TRANSPORT OPERATIONS

TRANSPORT OPERATIONS



TRANSPORT OPERATIONS

Introduction

To begin, Business of Transport covers a broad range of issues. There are differences between personal and freight transportation, among transportation modes, and between the fixed and variable parts of the transportation system. Analysis of personal transportation tends to focus on commuting and choice of mode, although there is also substantial interest in other personal transportation choices, such as time of day for travel and grouping of trips. For freight, the issues are primarily related to the cost of freight movement and the damage that heavy vehicles do to roads. Each mode has similarities and differences in the issues to be analyzed. For virtually all transportation systems, there is a large, typically publicly owned, infrastructure and a variable, often privately owned, set of vehicles that use that infrastructure. The financing systems are often complex, and the incentives that they offer may generate further issues that need to be addressed in evaluating transportation systems. In discussions of transportation, there is near universal agreement that there are problems. Each mode has different problems. For automobiles, increasing congestion, difficulty in financing construction and maintenance, and concern over the environmental effects are major issues. For public transportation, a long-term downward trend in share and rising costs are the key concerns. For freight, competition and cooperation among the modes, capacity of the freight system, and allocation of cost are among the important topics.

Demand and Importance for Transportation Services

The trend for personal travel has been for increasing use of the automobile and reduced reliance on alternative modes. One result has been increased levels of congestion and delay on the road system and increasing subsidies for the transit system. From an economic perspective, many of the perceived problems occur because people do not pay the appropriate price for travel. Hence, it is important to understand the demand for transportation and the methods of finance because the latter determines the perceived price.

There are two important distinctions between the demand for transportation and the demand for most goods and services. The first is that transportation is typically classified as a derived demand; most travel is not consumed for itself. Rather, it is a method to achieve other goals. The second is that for personal transportation, the person's time must be used, and the value of this time is part of the cost of transportation. Thus, time and the value of time are very important issues in discussions of transportation. In fact, transportation economists often differentiate between the cost of transportation services and the cost of transportation, which includes the opportunity cost of the time used in making the trip. The latter is typically referred to as generalized cost. This distinction is very important when analyzing the demand for transportation services because the differences in time cost often have substantial impacts on the choice of mode for travel.

Cost and the Value of Time

The most common example of the distinction between the generalized cost and the monetary cost of different choices is the choice of mode ...