The transportation process is one that only comes to an end once the good has reached its final consumer. In the course of this process, there are a few factors that do not always go as anticipated by shippers and in most cases, lead to an extra cost which is transferred down to the last element of the factors that greatly influence the general cost of transportation.
Transport cost and rates
Transport costs and rates come as fixed and variable costs, depending on factors like geography, administrative setbacks, infrastructure, and the movement of passengers and freight. The rates are usually a reflection of the cost directly involved with shipping or the nature of the commodity. Elements like the cost of fuel, the cost for the gathering of information, the cost of negotiation, the cost of contract enforcement, and currency exchange, are all factored in when determining the cost of transportation for passengers and freight. Unnecessary cost can however be avoided, when transporters identify the appropriate mode for freight between origin and destination while taking into consideration the nature of the goods, and the distance.
Components of the transport market
These are the costs based on risks, time, and possible inefficiencies. Elements like distance and time are the biggest propellant of transportation costs. Although it varies depending on the mode of transport, it still remains the most considered factor for the cost of transportation. The type of product being transported is also a pertinent factor given that fragile and perishable goods require more delicate handling than other kinds of goods. Shippers also set aside surcharges which include an extra fee for costs like toll, taxes, and temporary conditions that may hinder the transporter. When all these are put together, they play a defining role in the outcome of the total cost of transportation for freight or passenger.
Types of transport costs
Empirical studies show that transport costs tend to be higher in the early or final stages of a movement. The early stages which are unavoidable, include loading and unloading. the distance unit a freight has covered as well as the weight of the freight is considered line haul cost, while the cost of vehicles and infrastructure are considered capital costs. These are all contributing factors because transport providers make decisions based mainly on their cost structure.
There are a number of factors that affect the cost of transportation but the major factors boil down to Transport and cost, Components of the transport market, and the type of transport cost. The transport sector is one that takes into consideration a plethora of contributing factors before a final decision is taken (cost). This goes to show that the costs of freight are not always the same especially given the sector is dominated by private companies, hence a very competitive market. Although the general cost of transport cannot be avoided, unnecessary costs can be avoided when the appropriate mode of transport is identified.
The geography of transport system- Dr. Jean-Paul Rodrigue and Dr. Theo Notteboom