Rising fuel and labor costs have made it increasingly difficult to squeeze a profit out of road transport in recent years, but the cost per mile of trucking has always been more complex than just paying the driver and the fuel bill. Figures released by The Truckers’ Report puts the operational cost per mile of truck transport at $1.38 but anecdotal evidence indicates that it is closer to $1.50 per mile. With the trend in recent years for this cost to increase by as much as 10c per mile every year, it can often be profitable to re-evaluate the use of road transport to be sure that it is still cost effective. If the basic transport rate for a truckload of products adds $1,500 per 1,000 miles then the sale price of those products potentially has to be high enough to cover that cost and more. For some products, especially primary products, this expense makes road transport less cost effective than other options like rail or sea. At the other end of the spectrum are the high end products that have profit margins which merit more expensive transport, like air freight, because of the savings that can be made from…
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All economists agree that trade is a vital component in any economy, but the value of international trade to local economies is often overlooked because the benefits are often hidden. The dollar value of imports and exports are difficult to keep track of when the distribution system runs through so many stages. It can be hard to tell exactly what constitutes an import or an export when a product contains portions of both. Automobiles are an excellent example of this. In the United States, General Motors is generally viewed as an American automaker, but G.M. makes many of its cars overseas, and many of the components of the cars it assembles in the United States are fabricated in foreign countries. Honda, on the other hand, is seen as a Japanese automaker, but Honda assembles many of its cars in the United States, and even the cars it manufactures in Japan and brings into the United States contain many American-made components. The disruption caused by the Japanese earthquake and tsunami stopped production for many Japanese parts makers, but its effects were also felt by many local economies in the United States that were dependent on these materials. The supply chains of…
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