ECONOMIC IMPORTANCE

OF TRANSPORTATION IN
ECONOMIC DEVELOPMENT

MARVIN T. OCOT
In a macroeconomic sense, transportation activities form a portion of a nation’s total
economic product and play a role in building or strengthening a national or regional
economy and as an influence in the development of land and other resources. In a
microeconomic sense, transportation involves relations between firms and individual
consumers. The demand for and supply of transportation for both passengers and
freight, transportation pricing, and the reasons why the transportation system is both
regulated and deregulated are among its concerns.

Finally, the government’s involvement in each mode of transportation differs. In some

instances private enterprise is used; in others, government provides the facilities and
equipment, especially if the rationale for government involvement is that a strong
transportation system is necessary for developing the nation’s economy or for its
defense. Government’s involvement in transportation has both a macro- and a
microeconomic significance.
Transportation as a portion of GNP
Gross national product (GNP) expresses a nation’s total economic activities, of which
transportation forms a part. In the late 20th century in the United States, between 17
and 18 percent, or about one-sixth, is associated with transportation. The figure can be
broken down into passenger and freight transportation. About 11 percent of GNP is
accounted for by movement of people and about 6 percent by movement of freight.
More than four-fifths of expenditures for movement of people in the United States are
associated with the private automobile—its purchase, operation, and maintenance.
About one-tenth of the expenditure on intercity travel is for travel by air; the
remaining tenth is spent for rail, taxi, transit bus, and school bus.
Transportation’s role in strengthening the economy

Transportation facilitates communication and commerce. Alexander Hamilton, secretary

of the Treasury in the 1790s, believed that internal improvements were necessary for the
nation’s economic growth. The word “infrastructure” is used to describe all the facilities
that an economy has in place, including its transportation network of roadways, railroad
tracks, and ports, as well as the vehicles and vessels to use them. An adequate
infrastructure is a prerequisite to economic development. Transportation and
communications are important in developing and strengthening social, political, and
commercial ties. These ties must be developed before trade can be handled on a regular
basis. Transportation also is necessary for goods to reach markets where they can be sold
or exchanged for other merchandise or services. Transportation undertakings have proved
to be a fertile ground for inventors, innovators, entrepreneurs, and their supporting
investors.
Roro (Roll On Roll Off)
Heavy Freight Shipping
Countries worldwide rely on
roads and highways to move
goods across vast distances. For
example, highways were created
so that delivery trucks and
other motorists could travel
without disturbance over long
distances. But what about
delivery requirements across
locations separated by a body of
water? In those scenarios, a
roro (roll on roll off) ship is
needed.
Roro shipping is capable of carrying numerous trucks and small vehicles and
transporting them from one island to another. Thus, roll on roll off heavy freight
shipping is important for an archipelagic country such as the Philippines.

It is a well-established fact that freight forwarder logistics operations are crucial

to a country’s development. They enable commercial activities by moving the
goods and products bought and sold. Their importance is seen on the macro scale
and in the day-to-day activities of businesses, both large and SMEs (Small and
Medium enterprises). These businesses need heavy freight shipping services to
support their supply chain operations, whether for inbound or outbound
logistics.
For an archipelagic country like the Philippines, moving goods across bodies of
water is inevitable. As businesses grow and expand, so will their need to bring
their goods to other cities. And in the Philippines, major cities such as Metro
Manila, Cebu, Iloilo, and Davao are separated by bodies of water. Thus, for a
business to service logistics requirements from Luzon to Visayas and Mindanao,
roll on roll off heavy freight shipping is needed. Read on to discover more about
interisland cargo shipping operations.
What Is Roro (Roll on Roll Off) Heavy Freight
Shipping?

Throughout history, the definition of roro freight shipping has evolved in many ways. It
started as a “train ferry” back in the 1800s and later on, evolved into military use during
the world wars. Nowadays, roll on roll off heavy freight shipping is simply defined as
loading a ship with delivery trucks and transporting them from port A to port B.

According to the Philippine Ports Authority, roro transport is a mode of marine

transportation wherein the cargo can be loaded and unloaded from the ship through
horizontal movements, that is, it can move on its wheels. By that definition, one can
clearly see that roll on roll off shipping involves driving a vehicle into the roll on roll off
the ship and then driving it out once it has arrived at the destination port.
What Is Roro (Roll on Roll Off) Heavy Freight
Shipping?

Thus, if a company wants to ship goods from Metro Manila to Cebu, roll on roll off heavy
freight shipping is the best option since it allows you to ship large quantities of goods in a
single delivery. For example, a furniture company based in Manila wants to deliver
multiple units of cabinets to its showroom in Cebu. Instead of doing the interisland cargo
shipping delivery themselves, they can outsource this process to 3PL (third party logistics
providers).

These 3PL providers can go to your warehouse, load the items into their truck, travel to
the seaport and embark on the ship. After the ship docks at Cebu port, the truck will
then travel to your showroom in Cebu where the cabinets will be delivered. By using 3PL
providers, the furniture company does not have to worry about doing its own interisland
heavy cargo shipping operations.
Why Use Roro for Heavy Freight Shipping?

Being an archipelago, it is inevitable that the movement of goods would have

to pass through a body of water. Given that the major economic hubs of the
Philippines are spread out on different islands, interisland transport using a
ship is a necessity for the country. Besides hauling heavy freight cargo to and
fro different islands, roro shipping is also used as a mode of transportation
for people.
The list below explains why using interisland shipping
operations is a great choice for moving goods and
products along different island groups.

A convenient way of shipping goods

As with any other logistics solution, convenience is always a top consideration. And
interisland shipping service has plenty to offer in terms of convenience. In the first
place, all you need to do is load a delivery truck with your goods for shipment. After
the truck has been fully loaded, you can take it to the port and into the vessel. After
that is done, the vessel leaves the port and embarks on its journey to the destination.
Once it arrives at the port of arrival, the delivery truck can easily drive out of the
roll on roll off vessel and to the final destination.
With the scenario described above, one can easily see that interisland deliveries
via roro offer a lot of conveniences. First of all, there is no need for you to
schedule a truck to deliver goods to the port of origin and another truck to pick
up the goods from the port of arrival. The same truck will fulfill the delivery
requirement from end to end, that is from the source up to the final destination.

Furthermore, there is no need to unload the goods from the vehicle when it is
inside the ship. The goods or products can securely stay inside the delivery truck
throughout the duration of the delivery.
Better flexibility in managing deliveries

Because interisland heavy freight shipping offers a lot of conveniences, it goes

without saying that a company can be more flexible with its delivery operations
when it uses this method of interisland delivery. Because it has command of the
truck that it will use, the company can choose to have other drop-off sites along
the way. For example, an interisland shipment from Manila to Iloilo will pass
through Batangas city. Thus, a company can take advantage of this opportunity
to supply its fulfillment center in Batangas by making use of the Manila to Iloilo
interisland shipping route.
Deliver more at less cost

Not to be forgotten, among the reasons for using interisland heavy freight shipping
is the cost. If we compare the cargo capacity that can be transported via roro
shipment with that of air freight solutions, it is clear that interisland heavy freight
delivery is the economical option. This option allows you to move large volumes of
goods on multiple trucks at an affordable rate. In the case of air freight, there is a
strict limit on the cargo capacity of goods you can transport.
Frequently Asked Questions:

What are some common roro routes in the Philippines?

🚢 Most of the major cities in the Philippines are located in different islands which is why
roro shipping is a necessity. Some common roro shipping routes are Manila to Iloilo,
Manila to Cebu and Manila to Davao. Other common roro routes in the Visayas and
Mindanao area are Iloilo to Cebu, Davao to Cebu, San Carlos to Toledo and Bacolod to
Zamboanga City

What is roll on roll off shipping?

🚢 Roll on roll off shipping is a logistics solution wherein delivery trucks, packed with
products, are loaded into a roro vessel. Once the vessel arrives at its destination, the
delivery truck simply drives its way out of the ship and into the final destination which is
usually a warehouse or fulfillment center.
Frequently Asked Questions:

What logistics companies do heavy freight shipping operations?

🚢 In the Philippines, there are many companies that can fulfill heavy freight shipping
requirements. Omni logistics offers numerous supply chain solutions that can fulfill
heavy freight shipping requirements. 2GO is another logistics company that can do door-
to-door delivery of heavy cargo. However, for on-demand heavy cargo delivery
requirements, Transportify can cater to all your needs. It has a wide range of delivery
vehicles that can deliver to anywhere in Luzon. On top of that, it will be launching its
interisland delivery service soon.
 Research studies about Roro in Economics

Does public infrastructure affect human capital? The effect of improved transport
connectivity on children's education in the Philippines

Intermodal Road-RoRo Transport in the Philippines, its Development and Position in the
Domestic Shipping

FEASIBILITY ASSESSMENT OF RORO TRANSPORT SYSTEM IN THE

PHILIPPINES FROM THE VIEW POINT OF INTER-REGIONAL COMMODITY
FLOW

A Study on Current Situation and Future Development of RoRo Routes in the Philippines
Transporatation Theory

Narrative transportation theory focuses on the causes and consequences of an individual

being immersed in a story, or transported into a narrative world. Transportation refers
to the feeling of being so absorbed in a story that connection to the real world is lost for
some time; it includes cognitive engagement, emotional experience, and the presence of
mental imagery. This experience is a key mechanism underlying narrative influence on
recipients’ attitudes and beliefs, particularly in combination with enjoyment and
character identification. Narrative persuasion through transportation has been
demonstrated with a wide variety of topics, including health, social issues, and consumer
products.
The main advantages of ro-ro freight transport are speed and time saving.

Speed: Vehicles those can be directly driven into the vessel or land through the ramps
making the loading and unloading process more quick and agile.
Time saving: Being able to cut through loading and unloading procedures enables the
trucks and vehicles to land just minutes after docking and continue with their route to
their destination, improving on their delivery time.
Another important advantage to have in mind is less cargo handling. Because there is no
loading and unloading at port, there is less risk of accidents and cargo damage.

Furthermore, RORO gives land transport a bigger action radius as it makes possible to
shorten their route through ship instead of having to divert to a longer route
Significance of Roro (Roll On Roll Off) shipping system?

Recognizing the need to make interisland logistics more feasible and at affordable prices,
the Philippine government introduced the Roll on Roll off (RORO) Terminal system.
Through the RORO terminal system, clients from all over the Philippines can move
goods and products across the three main island groups: Luzon, Visayas, and Mindanao.

The roro shipping system in the Philippines is quite easy to understand. First, the
delivery vehicle is filled with products from the warehouse or storage facility. Then, it
travels to the port where it is loaded into the roro vessel. After the ship arrives at the
destination port, it rolls out of the ship and into the final drop-off point. There is no need
to worry about the cargo handling process. By using the roro shipping system, such a
process is circumvented because the same truck will be used throughout the journey,
from the pick-up point up to the final drop-off point.
Significance of Roro (Roll On Roll Off) shipping system?

The roll on roll off shipping solution was able to help many sectors in the Philippines’
economy. First of all, it was a big help to the agriculture industry. A report from the
Asian Development Bank says that roro ports trade 60% more types of agricultural
products compared to non-roro terminals. Another sector greatly helped by this logistics
solution is the small and medium enterprises. Through roro shipping, they can move
their goods and products across different islands at business-friendly rates.

In summary, the roro shipping system is a great logistics solution in reducing delivery
costs. This helps and encourages businesses to expand by transporting their goods to
other locations across bodies of water. This translates to more commercial and trade
activity in the Philippines.
Current Trends

RORO Shipping Market: Booming Globally at Highest CAGR by 2030

Market Overview:

The RORO (Roll-on/Roll-off) Shipping market is a vital component of the global

shipping industry. RORO vessels are designed to carry wheeled cargo, such as cars,
trucks, and heavy machinery, that can be driven on and off the ship. This method of
cargo handling ensures efficient and quick loading and unloading, making it a preferred
choice for transporting vehicles and equipment. The market has witnessed steady
growth in recent years due to increasing international trade, automotive industry
expansion, and the demand for specialized heavy equipment transportation.
Current Trends

COVID-19 Impact: The COVID-19 pandemic had a significant impact on the RORO
Shipping market. With disruptions in global supply chains and trade restrictions, the
demand for RORO services faced challenges. However, the market showed resilience as
trade activities resumed with the easing of restrictions. The transportation of essential
goods and medical supplies played a crucial role in sustaining the market during the
pandemic.
Market Drivers, Challenges, Trends:

Drivers:

· Growing automotive industry,

· expansion of international trade,

· efficient cargo handling, and

· cost-effective transportation.
Challenges:

· Fluctuations in fuel prices,

· environmental regulations,

· competition from other shipping methods.

Trends:

· Adoption of eco-friendly vessels,

· digitization and automation in cargo handling,

· integration of advanced tracking technologies.

Segmentation by Type and Applications:

Type:

Used Car Shipping

New Car Shipping
Applications:

· Domestic Shipping

· International Shipping
Strategy by New Players:

New players entering the RORO Shipping market can focus on enhancing their fleet
with eco-friendly vessels to meet environmental regulations. Embracing digital
technologies for efficient cargo tracking and optimizing operational processes can also
give them a competitive edge. Building strategic partnerships with automotive
manufacturers and exploring untapped markets will help new entrants establish a
strong presence.

Report Coverage:

This comprehensive report provides an in-depth analysis of the RORO Shipping

market, including market trends, drivers, challenges, and emerging opportunities. It
offers segmentation by type and applications and regional insights to understand the
market dynamics. The report also profiles the top players in the industry and provides
strategies for new players to succeed in the competitive landscape.
Thank you! :)