Transport Costs in a Shrinking World

Abstract

Logistics is about reducing costs in freight transport and removing virtual (rather than physical) obstacles in the event. Reports dwell on the quest for efficiency and show ways to remove bottlenecks and costs. The reduction of these costs was instrumental to an ever increasing exchange notably of finished goods between the countries of the World. The cost elements of transportation de-pend on the nature of the goods to be transported as well as the topography, the distance to overcome and the modal choice. But day-to-day reality seems to paint a totally different picture to the economic analyst. Does it still make sense to apply or even study the theories of the classical and neo-classical transportation geography which allocate the spheres of production and of consumption according to costs in space. This paper dwells on two diverging opinions. The combination of two sets of models, one coming out of the classic methodologies and one from modern marketing concepts, leads to an explanative approach which reconciles both model builders and empirical analysts.