External costs of intercity truck freight transportation

The intent of this analysis is to compare and contrast the cost structures for rail, motor carriers and air modes of transportation. Implicit in this analysis is the rapid adoption of intermodal transportation which is often optimized to specific logistics and supply chain objectives (Jennings, Holcomb, 1996).

Transportation financial matters, the investigation of the portion of transportation assets keeping in mind the end goal to address the issues of a general public. In a macroeconomic sense, transportation exercises shape a part of a country's aggregate financial item and assume a part in building or reinforcing a national or local economy and as an impact in the advancement of area and different assets. In a microeconomic sense, transportation includes relations in the middle of firms and individual buyers. The interest for and supply of transportation for both travelers and cargo, transportation evaluating, and the reasons why the transportation framework is both managed and deregulated are among its worries. Reference acquired from :http://www.britannica.com/topic/transportation-economics)

Economy of scales: Job cuttings into central functions, some expensive segments and products will be suppressed, R&D, marketing and communications expenses will be reduced

Firms in this industry compete based on the rates charged and the ability to wring out costs from operations. The rates charge are dependent on the routes and the type of freight that is being transported. The costs are dependent on the fuel prices, the length of the train, and the type of material that is being hauled. As the global economy improves the firms in the industry can charge higher rates.

Transportation is an important sector that drives economic activities within and outside the state. Although transportation as a sector does not bring in significant revenues to the economy of Arizona, it does assist the smooth operation of other industries such as manufacturing, tourism, agriculture and mining. Without roads, rail, and airports, it would be difficult to move goods and services from one part of Arizona to another. Arizona’s transportation industry does not have a great impact on its economy because the state is largely used as a transit hub. More than half of the freight that comes into Arizona originated from outside, rests for some few days and moved to their destinations in other states. This means that the Arizona state government can only gain relatively small revenues from the freight may be in the form of storage charges, repackaging, and accommodation for truck drivers. The remaining 50% of freight is intra-state implying that no money is brought in from outside Arizona. Transportation sector acts as a vital factor in attracting investors because modern businesses critically examine the transport infrastructure before deciding whether to relocate or not. For instance, manufacturing companies depend on well-established road and rail network to move large volumes of bulk freight. Some also rely on the trucking to move containerized freight on highways with low congestion levels.

The trucking industry serves the American Society by transporting 80% of all freight, annually accounting for $671 billion worth of manufactured and retail goods within U.S. alone. Add $295 billion truck trade in Canada and $195.6 billion truck trade with Mexico. About 4.8% of the Gross domestic product

Determining freight costs within shipments require the ability to calculate them precisely and settle on an amount that doesn’t damage profits. Each shipping cost must hold the capacity to be tied back to correct accounts, and be calculated across the company in a profitable manner.

Costs decrease because of less rework, fewer mistakes, delays, snags; better use of machine time and materials.

In our economy, the government is always trying to improve the allocation of resources; one of the methods that improve the allocation of resources in our economy is the alteration of market failures that are caused by externalities. Externalities occur when an external source receives some of the costs of benefits of a certain good that the actual buyer or seller does not receive. There are two sides to externalities; there are both negative and positive externalities.

A reduction in labor costs, as well as an increased rate of production, enables a company to produce a larger quantity of one product at a lower cost than using traditional, non-linear methods.

The trucking industry is one of the largest transportation sector in America. The American Transportation Research Industry conducted a study on the operational cost of trucking in 2008 and updated it in 2011. This research utilized an updated version of the survey

• A reduction in lead times for purchased items and production times for manufactured items

Road freight carried by medium and heavy trucks accounts of over 6% of all global greenhouse gas emission. Greenhouse gas emission from all transportation sources is estimated will increase 80% by 2030.

In economics it is important to understand the costs and revenues of firms. This will give an important insight into the behaviour of firms. Basic / traditional economic considers that the sole purpose of firms is to maximise profits. This goal then leads firms to minimise costs and maximise profits.

With a focus on unit of production that is relevant to sales within this cost centre, and timely review by management, there could be possible savings.