1. The Importance of Transport in Location
In addition to being a factor of development both at the macro and microeconomic
levels, transportation is linked with the location of socioeconomic activities,
including retail, manufacturing and services. In a market economy, location
is the outcome of a
constrained choice where many issues are being considered, transportation
being one. The goal is to find a suitable location that would maximize the economic
returns for this activity. There is a long tradition within economic geography
in developing
location theories with a view to explain and predict the
locational logic of economic activities by incorporating market, institutional
and
behavioral considerations in various degrees. The majority of location theories
have an explicit or implicit role attributed to transport. As there are no absolute
rules dictating locational choices, the importance of transport can only be
evaluated with varying degrees of accuracy. At best, the following observations
concerning transportation modes and terminals and their importance for location
can be made:
- Ports and airports. Convergence of related activities around terminals,
particularly for ports since inland distribution costs tend to be high.
- Roads and railroads. A structuring and convergence effect that
varies according to the level of accessibility. For rail transport, terminals
also have a convergence effect.
- Telecommunications. No specific local influence, but the quality
of regional and national telecommunication systems tends to ease transactions.
Globalization has been associated with significant changes in business operations
and markets. Managing operations in such an environment has become increasingly
complex, especially with the territorial extension of production and consumption.
Manufacturing strategies tend to use different locations for each component
of a product in order to optimize respective comparative advantages. Transport
requirements have proportionally increased as well in order to organize the
related flows. The requirement of faster long distance transport services has
propelled the importance of air transport, especially for freight. Air terminals
have thus become a significant location factor for globally oriented activities,
which tend to agglomerate in the vicinity. Additionally, the surge in long distance
trade has made logistical functions, namely transport terminals and distribution
centers, at the forefront of locational considerations. Technological changes
have also been linked with the relocation of industrial and even service activities.
Global telecommunication facilities can favor the outsourcing of several services
to lower cost locations, such as the case of call centers in India indicates.
2. Location Factors
Transport plays an important role in the location of activities. It is a
necessary condition, among others, for social and economic development. The
location of economic activities is a priori dependent on the nature of the activity
itself and on certain
location factors such as the attributes of the site, the level
of accessibility and the socioeconomic environment. Although each
type of economic activity has its own set of location factors, some general
factors can be identified by major economic sector:
- Primary economic activities. Their dominant location factor is
related to environmental endowments, such as natural resources. For
instance, mining takes place where economically recoverable mineral deposits
are found and agriculture is subject to environmental constraints such as
soil fertility, precipitation and temperature. Primary activities are thus
characterized by the most basic location factors but have a strong reliance
on transportation since their locations rarely are close to centers of demand.
Substantial investments in extraction and distribution infrastructures must
thus be made before resources can be brought to markets. The capacity to transport
raw materials plays a significant role in the possible development of extractive
activities at a location.
- Secondary economic activities. Imply a complex web of location
factors which, depending upon the industrial sector, relate to labor (cost
and/or skill level), energy costs, capital, land, markets and/or proximity
of suppliers. Location is thus an important cost factor (cost minimization).
Considering the wide variety of industrial and manufacturing activities, understanding
the rationale of each sector is a difficult task that has been subject to
many investigations in economic geography. Globalization and recent developments
in supply chain management and
global production networks have made the situation even more complex with
the presence of many intermediaries and significant
locational changes.
- Tertiary economic activities. Involve activities that are most
bound to market proximity, since the capacity to sell a product or service
is their most important location requirement. As many of these activities
are retail-oriented, consumer proximity (as well as their level of income)
is essential and is directly related to sale levels. The main focus is to
maximize sales revenues. Location is thus an important revenue factor
(revenue maximization). The retail industry has significantly changed with
the emergence of large retail stores that maximize sales through economies
of scale and local accessibility. E-commerce also provides a new dynamic where
information can easily be traded and where niche retailing markets can be
developed in a situation of high product diversity.
- Quaternary economic activities. Imply activities not linked to
environmental endowments or access to a market, but to high level services
(banking, insurance), education, research and development; dominantly the
high technology sector. With improvements in telecommunications, many of these
activities can be located almost anywhere as demonstrated by the recent trend
to locate call centers offshore. There are still some strong locational requirements
for high technology activities that include proximity to large universities
and research centers and to a pool of highly qualified workers (as well as
cheap labor for supporting services), availability of venture capital, a high
quality of life and access to excellent transportation and telecommunication
facilities. However, as telecommunication infrastructures are becoming globally
ubiquitous and accessible, such proximity is of lesser importance.
Each of these sectors thus has its own criteria, which vary in time and space.
However,
basic location strategies appear to be dominantly a cost minimization or
a revenue maximization endeavor. Understanding location factors enables a better
overview of the dynamics of the global economy and the associated territorial
changes at the global, regional and local levels.
3. Accessibility and Location
Since accessibility is dominantly the outcome of transportation activities,
namely the capacity of infrastructures to support mobility, it presents the
most significant influence of transportation on location. Hence, it appears
that
location (accessibility) and economic activities are intimately linked.
Accessibility plays an important role by offering more customers through an
expanded market area, by making distribution more efficient (in terms of costs
and time), or by enabling more people to reach workplaces. While some transport
systems have favored the dispersion of socioeconomic activities (e.g. automobiles
and suburbanization), others have favored their concentration (e.g. container
terminals). All systems are bearers of spatial specialization and configuration.
Among the main configuration forces are:
- Transportation costs. Refer to the benefits of a location that
minimizes transport costs either for passengers or freight. This is at the
core of
classic industrial location theories where transport-dependent activities
seek to
minimize total transport costs. With the expansion of transport infrastructures,
shifts in manufacturing, new economic activities such as high technology,
logistical management and an overall decline in transport costs, cost minimization
is no longer a substantial consideration in location. However, transport costs
cannot be easily dismissed and must be considered in a wider context where
the quality and reliability of transport is of growing importance. It has
been demonstrated that travel time, instead of distance, is the determining
factor behind commuting ranges, a notion that increasingly applies to freight
distribution.
-
Agglomeration economies. Refer to the benefits of having activities locate
(cluster) next to another, such as the use of common infrastructures and services.
Clustering continues to be a powerful force in location as the reduction in
transport costs favored the agglomeration of retail,
manufacturing and distribution activities at specific locations. For instance,
shopping malls are based on agglomeration economies, offering customers a
wide variety of goods and services in a single location. Distribution activities,
even unrelated, have also a tendency to cluster. The development of special
economic zones, many export-oriented, also benefit from the clustering effect.
- Economies of density. Somewhat related to economies of agglomeration,
but focus on spatial coverage and proximity. For instance, a retailer can
achieve several types of cost savings by locating its stores in proximity
to one another. Such a structure reduces logistics and delivery costs by sharing
a distribution center. Other advantages may include the possibility to relocate
part of the workforce between nearby facilities and having shared advertising.
In such a circumstance, the locational strategies are based on proximity to
existing facilities, even if this implies the selection of sub-optimal locations.
Because of the level of accessibility they provide, new transport infrastructures
influence the setting of economic activities. It becomes a particularly strong
effect when new infrastructure are added to an undeveloped (or underdeveloped)
site and thus locational decision tend to be simpler and unhindered by the existing
spatial structure. The locational effects on activities are not always automatic
or evident. They are important however when infrastructure is accompanied by
social, economic and urban transformations of space. New infrastructures therefore
play a catalytic role, because they are able of transforming space.
Copyright © 1998-2008, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography,
Hofstra University. For personal or classroom use ONLY. This material (including
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