Name: Sunil Mohan

Student Id: A00115915

How transportation is a major contributor to economic prosperity for a

nation?

INTRODUCTION:
With the growing importance of transportation, logistics, and the commodity
economy to support industrial activities, direct investment in procurement could
have a significant impact on the national, domestic and regional economy. At
the same time, the relative availability, quality, and cost of various
transportation services, especially those related to the important functions of
transportation and infrastructure influence local decisions of firms.

ECONOMIC IMPORTANCE OF TRANSPORTATION:

Due to the extensive use of infrastructure, the transport sector is an important
part of the economy and a common tool for development. This is mostly
accurate in the case of global economy where economic opportunities have been
increasing in correlation with the movement of people and goods, including
information and communication technology. The relationship between the value
and quality of transport infrastructure and the level of economic development is
evident. High-quality transport infrastructure and highly connected networks are
often associated with high levels of development. When transport systems are
efficient, they provide economic and social opportunities and benefits that lead
to better repetitive outcomes such as better market access, employment, and
increased investment. Also, better transport system will bring more tourists to
the country and will also bring foreign currency which lead to the growth of
economy of the country.

Moreover, only with the help of transportation, the country can increase its
imports and exports business which directly or indirectly have impact on the
economy of the country. Also, this will increase the country-country
relationships by which one nation can expand their foreign business and bring
more and more foreign brands in their own country, which enlarge its market
and also increase country’s overall income.

Moving further, with the help of transportation facilities, villagers can also
come to the city for employment and for other needs. In this way, it will
decrease the unemployment rate of the country. Also, due to more and more
people using public transport will increase the economy of the country.

The economic value of the transport industry can be assessed from a

macroeconomic and microeconomic perspective:

At the macroeconomic level (the importance of global economy),

transportation and supply chain are linked to the level of output, employment,
and revenue in the national economy. In most developed countries,
transportation composes between 6% and 12% of GDP. In addition, equipment
costs between 6% and 25% of GDP. In addition, the value of all transport
assets, including infrastructure and vehicles, could easily undermine the GDP of
a developed economy.

At the microeconomic level (the importance of transporting certain parts of the

economy), transportation is linked to manufacturer, consumer and distribution
costs. The significance of specific transport services can be assessed for each
economic sector. Often, higher income levels are associated with a larger share
of travel expenses. Transport accounts, on average between 10% and 15% of
household expenses, while accounting for about 4% of the cost per unit of
production, but this figure varies considerably from sub-sectors.
Identify different transportation methods and evaluate using a cost- benefit
analysis approach

There are multifarious ways of transportation such as road, railroad, air, sea and
multimodal transportation that is combination of different transportations to
meet the various needs. Some innovative methods like drones are used for short
distances in specific operational conditions.

Road is most convenient and flexible method of transportation which does not
need any beforehand condition for travelling. It is one of the most preferred
modes for traveling short distances. However, it is not that cost effective over
long routes. Also, road has many disruptions like traffic congestions, traffic
lights, speed limits and so on. Moreover, road is more prone to accidents than
other modes of transportation. It is more useful for small quantity to be
transported over small distances. Road has some limitations like road transports
burn more fuel even for small amounts of load and also has more costs for
drivers as compared to railroads.

Railroad is a safer, fast and low cost as compared to road, method of

transportation. Also, railroads are more environments friendly and less prone to
accidents and it can carry larger volumes over long distances. However, it has
its own shortcomings, as a railroad is not available everywhere like in rural
areas

Sea / Waterways are convenient and cheapest mode of transport for importing
and exporting of heavy goods. There is minimal handling in this that means
very less chances of cargo get damaged and also will reach to its destination
safely. Also, the containers used in shipment through sea can be used further on
rail or road transport. However, there are less navigable routes in seas; therefore
it is used for overseas transportation of heavy, bulky items which do not have
very high economic value.

Air transport is faster, safer and more reliable mode of transportation. It is

used to transport items which have very high economic value and which need to
be delivered immediately irrespective of the cost involved. However, It is the
costliest mode of transport and used for high value, high priority items, which
can be sent virtually everywhere.

Multimodal transport also known as combined transport is a combination of

some of the above mentioned methods and is used depending on conditions and
needs at that time. In this mode, the goods are transported by two or more
modes of transports. The goods can be sent using air and road. Similarly,
different combinations can be used considering the factors like time, cost and
convenience.
Drones are an innovative mode which is used for transporting goods in some
places that are difficult to access. Their scope is limited and can be used for
delivering small cargo over short distances efficiently, where other modes are
ineffective.

Explain governmental regulations surrounding the transportation of goods.

Regulations which states conditions under which goods can be transported:

These regulations states, in what all conditions the goods can be transported
from one place to another. For example a good which was imported from
another country, cannot be transported until and unless released from customs.

Regulations which states under what all conditions goods can be delivered:
These regulations tell us the conditions and rules under which a person can
deliver goods to a consignee or a company. For example legal goods that has
been reported under section 12 of the act.

Transporter liability Regulations: These regulations states, what are the

liabilities of the transporter while shipping the goods from one place to another.

Security regulations: This regulation takes care of the security of the goods
while in transportation. These regulations state how the goods are secured and
who are liable for security of the goods when being transported.