Abstract
This chapter elaborates the transport costs and economic distance. The transport of goods from areas of surplus to areas of deficiency increases their value, so that iron ore commands a much higher price in Tokyo than it does in Western Australia, but the transport of the iron ore involves a cost, and for movement to take place the cost of transport must be less than the increase in the value of the iron ore. The point where transport costs become greater than the increase in value is the maximum economic distance that any commodity can be carried and this varies considerably between commodities. A £500 camera can be carried much further than £500 worth of cement because of the difference in the transport costs involved. Transport costs will vary depending on the particular type, origin, and destination of a cargo, but they will be made up of two basic elements which the customer, or shipper has to pay. The two elements are the operating costs involved in the actual movement of goods, and the profits that the carrier expects when he determines his rates.
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