Economics of Transportation

Transportation

-Pervasive element of daily life

-Impacts citizens?

Demand for Transportation

Typical measurement units

Price Elasticity of Demand

-Price elastic:

-Price inelastic:

If % change in quantity < % change in
price, then demand is

If % change in quantity > % change in
price, then demand is

Definition of derived demand

Derived Demand for Freight Transportation Diagram

Landed Cost

Transport cost is a component of landed cost
Landed cost includes:

Demand and landed cost diagram

Extent of market area diagram

Service Components of Freight
Demand

Critical service characteristics and related supply chain cost impacts
Transit time

Location of Economic Activity

Development of the Concept

Concept evolves in three phases

Physical distribution concept

Business logistics concept

Supply chain management concept

Integrated Supply Chain Diagram

Information flow

Financial or cash flow