Transport costs
Dr. Yasmine Rashed

What is transport cost Profit = Revenue (demand side) – Costs (supply side A major factor affecting the quantity supplied is the cost of production Private costs: impact on the individual user of a particular mode of transport who directly benefits from undertaking a journey financial costs, such as the fare in the case of public transport non financial costs, such as the time involved in undertaking the journey Public costs: the costs of transport that fall on nonusers of the transport service who do not benefit from that transport service. This includes what could almost be termed the unwanted byproducts from the undertaking of transport activities, such as polluted air, the congested road, noise and visual intrusions Generalised cost
financial and non-financial costs (monetary (out-of- pocket) & non-monetary cost (the time spent undertaking the journey))

Production costs: that fall on the operators of a transport service or in the case of private transport the financial costs incurred when undertaking the activity In many ways these are essentially private costs, as the individual that incurs the cost (the operator/road user) is the one that benefits from the provision of that service (i.e. profit/benefit from the journey)

Cost in the production of service 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)
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.

Costs and Time Components The price of a transport service does not only include the direct out- of-the-pocket money costs to the user but also includes time costs and costs related to possible inefficiencies, discomfort and risk (e.g. unexpected delays. However, economic actors often base their choice of a transport mode or route on only part of the total transport price.

Types of Transport Costs

Terminal costs
. Costs that are related to the loading, transshipment and unloading. Two major terminal costs can be considered loading and unloading at the origin and destination, which are unavoidable, and intermediate (transshipment) costs that can be avoided. For complex transport terminals, such as ports and airports, terminal costs can involve a wide array of components, including docking / gate fees, handling charges and pilotage / traffic control fees.

Linehaul costs
. Costs that area function of the distance over which a unit of freight or passenger is carried. Weight is also a cost function when freight is involved. They include labor and fuel and commonly exclude transshipment costs.

Capital costs. Costs applying to the physical assets of transportation mainly infrastructures, terminals and vehicles. They include the purchase or major enhancement of fixed assets, which can often be a onetime event. Since physical assets tend to depreciate overtime, capital investments are required on a regular basis for maintenance.

Fixed and Operating Transport Costs

Conditions Affecting Transport Costs

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