370 exam 1 shorter

Import and export flows

International goods movements that generate transportation demand and influence routes, capacity, and infrastructure.

Economic basis for trade

Regions specialize according to differences in resources, skills, and costs, then trade when delivered costs make it worthwhile.

Comparative advantage

Producing something at a lower opportunity cost than another producer; supports specialization and trade.

Inherent advantage

A mode's built-in strength compared with another, such as air's speed or trucking's accessibility.

Trade restrictions

Tariffs, quotas, and other barriers can raise costs, reduce trade, or change sourcing and transportation routes.

Trade agreements

Reduced trade barriers can increase trade flows and transportation demand.

Technology game changers

AI, robotics, containerization, digital tracking, 3D printing, automation, and driverless vehicles.

Evolution of logistics

Physical distribution → integrated inbound/outbound logistics → coordination across the entire supply chain.

Integrated supply chain

Coordination of product, information, and financial flows across functions and companies.

Proper level of optimality

Optimize the whole supply chain rather than minimizing one activity's cost.

Total logistics cost

Combined transportation, inventory, warehousing, handling, and related costs at a chosen service level.

Logistics as an interface

Connects production with marketing by delivering inputs and finished products where and when needed.

Time utility

Value created by making goods available when needed.

Place utility

Value created by making goods available where needed.

Form utility

Value from turning inputs into useful products; transportation supports it indirectly.

Derived demand

Transportation demand arises from demand for other goods, services, or activities.

Economic activity and transportation

More production, trade, and consumption generally increase transportation demand.

Transportation output

Measured through both volume/distance and customer service.

Ton-mile

One ton of freight moved one mile; tons × miles.

Passenger-mile

One passenger moved one mile.

Price elasticity of demand

Responsiveness of quantity demanded to price; percentage change in quantity ÷ percentage change in price.

Elastic demand

Quantity changes proportionally more than price; absolute elasticity exceeds 1.

Inelastic demand

Quantity changes proportionally less than price; absolute elasticity is below 1.

Primary influence on price elasticity

Availability of practical substitutes or competitors.

Aggregate versus carrier demand

Total transportation demand is often relatively inelastic; demand for one carrier may be more elastic because customers can switch.

Service elasticity of demand

Responsiveness of demand to changes in service quality, such as speed or reliability.

Perishable transportation capacity

Unused service capacity cannot be stored; an empty seat's selling opportunity disappears when the flight departs.

Mobility rights

The freedom and practical ability to move and access opportunities.

Node

A supply chain location, such as a factory, warehouse, port, terminal, or store.

Link

A connection between nodes; examples include transportation, communication, and financial connections.

Landed cost

Total cost of getting a product to the buyer, including production, transportation, handling, tariffs, and duties.

Landed cost and market reach

Lower landed cost expands the area where a seller can compete; higher landed cost limits it.

Load factor

Percentage of available capacity used; used capacity ÷ available capacity × 100.

Load factor effects

Higher utilization can improve efficiency, productivity, and margins, but excessive utilization reduces flexibility.

Cost-of-service pricing

Rates based on the carrier's cost of providing service plus a reasonable return.

Value-of-service pricing

Rates based on the value of transportation to the customer and willingness to pay.

Cost-of-service floor

Long-run revenue must cover relevant variable, fixed, and shared costs; an extra short-run shipment may be evaluated using incremental cost.

Fixed cost

A cost that does not change much with short-run traffic volume, such as committed infrastructure expense.

Variable cost

A cost that changes with activity, such as fuel and trip-related labor.

Product value and transportation

High-value or urgent goods can justify greater spending on speed, security, and reliability.

Pricing before deregulation

Greater government control of rates, routes, entry, and service.

Pricing after deregulation

Greater market and contract flexibility, with stronger price competition in many markets.

Customer

The buyer of transportation service, often the shipper.

Consumer

The buyer or user of the transported product.

Ultimate consumer

The final user whose demand drives upstream supply chain activity.

Four Cs of pricing

Cost, competition, consumer demand, and controls (government).

Perfect competition

Many sellers, similar offerings, easy entry, and little pricing power.

Monopolistic competition

Many sellers offering differentiated services with relatively easy entry.

Oligopoly

A few major firms with entry barriers and interdependent decisions; the predominant transportation structure in the review.

Monopoly

One provider with no close practical competitor.

Contestable market

A market where potential entry and easy exit pressure existing firms to keep prices competitive.

Contestability factors

Entry and exit barriers, sunk costs, infrastructure access, regulation, and incumbent network advantages.

Contestability and pricing

Less contestable markets tend to have higher prices.

Visibility

Knowing what is happening to shipments, inventory, and operations through timely shared information.

Visibility benefits

Earlier disruption detection, contingency planning, better decisions, and improved coordination.

Visibility challenges

Incompatible systems, poor data, limited participation, hidden supplier tiers, cost, cybersecurity, and difficulty turning data into action.

GPS and telematics

Track location, fuel use, and driver behavior; require equipment, connectivity, and data management.

Transportation Management System (TMS)

Plans shipments, selects carriers, and manages freight costs; requires integration and reliable input data.

Routing software and AI

Optimize routes, loads, and schedules; poor data or unrealistic recommendations can limit benefits.

RFID, barcodes, and IoT

Identify and track cargo or monitor conditions; drawbacks include equipment costs, scanning limits, and integration needs.

EDI and APIs

Exchange shipment information between systems; require compatibility, integration, and security.

Electronic logging device (ELD)

Records commercial drivers' driving hours; supports compliance but adds equipment and administration costs.

Safety and driver-assistance systems

Support warnings and collision avoidance; require maintenance, training, and continued safe operation.

Digital product passport

A digital record of a product's identity, origin, materials, and history that supports traceability, repair, and recycling.

Economies of scale

Average cost per unit falls as output increases.

Sources of scale economies

Spreading fixed costs, specialization, bulk buying, efficient technology, and better capacity utilization.

Modes with strong scale economies

Pipelines, ocean shipping, LTL trucking, and railroads; sufficient demand must use the capacity.

Diseconomies of scale

Average costs rise because growth creates coordination problems, bureaucracy, communication failures, congestion, or reduced oversight.

Internal economies of scale

Cost advantages developed within a firm, such as spreading its equipment costs over more output.

External economies of scale

Cost advantages outside one firm that benefit multiple companies, such as improved shared infrastructure.

Competitive advantage from internal economies

Internal savings generally provide greater advantage because competitors do not automatically receive them.

Scale economies and globalization

Larger international markets support greater volume, specialization, and lower unit costs.

Scale economies and market concentration

Large firms' lower average costs can support fewer firms and make entry harder for smaller competitors.

Limits to scale

Limited demand, capacity limits, coordination problems, congestion, distance, service requirements, and regulation.

Scale economies and mergers

Combining volume, networks, and facilities can spread costs and encourage mergers or acquisitions.

Economies of scope

Lower combined cost from producing different services using shared inputs.

Sources of scope economies

Sharing equipment, facilities, staff, technology, administration, purchasing, marketing, and distribution.

Scale versus scope

Scale means more output; scope means different outputs sharing resources.

Economies of density

Lower unit costs as more customers or shipments use the same geographic area or network.

Sources of density economies

Fuller vehicles, concentrated customers, higher route volumes, balanced return loads, and less empty travel.

Density and pricing

Better utilization lowers unit costs and may support lower prices.

Network economies

More connected routes, terminals, or destinations improve network usefulness, consolidation, and utilization.

Modes with network economies

Airlines, railroads, LTL trucking, maritime transportation, and pipelines.

Trucking's economic significance

Provides flexible door-to-door service and first/last-mile connections; the review gives 70+% of U.S. tons and 40+% of ton-miles.

Common carrier

Offers transportation to the public under applicable service obligations.

Contract carrier

Provides transportation for particular customers through negotiated agreements.

Private carrier

Uses an owned or leased fleet to support its own business rather than sell transportation service.

For-hire transportation

Transportation purchased from an outside carrier.

Insourcing versus outsourcing

Insourcing performs transportation internally; outsourcing buys it externally. The review identifies transportation as the most commonly outsourced function.

Private transportation's presence

Private fleets move approximately half of U.S. truck tonnage; private passenger transportation includes household and company vehicles.

Private fleet advantages

Control, reliable capacity, customization, customer service, and supply chain integration.

Private fleet disadvantages

Investment, staffing, maintenance, compliance, liability, and unused capacity.

Truckload (TL)

Usually moves a large shipment directly between origin and destination with limited terminal handling.

Less-than-truckload (LTL)

Combines smaller shipments through pickup, sorting terminals, line-haul, and delivery.

TL market structure

Monopolistic competition: many carriers can enter without building a large terminal network.

LTL market structure

Oligopoly: expensive terminal networks and scale economies favor fewer large competitors.

Trucking's inherent advantages

Accessibility, flexible routes and schedules, and complete door-to-door service.

Fuel management strategies

Improve loading, reduce idling, train drivers, maintain vehicles, improve efficiency, buy fuel strategically, and use telematics.

Trucking cost structure

Low fixed and high variable costs; the review lists labor around 44% and fuel around 21%.

Trucking scale economies

Stronger in LTL because greater traffic spreads terminal and network costs; more limited in ordinary TL.