7 factors that affect transportation economics


1. Distance

2. Volume

3. Density

4. Storage Capacity

5. Handling

6. Liability

7. Market Factors



1. Distance

This has a major impact on cost as it is a direct contributor to variable costs such as labor, fuel and maintenance. The tapering principle, where the cost curve increases at a decreasing rate as a result of the distance function, is relevant here.


2. Volume

It is feasible to consolidate smaller loads into larger loads to take advantage of economies of scale.


3. Density

Product density or weight is discussed here, where product density can be increased within a truck load for better capacity utilization.


4. Storage Capacity

This refers to product dimensions and how they affect vehicle space usage. Standard sized items are easier to place than odd sized items, which take up more space.


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5. Handling

When loading or unloading trucks, railcars or ships, special handling equipment such as trolleys, forklift trucks, conveyors, etc. is required to load or unload trucks, railcars or ships.


6. Liability

These are product characteristics, which fundamentally affect the risk of damage and the resulting incidence of claims.


7. Market Factors

Factors such as lane volume and balance. A transport lane refers to activities between points of origin and destination. When a vehicle is dispatched from the place of origin, it may return empty handed or bring back the load. Due to the imbalance in demand in both the manufacturing and consumption places, a balanced (quantity is the same in both directions) move is almost impossible.