COM4: TRANSPORT IN COMMERCE

This unit is transport or transportation used in countries as described in commerce.

TRANSPORT

This is an aid to trade which involves the movement of people and goods from place to place. It makes goods available to consumers which create utility of both place and time. There are four elements of transport.

 

Elements of  transport

  • The way

This is the surface on which goods move. The way is subdivided into two –

  • National ways ie roads, water, air.
  • Artificial ways ie rail ways, pipelines, bridges, tunnels.
  • The carriage

In transport, there must be a unit of carriage on which goods are loaded for example vehicles, ferry, ships, water vessels, train, pipes cargo plane etc

  • The method of propulsion

The unit of carriage must be driven by some method eg it can be driven by a petrol engine or electric mortar.

  • The terminal

Goods must be loaded or off loaded some where these places are referred to as terminals eg airport, sea ports, bus stations, car parks, railway stations etc.

Importance of transport in commerce

  • Transport helps in the supply of raw materials to factories and in the delivery of goods to where they are supposed to be consumed therefore transport creates utility of place and time.
  • It enables producers and traders to reach customers who may be dispersed over a wide area for example imports and exports can reach their final destination because of transport.
  • Developed transport networks encourage mass productions since markets are opened for and wide. Mass production reduces costs of production and prices of goods.
  • It creates inter dependency between countries. This enables consumers to enjoy a wide variety of foods from various countries.
  • Transport facilities will facilitate the transfer of goods from regions of plenty /surplus to regions of scarcity. For example matooke can be transported from Mbarara where it is plenty to Kampala where it is scarce.
  • Easy means of transport will keep prices of goods stable. When there is a continuous supply of goods there will not be any shortages for prices to rise where as if there is a shortage prices will raise because of poor transport.
  • With an efficient means of transport, the movements of perishable goods like fruits, newspapers are made possible esp. over long distances.
  • Transport encourages specialization because it enables the transfer of finished products from regions of production to the market areas.
  • Transport facilities international trade
  • Transport creates employment avenues for people who work in the transport industries eg drivers and engineers.
  • It also facilitates communication eg movements of letters, post cards, parcels, cannot be done without transport.
  • Good and efficient transport systems may lead to development of regions. This is because transport provides access to areas which unreached so businessmen will be motivated to locate their business ventures in areas with good transport systems.
  • Transport systems generate revenue for the government inform of road licenses, driving permits and registration of transport companies.

 

Types of transport

We have five major types of transport namely;

  • Road/ land transport
  • Railway transport
  • Air transport
  • Water transport

 

  • Road/ land transport

These include lorry, cars, motor cycles etc

Advantages

  • Roads can be constructed in any area which may be inaccessible for other forms of transport eg they can be constructed in swamps, hilly areas, mountains etc
  • It is convenient and good for carrying goods over short distances than any other mode of transport.
  • It is a feeder / linkage to other modes of transport like air transport, railway stations have to be linked by road transport
  • Road transport is highly flexible because one can switch from one route to another easily.
  • In road transport, insurance charges are normally / owner than any other mode of transport.
  • It is easier to start up road transport business compared to other modes eg business men may start up a bus company, or own a fleet of vehicles but expensive to own a train, an aero plane or ship.
  • Their charges are relatively cheaper compared to air and rail transport
  • The road transport, vehicles can be used for advertising eg the cars can be painted with adverts
  • It is convenient for door to door services eg motor cycles, bicycles can move from one spot to other delivering goods. Buses or vans can also be used as mobile shops.
  • It is suitable for delivering emergency goods and perishable items with in short distances
  • Road transport does not run on time schedules like other modes of transport. So one can access it at any time
  • Maintenance costs are lower in road transport than other modes of transport
  • In road transport, it is possible to carry out route / along the way like selling and collecting goods along roads can be possible.

Disadvantages of road transport

  • Road transport is slow compared to air transport
  • Road transport is affected by weather conditions esp. during heavy rains when murram routes may be impassable
  • Road transport is limited in carriage space so it would not carry bulky goods that could be carried in a railway/ water transport
  • Road transport faces a problem of traffic congestion and delays
  • Road transport is also associated with more social costs like pollution than other modes of transport
  • Statistics have proved that there are more accidents in road transport than any other modes of transport
  • Road transport is more expensive than railway transport when transporting goods over  a long distances
  • Road transport is insecure in isolated areas like forests which gives travelers a high risk of robbers
  • Road transport is exposed to mechanical breakdowns due to bad roads this makes repair costs high
  • Road transport is not easy to organize and arrange for a return journey than other modes of transport.

  • Railway transport

Advantages

  • It is less affected by weather conditions compared to air transport and water transport
  • There is no traffic congestion since each route is used by one train at a time
  • Special wagons can be designed to carry particular goods for example wagons for fuels, wagons for people are designed differently
  • The rate of accidents is lower compared to road transport
  • Railway transport is based on time schedules so one can plan in a chance to transport goods
  • The time schedules make it possible to arrange for a return journey with a full load
  • It is cheaper than road transport over a long distances
  • The routes are directed ie they do not meander which makes it faster than road transport
  • It is suitable for carrying bulky commodities like minerals, cattle, coffee, etc over long distances
  • It is also suitable for carrying containers

Disadvantages

  • It is expensive over short distances therefore it cannot even carry perishable of urgently needed goods since they operate schedule
  • It is expensive for business men to own a train therefore it is difficult to run a private venture in this mode of transport
  • Trains turn out to be slower than air, water or road transport because they tend to delay only to take off at a particular time
  • It is not flexible since trains cannot switch from one route to another when they have set off on a particular route
  • There are high risks of pilferage (risk of stealing) because of excessive handling of goods on loading and unloading in terminals
  • Since trains operate on schedules, their movement is restricted to particular days and times
  • It is hard to construct a railway line in a mountainous area and constructions are also very expensive
  • Goods normally delay at terminals because of clearance procedures

 


  • Air transport

This is the quickest means of transport but very expensive. When speed and convenience matter, air transport is the most suitable. It is also suitable for transporting valuable and light goods like clothes, flowers etc and where distance must be considered esp from one continent to another air transport becomes inevitable.

Advantages

  • It is the quickest and fastest means of transport and it is suitable for carrying urgently needed commodities eg foods and drugs for relief.
  • It is suitable for carrying light valuable and delicate goods like glass, jewellery etc
  • It is more economical over long distances eg intercontinental distances or country to country.
  • It is the most convenient and comfortable means of transport eg meals and drinks can be served along the way
  • Air transport is free from topographical barriers
  • There is extra security in air transport. Care is taken to ensure that there are no robbers or hijackers. This is important to business men because extra caution means less looses
  • It is possible for business men to operate their own air line companies. This quickens the movement of passengers between air ports.

Disadvantages

  • It is very expensive because it involves a lot of flying operations, fuel, maintenance costs etc
  • Some commodities cannot be transported by air because they are bulky eg cows, containers, explosives etc
  • Air transport is affected by weather conditions like fog
  • Aeroplanes cannot transport passengers and cargo to their final destination
  • In case of an accident, all cargo and passengers are likely to be completely destroyed
  • It is more exposes to hijackers than any form of transport
  • It requires a lot of formalities to travel to other countries eg passport, health certificate, visa, air ticket etc.

  • Water transport

This involves the movement of goods on water bodies like canals, navigable rivers, lakes and oceans.

Advantages

  • It is the most efficient and cheapest means of transporting bulky and heavy goods
  • Water is a free way therefore no payment is needed for the use of water and no accidents/accidents are rare.
  • There are no incidences of congestion of water except at the labor
  • There is relatively low cost of maintenance of vessels compared to other forms of transport
  • Water transport is the best for international trade. it can transport very large cargo which other forms of transport cannot handle
  • Large ships can be built to accommodate cargo of whatever size
  • No expenses are incurred in constructing routes because they are provided by nature
  • Special vessels can be constructed and destined to carry special kinds of goods eg oil tankers
  • With the exception of land locked countries which may also be joined by water, by railways and roads, most of the countries are boarded by seas therefore they find water transport convenient and cheap to use
  • Water transport is flexible because some vessels can travel on a regular basis and can be used by traders anytime eg tramps

Disadvantages

  • It is very slow especially in international trade; ships can take several months without getting to their ports of destination. Therefore water transport is not convenient for urgently needed goods or perishables.
  • Many countries are land locked ie they have no access to coastlines. This means that they have to incur extra costs to have access to the sea
  • The delays in shipping and the delays at the port may affect the quality of the cargo
  • The congestion at the port and habours leads to delay in delivering goods
  • Countries without natural harbors will also incur extra costs to construct the artificial ot lets of habours
  • Water transport is vulnerable to fierce storms and adverse weather conditions
  • In some countries, water bodies freeze during winter which renders the water bodies out of use
  • In water transport, goods are not transported to their final destination they have to be linked up by either railway or road transport
  • Very heavy loads may not be transported in shallow waters like in canals, rivers, lakes
  • Water vessels like ships are very expensive to construct

Types of water vessels

  • Ocean lines

These water vessels are characterized into two ie

  • Passenger lines and
  • Cargo lines

 

  • Passenger’s liners

Only carry people or mail and a limited amount of cargo. The follow a specific route and use a specific time table. They call at ports regular intervals and because they follow a regular route and time table they will soil off with or without passengers or cargo

  • Cargo liners

Specifically carry cargo and also have specific routes and time tables.

  • Tramp steamers

These are types of ships which do not follow a regular route of time table. They go anywhere they can get business. They charge a lower rate than ocean liners because they are usually away for a very long time visiting other countries where they can get cargo. Tramps usually carry bulky goods like timber, mineral ores, etc. they can even operate on contract by use of a charter party.

  • Tankers

These are water vessels owned by oil companies to carry petroleum products and other liquids.

  • Bulk carriers

These are special vessels designed to carry specific goods eg timber, minerals, perishable commodities

  • Rollin- roll off

These are very large water ferries which are used to carry vehicles on water. The drive their name from the fact that vehicles are driven on and off at the loading and off loading paints.


  • Pipeline transport

This is a means of transport where pipes are used to carry commodities like petroleum products, gases, water, sewage, etc. an examples is the national water and sewerage co-operation in Uganda while pipelines to distribute water and for sewerage disposal, Kenya has a pipeline which transport gasoline petrol from Mombasa to Nairobi

Advantages

  • The speed in pipeline transport is reasonably high and it is guaranteed.
  • Once pipelines are installed, the cost of running such transport is very low ie it does not call for servicing fueling, oiling and washing etc
  • In this form of transport, large volumes of commodities can be carried through the pipes.
  • Since pipes are underground, they are less likely to be affected by damages or even atmospheric conditions.
  • Problems of traffic jam, accidents, and delays are not experienced.

Disadvantages

  • Only gases and liquids can be carried through pipes and not physical goods installing pipes is very expensive esp. with long distance.
  • Installing pipes is very expensive esp. with long distances
  • In case of a linkage, all the items being transported will be lost.
  • Repairs and maintenance tend to be costly and difficult to locate
  • Soil erosion might expose the underground pipes. Nature disturbances like earth quakes may also break the pipes.
  • In the case of water, if poisoning occurs, it is likely to be very disastrous.

Factors considered in choosing a mode of transport

  • The nature of goods

This determines the mode of transport in those perishable goods and urgently needed require a quick means of transport. Dangerous articles like petroleum products and explosives are not accepted on aero planes.

On the other hand, railway transport and water transport are best suited to bulky and heavy goods

  • The distance involved

Short distances eg on land may be taken economically by road which long distances may be taken by rail or water depending on another factor like the road.

  • Speed and urgency

A fast means of transport is chosen when goods like relief, perishable are needed urgently normally by air.

  • Size of the load or cargo

Bulky and heavy goods are best transported by railway and water over long distances and when the distance is short, heavy trucks can be used on road. On the other hand, light cargo like mail, news papers, can be transported by air between countries and road between countries.

  • The flexibility of the transport system

Sometimes it is necessary to make sales of goods along the way, this only possible with road transport and where there is need to switch from one route to another road transport is best.

  • Terminals

If goods are transported by railway, sea or air, there must be a suitable terminal to act as a loading or an lording point eg a railway station, air port, sea port etc.

  • The cost of transport

Some forms of transport may be quick and convenient but very expensive. Valuable goods may be transported economically by air but one should bear in mind the cost of transport in relation to value of goods being transported (insurance costs made a mode of transport more expensive than another).

  • Packaging requirements

Goods transported by air and water require special packaging which adds on to the cost of the goods. Road and railway transport require less expensive packaging.

Factors that determine the efficiency of a transport system

The following factors determine the efficiency of any transport system;

  • Speed

It matters where goods are required immediately eg perishable goods, relief goods etc

  • Time schedules

One can get the confidence of using a transport system that keeps time schedules

  • Flexibility

This factor is considered when loading and unloading is necessary or when changing from one route to another is necessary.

  • The cost of transport

Unnecessarily high transport costs will be transferred to consumers in form of high prices this eventually affects the market of goods so one should choose a relatively cheap means of transport.

  • Safety

For one to consider a means of transport efficiently, it must carry goods with the least an avoidable damage on them.

Problems facing the transport system in Uganda

  • The road network in Uganda is insufficient ie there are few roads and those available are in poor condition and not well maintained.
  • The government in Uganda has the monopoly over the construction and maintenance over the roads system. No private companies are allowed to own railway line or any other transport system.
  • The unreliable climatic conditions like heavy rains, usually wash way bridges and hinder the construction of better transport methods. This also makes murram roads impassable.
  • In some places, the nature of the relief or topography makes the cost of construction of a good transport not work expensive eg in mountainous areas or places with rift valleys.
  • The cost of transport charges is unstable because of the cost and instability of fuel charges. This hinders the development of trade.
  • The cost of buying vehicles makes the number of vehicles available esp. in rural areas inadequate.
  • There are few experts available to undertake the work of constructing and maintaining the transport networks. Most of those used in Uganda are foreigners (expatriates).
  • Uganda is a land locked and it suffers such problems like between neighbors which will reduce the amount of cargo that through the neighboring counties
  • Because of over speeding on the roads and railways, there have been many accidents in the recent past.
  • The nature of the transport networks like roads causes a lot of traffic I am during the rush hour because the roads are very narrow.
  • Lack of funds by the government to maintain and construct transport systems. The ministry concerned is characterizes by corruption, nepotism and embezzlement of funds.

Efforts taken to reduce transport costs in Uganda

  • Privatize part of the transport system by encouraging private to own bus companies, air transport companies etc. this has reduced government participation in transport and has eliminated the problem of society.
  • The government has tried to construct all weather roads which make the road more usable all year round.
  • The government has tried to decentralize the construction of roads in districts b encouraging them to buy their construction equipment and directly controlled by their local councils.

ASSIGNMENT : TRANSPORT IN COMMERCE Assignment MARKS : 10  DURATION : 1 week, 3 days

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