The transportation industry is made up of suppliers of transport-related services and consumers of such services. Drawing from a study by Rodrigue and Notteboom (2015), a transport industry that functions efficiently facilitates the meeting of transport demand to ensure that the mobility requirements of individuals are sufficiently met. Every single economic activity that comprises numerous economic undertakings at different locations must be supported by a reliable transport industry.
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This paper discusses how supply and demand drive the transportation industry. It also addresses the question of how the transportation industry affects the environment.
How Supply and Demand Drive the Transportation Industry
Despite the fact that the demand for transport in some cases may simply be fulfilled by walking from one destination to another, an elaborate transport system is an important requirement in many occasions to provide the required mobility. According to Rodrigue and Notteboom (2015), transport supply is articulated in terms of the capacity of available transport infrastructure, the frequency of services provided, and the coverage of the transport infrastructure.
Demand for transport is considered in terms of the existing transportation needs regardless of whether they are fully satisfied or not. Transport demand is usually explained by considering the number of people or the amount of space that is required. To a large extent, supply and demand for transport tend to have a reciprocal relationship. This notwithstanding, it is impossible to have a transport demand without an equivalent transport supply. Stakeholders in the transport industry must, therefore, strive to meet the existing demand for transport.
The relationship between the supply of transport and its demand is quite dynamic and keeps on changing. However, there is a very strong interrelation between transport demand and supply (Rodrigue & Notteboom, 2015). Ideally, the supply of transport and its demand keep interacting until a point is reached where the transport supplied is able to satisfy an existing transport demand at a particular price level.
Transport demand and supply affect the transport industry in a number of ways. When the demand for transport increases against a constant supply, the cost of transportation is bound to go up, and this may serve to attract new players into the market. On the contrary, an increase in transport supply without a corresponding increase in demand for transport often leads to lower cost of transport. The decreased cost of transport, in turn, causes some transport providers to exit the market.
Effect of the Transport Industry on the Environment
Increase in transport demand and transport supply affects the environment in different ways. When the demand for transport increases, the corresponding requirement for increased transport supply attracts new entrants into the market. In most cases, the means of transport used releases different forms of gases into the atmosphere, and these gases end up affecting the environment negatively. The higher the number of transport suppliers, the higher the number of toxic releases into the air.
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As discussed in this paper, transport demand and supply affect the transportation industry in a number of ways. Increased demand for transport implies that there must be a corresponding increase in transport supply. At the same time, increased demand for transport serves as a motivation for new players to enter the transport industry. Unfortunately, the increase in the number of suppliers creates a new problem that negatively affects the environment.
Rodrigue, J. & Notteboom, T. (2015). Transport Supply and Demand. Web.