transport comm notes
transport comm notes
IMPORTANCE OF TRANSPORT
1. Transport is necessary to provide for the physical movement of people and goods
from where they are abundant (such as plantations, mines, farms) to the factory
where they are needed as raw materials for the manufacture of finished goods, or
where they are processed.
2. Transport is again necessary to send these processed or finished goods to their
markets, and ultimately, to the final consumers, both domestic and foreign.
3. A fast, cheap and efficient transport system has led to the extension of both
local and overseas markets.
4. This has enabled producers to specialize and engage in large-scale production
with its related cost savings. It has also led to different regions specializing in
those goods in which they find comparative advantage in producing on a commercial
basis. Trade between different regions within and outside the country expanded.
5. Consumers all over the world can now buy goods produced in far-off countries.
Thus, they have greater choice. Standards of living have improved.
6. The main means of transport in home trade are by road, rail, rivers and canals
whilst in foreign trade they are by air and sea.
WATER TRANSPORT
Water transport is cheaper than various modes of transport of land transport. In
land transport, large amount of capital is required for the construction and
maintenance of roads and railways. But in water transport, it is not necessary
except in the case of canal transports. The cost of running expenditure is also
less.
PIPELINES
Advantages of pipelines
1. Liquid and gaseous goods like liquefied natural gas and petroleum are
transported over long distances from the place of production to the refineries, and
from there, to the consumers in their homes via pipelines because this is the
safest and most economical method to transfer such hazardous (inflammable)
materials in bulk. Goods in bulk like wheat are also transferred via pipelines from
the silos (places of storage) at the ports into special bulk carriers. Maintenance
costs are low because very little labour is needed and fuel costs are lower than
that required if vehicles were used to transport these goods.
2. Loss due to pilfering and evaporation is minimized.
3. It is not affected by weather conditions.
4. There is less pollution of the environment compared to vehicles.
Disadvantages
1 High initial capital cost is involved in installing the whole system, which is
normally laid underground.
2 It is rather limited in use. Once built, these pipelines can only be used the
particular type of product for which it was originally installed. Long-term use
must be guaranteed to make the laying of the pipelines a viable project.
ROAD TRANSPORT
Advantages:
Timetables: There is no specific timetable for a road journey. The transport can be
arranged at any time and is even available at short notice.
Motorways: The motorway system has developed and has linked industrial centers with
consumers. Goods can now be delivered very fast.
Vehicles: Vehicles have increased in size and efficiency. This allows more freight
to be transported at one time.
Suitability: Road transport is suitable for carrying small quantities of goods over
short distances.
Containerization: Goods are now packed in containers, sealed and then transported.
Damages caused by rainwater and sunlight can be avoided. Theft of goods can also be
avoided. The containers are loaded and unloaded with the help of cranes. So,
breakages can be minimized. Perishable goods can be transported in freezer
containers.
Disadvantages:
Bulk: It is not suitable to carry bulk goods by road as it incurs a great cost.
Moreover, the vehicles are small when compared with the quantity that the railways
can carry.
Congestion and delays: The heavy road congestion has become a problem resulting in
delays in transporting goods to industrial centers. This problem does not arise in
railways.
Social costs: Private concerns are only worried about expenses such as driver’s
wages, fuel, tax, etc. They do not consider the expenses on pollution, maintaining
the road system, signaling system, accidents, etc. These costs are met by the
society and are called social costs. These costs are very high.
Slow traveling time: A road journey will take more time especially for long
distances when compared with railways. Road journeys could also be slowed down
because of traffic jams.
RAIL TRANSPORT:
Advantages:
Cheap: Rail is the cheapest mode of land transport for long journeys, especially
for bulky and heavy goods. If the goods are to be sent by road, then many lorries
have to be hired and lorry drivers paid. But for a rail journey only the freight
charges have to be paid.
Speed: It provides faster services for goods and passengers especially over long
distances. There are no traffic jams, to slow down the journey.
Bulk commodities: Railways are very suitable for the transport of bulk commodities
like coal, petroleum and iron and steel.
Containerization: Goods are now packed in containers, sealed and then transported.
Damages caused by rainwater and sunlight can be avoided. Theft of goods can also be
avoided. The containers are loaded and unloaded with the help of cranes. So,
breakages can be minimized. Perishable goods can be transported in freezer
containers.
Disadvantages:
Delays: Railways follow a strict timetable, which leads to delays for customers
needing immediate transport of goods.
Short journeys: Railways are only suitable for carrying goods over long distances.
They are not suitable for short journeys.
Timetables: This is the biggest problem for railways as trains are not available at
short notice. They follow strict timetables, which cause delays.
Changing output: In recent years, more emphasis has been shown on consumer goods,
which are carried by road. With the decline of the coal industry and the steel
industry, the need for the railways has also declined.
High capital costs: Capital costs are heavy. Maintenance of tracks and railway
rolling stock is also very expensive.
Diesel and electric locomotives, which give a faster service, are now being used.
SEA TRANSPORT:
Advantages:
Cheap: Sea transport is cheap for carrying bulky and heavy goods over long
distances. Moreover, the fuel needed to run a ship is much less when compared with
air transport.
Bulk: Thousands of tones of goods can be delivered in a single journey. Oil tankers
can deliver four hundred thousand tones of oil in a single journey.
Flexibility: Ships go where business takes them. Hence, they are flexible and
exporters can transport goods easily.
Short notice: Ships can be arranged at short notice to carry goods to any part of
the world.
Containerization: Goods are now packed in containers, sealed and then transported.
Damages caused by rainwater and sunlight can be avoided. Theft of goods can also be
avoided. The containers are loaded and unloaded with the help of cranes. So,
breakages can be minimized. Perishable goods can be transported in freezer
containers.
Disadvantages:
Slow Speed: Sea transport is not suitable for goods urgently needed because of its
slow speed. So hence not all types of goods can be transported by sea.
Other costs: Expenses for insurance premium, packing costs, storage and port
charges are very high and as a result increase the cost price of goods.
AIR TRANSPORT
Advantages:
Mail, newspapers, medicine and perishable goods can be transported very quickly by
air.
As the risks involved in transporting goods by air are less the insurance charges
are low.
The documents used in air transport are less complicated when compared with the
documents used in sea transport.
As there are no obstructions, aero planes can take the shortest route.
Disadvantages:
Usually airports are located outside the cities, so road transport has to be
arranged to carry the goods to and from the airport. This results in higher costs
and wastage of time.
Distance: Although the cost of haulage increases with distance, the cost of rail
and shipping services does not increase in proportion to distance travelled. Thus,
it is more economical to use rail or shipping services over long distances, whilst
road transport is faster and cheaper for short distances.
Nature of the Goods: Perishable goods need quick delivery and minimum handling.
Specially constructed trucks can be used to transport vegetables, fish and milk. In
foreign trade, air transport can be used to transport perishable goods. Products
like oil can be transported in oil tankers in foreign trade and by pipelines or oil
trucks in home trade.
Quantity: Bulky goods are normally transported by railway in home trade and by sea
in foreign trade.
Value of Goods: Expensive goods, which are small and light are normally transported
by air. In home trade, it is not advisable to send expensive goods by rail. Road
transport is more suitable for expensive goods since the problem of transshipment
does not arise.
Risk of damage: Fragile goods, which are easily breakable and need careful handling
are normally sent by sea or air.
Convenience: The most convenient mode of transport is the one most available with
the least formality. Road transport is considered to be the most convenient mode of
transport, with its door-to-door delivery service.
Cost: The consignor would normally choose the most economical mode of transport,
unless the factor of urgency arises. Sea and rail would be most economical for bulk
goods. Air and road would be most economical for urgency goods.
ANALYSIS OF GIVEN SITUATIONS IN THE CHOICE OF TRANSPORT
1. Lim Trading, a wholesaler; wishes to send goods regularly to his customers who
are mainly small retailers located in the same city and the surrounding suburbs.
State) with reasons, which mode of transport he would use. The city and the
surrounding suburbs are served with a good system of light rail transport.
Choice of transport recommended: Road, preferably own lorry
2. HKL Ltd, a factory producing computer disc drives located in Singapore, has
found that one of its machinery has broken down suddenly. As a result, all
production has come to a halt since the spare part has to be specially ordered from
the manufacturer in the UK. The Production Manager of HKL Ltd has confirmed through
the e-mail that the particular spare part is available. He, however has 2 options
as to the choice of the most suitable form of transport: air or sea cargo. Which
one should he use? Advise him, giving your reasons for your choice.
(a) Air transport is much faster than sea transport. As the spare part is needed
urgently, time is of utmost importance. Without the spare part, there can be no
production. If production is affected, it means HKL Ltd may not be able to fulfil
its customers' orders for computer disc drives. This would mean a loss of customer
goodwill, and it would affect its good standing with the affected customers whose
own plans would be adverse affected. This would in turn reduce HKL future sales.
(b) In the meantime, HKL Ltd has to pay its workers and other factory overheads
even though production is nil.
(c) It is true that the cost of freight is much higher for air transport compared
to the cost of freight by sea. However, the above advantages far outweigh the
factor of cost in this instance.
3. Cool Cut, a diamond cutting factory located in Singapore, has to import uncut
diamonds from Johannesburg, South Africa. Suggest a suitable mode of transport,
giving reasons for your choice.
(a) Diamonds are very expensive, small and light. There is great risk of theft. The
factor of security of such valuable goods is very important. That is why they may
have to be brought in by somebody trustworthy, rather than be sent by air cargo.
(b) The factor of speed is also very important. The faster such precious gems reach
its destination, the safer it is. Thus, the choice is air transport since it is the
fastest means of transport.
(c) The factor of cost is secondary although there is no doubt that the cost of
air transport plus the personal travelling expenses of the courier is very high.
4. Sheik Farouk, an oil exporter located in Kuwait wants to send his crude oil
to Japan. Advise him, giving your reasons.
(a) Crude oil is fluid and heavy, normally exported in bulk and there is enough to
fill one ship. It is not a perishable item. It is best to use sea transport in
special carriers, specially designed to carry oil even though the journey takes a
long time.
(b) Kuwait and Japan are very far apart and are separated by huge oceans. So, sea
transport has to be used. It is impossible to use rail or road transport.
(c) It is cheaper to send the crude oil by sea and it is not suitable to use air
transport. Crude oil is not sent in small quantities but in bulk. There would not
be enough space in an airplane to carry all the crude oil. Only items which are
light, small and valuable are suitable to be sent by air transport. On the other
hand, crude oil is very heavy.
MODES OF TRANSPORT
1. Passenger liner - This is normally used for carrying passengers, mail and some
express cargo. It has a regular time-table and only calls at major ports.
2. Cargo liner - This is mainly used for carrying a variety of cargo and sometimes
a few passengers. It has a regular itinerary.
Transportation via liners - This can be planned as space on ships can be booked
ahead. Charges are made according to published tariff rates fixed by the shipping
conference.
3. Tramp - This is essentially a cargo ship which does not belong to any
special line of services or sail to any special place. It is normally chartered to
carry a full load of one type of cargo to a certain specified destination where it
unloads the whole bulk.
4. Bulk carrier - This is a ship which is specially built to carry a cargo,
e.g. a bulk carrier is for iron ore.
5. Tanker - This is a special bulk carrier which carries liquids or gases such
as oil or liquefied natural gas.
6. OBO ship - This is an ore-bulk-oil carrier which uses different holds to
transport at one time a mixed-bulk cargo. It has holds which can be completely
sealed off one from the other.
7. Roll - on, roll - off or Ro - Ro ship - This is a highly specialized ship
that allows loaded vehicles like trucks, trailers, passenger cars, etc. to be
driven aboard through ramps at the stern and sides. Using a system of interior
ramps, these vehicles are driven to their proper positions, either below decks or
topside. At their destinations, they are driven off the ship in reverse to the
loading operation.
8. Container ship - This is built to carry large standard sized containers. (See
Containerization)
9. Liners - Liners follow fixed routes and timetables. These liners carry mixed
cargo and belong to shipping conferences, which determine the fares, the freight
charges and the frequency of journeys.
10. Coastal Shipping - Sometimes goods are transported around the coast rather than
inland. Some large ocean-going tankers find it very difficult to travel along the
coast. So, goods are carried by these coastal ships.
11. Ferries - These are small boats that carry passengers over very short
distances. These ferries also provide roll-on/roll-off facilities.
12. Delivery vans – Mostly wholesalers and large-scale retailers make use of
delivery vans for shorter distances for small consignments. Free door delivery
service is facilitated by delivery vans. Most probably, delivery vans are owned by
these traders.