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.