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3

Assessment (Additional)

Tools to be used:

- Edulink

- Slides

- Twitter

- Wet Paint

Why?

Relevance, relate to outside, engage with fellow students,industry leaders, acquire and improve writing skills, forming

factually based opinions and articulating them.

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TWITTER USE

- Twitter- @ujtranseco1A2012

- Open a twitter account using eg: @uj201284836

- Use #ujtranseco1A2012 when tweeting on matters relating to

discussion

- Benefits: - real-time connection to outside

- you build a professional portfolio

- begin to for opinions on transport matters

- Forms part of your evaluation and assessment

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ASSIGNMENTTOPICS

Transport and the environment: Discuss the causes and extent ofenvironmental damage as a result of emissions caused by transport. What

proposals and changes are and should be made to remedy the situation.

Passenger Transport in Gauteng: There are a couple of public transport

service providers in the province. Identify them as well as the challenges

faced in public transport to make it more efficient for all citizens of theprovince.

Transport Infrastructure in South Africa: Assess the current state of transport

infrastructure in South Africa, what more can be done with regards transport

infrastructure to ensure that the country reaches its full economic growth

potential.

Options: Class Presentation / Edulink Posting- comments from classmates

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What we expect from YOU:

This isYOUR class AND your results depend onYOU!

Avoid private discussions!

(you WILL be sent out of the class!)

Be an active listener!

(bring AND use: paper AND pen!)

Bepunctual!

(if you are late come in at the BACK!)

Participate in / complete ALL assessments!

(it WILL make a difference to passing vs failing)

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ASSIGNMENTTOPICS

Transport and the environment: Discuss the causes and extent ofenvironmental damage as a result of emissions caused by transport. What

proposals and changes are and should be made to remedy the situation.

Passenger Transport in Gauteng: There are a couple of public transport

service providers in the province. Identify them as well as the challenges

faced in public transport to make it more efficient for all citizens of theprovince.

Transport Infrastructure in South Africa: Assess the current state of transport

infrastructure in South Africa, what more can be done with regards transport

infrastructure to ensure that the country reaches its full economic growth

potential.

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PRESCRIBEDCOURSEMATERIAL

All students must acquire the literature:

1) Buy the prescribed text book for Transport Economics

1A and 1B:

Coyle, J.J.; Novack, R.A.; Gibson, B.J. & Bardi, E.J.;

2011. Management of Transportation, 7th Edition.

South-Western.

2) Buy the class notes from Van Schaik:

Title: Transport and the Economy.

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STUDY UNITS / CHAPTERS

1. Overview of the scope of transportation (1-15) (1-129)

2. The role/function of transport (16-29) (1-129)

3. Transport & trade, economic growth & development (30-48) (1-129)

4. The transport market, demand & supply (49-74) (1-129)

5. The transport modes & intermodalism (75-101) (133-255)

6. European intermodal transport (102-117) (200-215)

7. Carrier selection & ownership (118-124) (133-255)

8. Logistics (125-140) (17-23)

9. Challenges (141-147) (488-512)

10. Price formation and location theory (148-160) (295-347)

11. Transport costs (161-196)

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Assignments & Assessments

Edulink Assessments (10%):

Semester Assignment (20% of SM)

groups of 3-5 people

8-10p individual or 15p per group

Study Unit Description Open Closes

Study Unit 1 Overview of the scope of transportation 31 January at 08:00 11 February at 12:00

Study Unit 2 The role / function of transport 7 February at 08:00 11 February at 17:00

Study Unit 3Transport and trade, economic growthand development

14 February at 08:00 18 February at 17:00

Study Unit 4The transport market, demand andsupply

21 February at 08:00 25 February at 17:00

Study Unit 5 The transport modes and intermodalism 7 March at 08:00 11 March at 17:00

Study Unit 6 European intermodal transport 14 March at 08:00 18 March at 17:00

Study Unit 7 Carrier selection and ownership 21 March at 08:00 25 March at 17:00

Study Unit 8 Logistics 18 April at 08:00 22 April at 17:00

Study Unit 9 Challenges 2 May at 08:00 6 May at 17:00

Study Unit10 & 11

Price formation, location theory &Transport Costs

9 May at 08:00 13 May at 17:00

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1.1 Introduction to transportation

1.1.1. A macro-economic view

Social, political, economic development

Operation, management, regulation

Personal, society, economy

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Importance of transport(supplychainforesight study 2006)

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Importance of transport(CSIR 2009)

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1.1.2 The economic problem

Wants & needs greater than resources

Resources are scarce & cost

Allocation choices between alternative uses

Max. want satisfaction from limited resources

No solution without transport

Household & national level

Decision makers

Sound production & distribution plan

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1.1.3The production plan

Transformation of factors of production

Form utility

Producing goods

with greatest possible utility

at best possible price

to satisfy most needs & wants

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1.1.4The distribution plan

Distribution of goods & services

Place utility

Moving goods

to where they have greatest possible utilityPoint-of-origin to point-of-consumption

Material/in-process inventory/finished goods

Time utility

Moving goodsto where they are needed when needed

Otherwise shutdowns, lost sales, etc.

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1.1.5. Value of service (p12)

Transport Cost is a component ofLanded Costs

cost of the product at source Plus

cost to transport product to destination

Impacts demand for product

Determines extent of the market

(where the seller has a landed cost advantage)

Companies with lower transport costs have greatermarket areas

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City A

Widget

Production

City C

City B

Transport Demand = 0 Widget Demand = 0

Transport Demand = 100Widget Demand = 100

Derived Demand forFreight Transport

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Demand and Landed Costs

City A City B

Production Costs = R300 Production Costs = R400

Maximum Transport Costs

R100

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Extent ofMarket Area

Production Costs = R500/unit

Transport Costs = R6.00/unit/km

Production Costs = R500/unit

Transport Costs = R5.00/unit/km

A BDistance = 200km

What is the extent of the market between the two producers?

LC (A) = LC (B)

= Prod Cost (A) + Trans Cost (A) = Prod Cost (A) + Trans Cost (A)

= R500 + R6(x) = R500 + R5(200 - x)= R6(x) + R5(x) = R500 + R1000 R500

= R11 (x) = R1000

= 90.9km

90.9km 109km

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Service components ofFreight Demand (p14)

Critical service characteristics and related supplychain cost impacts

Transit time

Volume and cost of holding inventory

Potential stockout and/or safety stock costs

Reliability or consistency of transit time

Safety stock and/or stockout costs

Accessibility or the ability to move freight between a

spesific origin and destination impacts transport cost and time

Capability: special service requirements

Security: safety stocks and/or stockout costs

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1.1Introduction to transportation

Location of economic activity (p16)

Transport impacts location of industries

Cost of transport

Quality of transport

Companies need to decide where to locate

Changing locations of economic activity impacts demandfor transportation

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1.2 Nature of transport

Definition

Movement

Passengers & freight

One place to another

To where & when needed Different modes

Bridging time / space,

producer-consumer/economic & physical distance/gaps

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Definition

An economic function

A means to an end

Derived nature of demand for transport

A cost of production Limited by geographic features

Influenced by product related factors

Influenced by market related factors

Influenced by demographics

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Cost of production

Low value vs high value goods

Ease vs difficulty of performing transport

Reduction oftransport costs

packaging, materials, design, location etc.location of industry flexibility,

industrial efficiency, etc.

Value added by transport

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Limited by geographical features

Transport = f(geography)

Routes must be feasible & economical

Routes connect cities, economic points, naturalresources, etc

Modes of transport

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Classification

Forms Modes

Air

Surface

transport

Land

Road

Rail

Pipeline

Water

Inland

Rivers

Canals

Lakes

Sea Coastal

Tans-oceanic

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Product related factors

Cost & service = f(product characteristics)

Product characteristics =

Density (mass:volume)

Stowability (cube utilisation)

Handlability (uniformity, physical character)

Liability (value:mass)(pilferage)

Hazardousness (hazardous characteristics)

Fragility (need for protective packaging)

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Market related factors

Cost & service = f(market-related factors)

Market-related factors =

Competition (intramodal & intermodal)

Location of markets (distance, regulation)Traffic (balance of traffic in region)

Seasonality (of product movements)

Domestic vs international

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Demographics

Demand for pass transport (public/private) = f(demographics):

Size & income level of population

Age & education of population

Economic level & activities of population

= f(education & industrial activities)

Commuting & distances travelled

= f(land-use policies & planning)

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Customer service

1. Dependability, consistency

2. Time-in-transit

3. Market coverage

4. Flexibility

5. Loss & damage performance6. Availability, safety

7. Ability to provide more than basic service

Modes of transport + intermodal + other transporters(indirect & 3rd parties)

Economic & technical characteristics

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1.3 Dividing the transport service

Passenger & freight transport

Private & public, long & short distance

Own application & significance

Social & energy implications

NB for all social & business activities

Development & advancement of business

Economic movement of goods

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Passenger transportation

Business travel (long-distance)

Sensitive to schedule, convenience, service

Vacation travel (long-distance)

Sensitive to price Personal travel (long-distance)

Sensitive to speed, cost, times

Urban transit

Primary trip markets / o-d density patterns

Peak-valley demand problem

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Passenger transportation

Passenger demand characteristics

Destination

Schedules & speed

Cost

Equipment

Entertainment & attention

Terminals

Complaints & experiences

Role of the travel agent

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Freight transportation (p11)

Freight transport demand =

f(demand for a product in a given location)

f(geographic imbalance in product supply) =

f(labour specialisation/mass production)

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Freight transportation

Derived demand

Transport does not affect actual demand for product

however:

Transport rate & service level can affect demand forproduct & demand to transport the product

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1.4 The transportation system

Framework

1. Carriers that perform the physical movements &

2. Management that operates and control

TS role is to satisfy movement & demands of users= achievement of the system

external forces on ops & achievement

1. legal & regulatory environments &

2. user demands(government, industry, consumers, passengers)

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System

Modes (comparative advantages & disadvantages.)

5 modes + special services

Natural product provinces

Modes + representative carriers= NB role in the system

Transport interacts with 3 groups of society:

1. Users

2. Service Providers

3. Government

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System

Management of transportation system

1. Sellers (carrier management)

2. Buyers (traffic management)

Overall responsibility:

To provide services while responding to the demands of

both its users & the external environment

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External forces

Largely uncontrollable

Transport

= significant impact on society

Legal & regulatory environment, users

Regulation

= role of government in transport

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Regulation & legislation

Nature of transport industry

Many carriers in competition

Different modes

Impact on society & economy Safety (hazmat, labour, etc)

Economic (routing, scheduling, etc)

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Regulation of transportation

Nature of regulation

The imperfections in the marketplace in a free-enterprise

economy provide the rationale for governmental control.

Regulation must ensure conditions for economical use ofresources in a private enterprise system.

Regulation must ensure competition.

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Development of regulation

Transport industry impacts public interest.

Transport is vital to countries economic viability:

economic activity

exchange/movement of goods/serviceswell-being of society.

Government must ensure public has access to

economically viable transport system.

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Policy

Transports significance to a country

Transport affects everyone

Transport ties everything together

Transport connects segments Transport furthers economic activity & benefits

Transport assists national defence / emergencies

- Public ownership & operation of transport facilities

ensures access- Policy provides direction for the provision

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Policy

Governments transport responsibility =

Ensure safety of users

Protect public from monopolistic power

Promote fair competition Develop/continue vital transport services

Balance environment/energy/social needs

Plan & make decisions

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Public promotion

Transport project planning in public sector

Promotion, programs, agencies, planning, policies

ensure transport growth where pure market forces would

not have achieved this.

Services that are not financially viable but are socially

necessary are ensured.

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Transportation safety

Government promulgates safety regulations for all

modes & centralises safety enforcement at national

level.

Reduced economic regulation:

Safety sacrificed for profitability

Safety regulations:Labour qualifications

Operating procedures

Equipment specifications

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Transportation safety

Minimum levels of safety are established for transport

providers.

Stds for vehicles, equipment, operations

Stds for transporting hazardous materials

Including environmental safety

Safety increases the direct cost of transport

Safety decreases the indirect costs

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Regulatory institutions

Level of service, equipment, facilities

Fair, reasonable level of charges

Transport violations monitored & corrected

Regulatory bodies ensure compliance Enforcement for societys well-being

Control & administer all users

Acts & regulations

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Government as stakeholder in the

transport system

Reasons for government involvement in transport:

1. Control of excessive competition

2. Co-ordination of transport

3. Integration of transport with economic policy4. Maintenance of safety, security and order

5. Provision of costly infrastructure

6. Provision of public goods

7. Recovery of the true resource cost of transport inputs

8. Regulation of harmful conduct and externalities

9. Restraint of monopoly power

10. Social support

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Users

Government

Industry

- Producers

- Distributors (wholesalers, retailers) Consumers

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Achievements

Efficient movement of freight / passengers

In the legal & regulatory environments

Affecting performance

Of all activities in society Efficiency & effectiveness key

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Assessment type questions

1. Define and discuss transport2. Explain transports role in the macro-economy

3. Discuss the economic problem + production / transport

roles in the solution

4. Discuss the nature of transport (implications etc.)5. Discuss freight transport

6. Discuss passenger transport

7. Describe the transport system

8. Discuss transport regulation (policy, planning, safety)

te 1a_study unit1 14022012

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