Components of Transport Cost
A movement between location A and B involves three cost
components in the assessment of the related transport costs.
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
space represents how many units of distance 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, but when international transportation is involved the
change in jurisdiction is also an important component of
the transport cost.
- Shipment implies the physical characteristics of the
transportation process and the efforts that must be made to make
a passenger or freight unit transportable. The higher
the level of
massification of the units, the lower the transport
costs. Additionally, freight must be prepared for
transport, such as packaging, palletizing or stuffing
into a container.