Transportation is a pervasive and very important part of all developed economies and is a key ingredient for underdeveloped countries to progress to economic develop- ment and independence.
• The history of the United States is replete with evidence of the close correlation of advances in transportation technology with our advancing economic development from the Erie Canal to our modern highways and air systems.
• Transportation systems are the lifelines of cities and the surrounding suburbs. Tons of products are moved into cities every day to promote the health and welfare of its citizens. Also, products which are produced in the cities are moved out for shipment elsewhere.
• Transportation contributes to the value of goods by providing time and place utility. That is, effective and efficient transportation moves products to points where there is a demand for the product and at a time when it is needed.
• Geographic and labor specialization are important cornerstones of industrialized countries and transportation provides one of the necessary ingredients for this to occur.
• The more efficient the transportation system, the greater the possibility of scale econ- omies and increased market areas.
• Improved transportation in an area will usually increase land values because of the improved accessibility to raw materials and markets.
• The flow and patterns for commerce influence transportation infrastructure patterns of developing countries.
• Transportation expenditures for freight and passengers are an important part of the gross domestic product in the United States.
• While transportation provides many benefits, it can also contribute to environmental problems including pollution, poor air quality, acid rain, and global climate changes.
Questions
1. Economists often point to the impact of improved transportation on land values and related economic development. What is the nature and significance of the transportation impact?
2. While improved transportation systems provide economic benefits, there may be some associated environmental costs. What are the major environmental costs associated with transportation and what are their potential negative impacts?
3. “Improved transportation systems can also have social and political significance.” Why are these important considerations for evaluating existing and/or proposed additions to the transportation system
4. The service characteristics of freight movements are considered by some shippers to be as important as or more important than the freight rate. Discuss the various ser- vice characteristics for freight demand. Do you agree with the statement that they may be as important as or even more important than the freight rate? Why or why not?