Components of Transport Cost
A movement between location A and B involves three cost
components in the assessment of its transport cost. Transactions
costs are related to resolve the setting of the movement,
including legal costs and insurance. For international movements
they can be significant as issues related to currency exchange
as well as custom duties have to be considered. The friction of
distance represents how many units of space can be traded per
unit of cost, which indicates how much effort (time, energy,
etc.) must be made to insure that a movement takes place.
Distance is considered to be the simplest attribute for such a
purpose. Shipment implies the physical characteristics of the
transportation process and the efforts that must be made to make
the load transportable.