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Revisiting the Conventional Wisdom on Transportation Costs

Figure 2.3

21

Trucking Price and Trucking Market Structure6 savings

traction price ($/km)

deregulation 2

facilitation 1.93

1.26

1

1.04 utilization km/month

0

2,000

3,000 4,000

6,000

8,000

9,000 10,000

50% fleet utilization Source: Authors’ calculations.

immediate cost added due to the trans-shipment operation. This is the case in south Asia for most traffic, and it still applies to some railway network interconnections in Europe and south Asia. The cost of each operation is often equivalent to the direct transport cost for several hundred kilometers along the same corridors.

Comparing Effects of Various Transport Cost Factors on a Given Corridor Transport costs are typically used as indicators in roads projects because the impact of road construction or rehabilitation leads to savings in vehicle operating costs. A low quality of road infrastructure directly increases variable costs, since bad roads mean more fuel consumption and increased maintenance. In a competitive environment, certain measures have a direct impact on transport costs and prices. Teravaninthorn and Raballand (2008), for example, tested the impact of several measures on major transport corridors and demonstrated a significant effect for most of them, which can be factored by using the same shipper-based model (see table 2.3). However, savings in transport costs are often not passed on to end users (shippers) because of inertia or lack of competition. This is why, for assessing the impact of facilitation measures or even infrastructure, the model, which is based on the shipper’s viewpoint, may sometimes not be useful for assessing the economic benefits of a project: savings in costs may not necessarily be translated to the consumer of transport services (see table 2.4).

The Cost of Being Landlocked  

This book proposes a new analytical framework to interpret and model the constraints faced by logistics chains in landlocked countries. The...

The Cost of Being Landlocked  

This book proposes a new analytical framework to interpret and model the constraints faced by logistics chains in landlocked countries. The...