Assignment 2

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American Military University *

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311

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Economics

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Apr 3, 2024

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Uploaded by Manadeen1986

Why the Transportation Industry is Cyclical in Nature Because it is influenced by economic trends and is strongly dependent on a nation's economic situation and an adaptive system of lending rates, the transportation industry can be classified as cyclical in structure. In the face of financial affluence, the transportation business is very active, and throughout times of economic weakness, it is tranquil. In periods of economic success, countless people and corporations enter the transport industry, while during recession or depression, a smaller lot of firms and persons enter. The decline in the number of personnel is marked by cyclical processes, such as firing and cost-cutting. The industry is characterized by colossal recruitment and incentives during times of economic growth. The companies' global transportation operation, handled mainly by ocean tankers, is directly affected by oil prices. Tanker transporters face considerable financial concerns that are otherwise due to assumptions embedded in the complicated non-linear, unpredictable relationship between oil and cargo rates. Different variables cause non-linearities in each of these prices, resulting in exceptional sub-cycles on different timeframes, making direct price co-movement evaluation a faulty technique (Siddiqui & Basu, 2020). The airline sector, which has high and low seasons depending on the economy, is another excellent illustration of the cyclical nature of the transportation sector. For example, in positive macroeconomic times, the airline business has many clients because people are interested in spending dollars on trips. The aviation sector gives incentives on specialized trip arrangements during such times. Because there are fewer clients during the off-season, the sector fires some staff to save money on remuneration. Alterations in other businesses that affect the economy also affect the transportation sectors. The agriculture sector, for instance, has peak seasons when certain food products are harvested. The transportation business sees a spike in the volume of consumers and activities during such seasonal peaks. These economic cycles have a significant effect on the transportation business, which is why it is cyclical.

2 Steps Required Take to Avoid / Mitigate the Negative Effects of Economic Downturns To solve capacity challenges, transportation organizations should attend to strategic rather than operational perspectives. During economic recessions, lengthy plans can assist transport services in addressing tremendous supplies and capacity shortages. The approach necessitates the management and control of economic cycles. Corporations can always use new technical breakthroughs to foresee changes and develop countermeasures. In recession time of the critical items, planning is essential concerning enterprises change to other products to deliver. It could also assist businesses in detecting standard economic shifts and developing mitigation strategies. Corporations should perhaps design techniques to cope with seasonal variations without reverting to radical action, including inevitable layoffs. Companies might benefit from strategic planning to enjoy seamless flow from one season to the next rather than wait for the recession to strike. These corporations should begin positioning themselves for impact right now. There were no indications before the great recession's implosion in 2008 and the COVID 19 that caught everybody off guard (Charleston, 2016). It is wise to maintain vigilance and remain ahead of the trend by anticipating and prepping for upcoming challenges. Adopting a holistic view of one's business and finding aspects that can develop a dependable backup if things go wrong is also an excellent move. Although that impending downturn is expected to be lighter than the one that occurred several years back, ignorance is not bliss in the event of a recession, so a call to respond immediately is paramount. Relationships should be bolstered and evaluated. Cementing relationships with employees, customers, and collaborators is always a good idea, but getting the right people in place is more critical with a recession looming or any other unpredictable occurrence. Listening is one of the most effective techniques to do a temperature check and develop connections. Utilizing a firm's assets can help it attain its full potential. Ensuring that all transportation systems carry appropriate weights is one of these

3 solutions. To avoid wasting resources such as petrol and transportation expenses, firms should guarantee that all vehicles are available. Excellent relations with suppliers can indeed help transportation corporations stay on top of industry changes. Suppliers could also supply critical data regarding the capacity of products and inflationary pressures that may influence transportation businesses. More significantly, businesses must be prepared for unanticipated events that arise as a result of economic shifts. Unpredictable alterations in petrol prices are one example of such events. References Charleston, S. (2016). Preparing your trucking company for a recession. PEOPLES. Retrieved 7 August 2021, from https://www.peoplease.com/our-company/news/peoplease-shares-advice-prepare- trucking-company-recession/. Gkiotsalitis, K., & Cats, O. (2021). Public transport planning adaption under the COVID-19 pandemic crisis: a literature review of research needs and directions. Transport Reviews, 41(3), 374-392. Siddiqui, A., & Basu, R. (2020). Retrieved 7 August 2021, from https://www.sciencedirect.com/science/article/abs/pii/S0360544220306010 . ABDUL.

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