demand determinants in freight transportation

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Expert Solution

There are a number of factors that influence the demand for freight transport. Some of them are:

(i) Influence of the economy

Since the demand for freight transport is a derived demand, the most basic influence on the demand for freighr transport is the volume of goods produced and consumed. Since freight demand is closely related to the goods production component of the GDP, any changes in GDP will have an effect on freight demand.

(ii) Industrial location

Like the economy determines the amount of goods transported, the spacial distribution of economic activities determines the distance of transportation.

(iii) Globalization of business

With the increasing integration of the world economies, some goods are manufactured in some other countries (outsourcing) and assembled in some other. The pattern of domestic and foreigh production and distribution vary significantly. Thus, any change in exchange rate and market conditions will affect the demand for freight.

(iv) International trade agreements

The international trade agreements between the firms, and export import restrictions - quotas/tariffs etc. effect not only the volume of goods and services between the cojntries, but also the demand for transport.

Rahul Sunny answered 1 year ago

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