The European and North American transport systems present a mix of similarities and difference. The author must have found it necessary and therefore compelled to compare these two regions because they are among the key global transport powerhouses in regards freight transportation. The regions have been used to offer the much-needed benchmark.
More, the two regions have massively evolved over time in their transport systems and hence, there is adequate researched and well documented data that can be aptly used to draw valid discussions and conclusions. In any case, the two region’s development and strategies in the transport sector stand out globally.
Moreover, strategic location of European and North American regions is another profound reason why the author opted to create the comparison. They host a huge market for goods produced in other parts of the world. Besides, both regions have strong logistical inbounds and highly developed systems of freight distribution (Leinbach & Capineri, 2007).
In spite of the stack similarities that exist between the European and north American regions, their transport and economic systems are still different in one way or another. For example, system management is profoundly different between the two regions. For instance, tax regimes in North America are unique to those in the European marketing bloc. While north America waivers or subsidizes certain transport levies, the European system is quite static and some tax brackets are quite high.
Logistical policies are also strategized differently n the two regions. The strategies applied by the regions’ territories are different. In this case, a network of logistics and transport configuration in the two regions reveal a significant difference in the sense that the regions have different models of making policies. Europe has a policy-making structure that is incremental in nature while North American region uses the big bang approach (Leinbach & Capineri, 2007).
Transportation costs directly affect global trade in a number of ways. To begin with, it is obvious that the net cost of products tend to skyrocket owing to a high cost of transportation. Usually, the costs incurred when moving goods from the points of production to consumption are passed over or transferred to the final retail buyers and consumers. Needless to say, transportation cost inflates the cost of goods and services.
As a result, products sold on a global platform may lack ready markets especially when they are to compete with locally produced and cheap goods. The element of cost alone can lower the volume of global trade owing to reduced consumption. This relationship confirms that global trade is negatively affected by the high cost of transportation since imports will be more expensive than locally produced goods. Consumers will prefer purchasing cheaper goods to highly priced imported products.
Second, the high cost of transporting imported products can negatively impact global trade in the sense that it limits manufactures from producing certain goods destined for foreign markets due to the fear of running into losses (Leinbach & Capineri, 2007). When global or international firms predict diminished profits occasioned by transportation costs, they definitely reduce the volume of manufacturing export products. Consequently, the market shares of global brands are eventually minimized by local products.
In addition, transportation costs can also lead to creation of strong monopolies because only giant corporations can secure adequate investment capital funds for production, transportation and marketing. Hence, global trade may eventually be dominated by a few players.
Reference
Leinbach, T.R., & Capineri, C. (2007). Globalized Freight Transport: Intermodality, E-Commerce, Logistics and Sustainability. Cheltenham, U.K: Edward Elgar Publishers.