The cost of moving a transportation conveyance is almost independent of its load.
Equipment amortization and operator wages do not change at all, while fuel
consumption and equipment wear and tear are affected only marginally. Consequently,
it is advantageous to move the conveyance always loaded at capacity or
close to it. When moving in and out of a logistics cluster, where many firms
manage bidirectional flows, the likelihood of filling in conveyances is higher than
otherwise, leading, again, to lower transportation costs.
In addition, as the volume of freight in and out of the cluster grows, transportation
carriers can start using larger and larger conveyances. Since the cost of
operating a transportation conveyance does not grow linearly with the size of the
vehicle, it costs less to operate a larger vehicle, on a per unit capacity basis, than a
smaller vehicle. This is evident by ocean carriers’ move to larger and larger ships
(resulting in the need to expand the Panama Canal); the use of double stacking and
very long trains by railroads; the use of 530 trailers and double and triple
combinations by motor carriers; and the use of large cargo planes by freight
airlines. As the size of the logistics cluster grows, this phenomenon generates
another positive feedback, since when carriers can use larger conveyances they can
reduce their rates, making the cluster more attractive to more companies,
increasing the size of the cluster and making it even more attractive to carriers and
shippers.
A further advantage of locations where there is a large concentration of freight
is that more direct conveyance movements can be operated. For example, LTL
movements out of a cluster can utilize more direct movements, bypassing terminals
with fully loaded trailers and reducing handling costs (as well as improving
service and reducing handling errors and damage to shipments). This phenomenon
grows with increasing freight volumes, creating, again, a positive feedback loop.
The cost of moving a transportation conveyance is almost independent of its load.Equipment amortization and operator wages do not change at all, while fuelconsumption and equipment wear and tear are affected only marginally. Consequently,it is advantageous to move the conveyance always loaded at capacity orclose to it. When moving in and out of a logistics cluster, where many firmsmanage bidirectional flows, the likelihood of filling in conveyances is higher thanotherwise, leading, again, to lower transportation costs.In addition, as the volume of freight in and out of the cluster grows, transportationcarriers can start using larger and larger conveyances. Since the cost ofoperating a transportation conveyance does not grow linearly with the size of thevehicle, it costs less to operate a larger vehicle, on a per unit capacity basis, than asmaller vehicle. This is evident by ocean carriers’ move to larger and larger ships(resulting in the need to expand the Panama Canal); the use of double stacking andvery long trains by railroads; the use of 530 trailers and double and triplecombinations by motor carriers; and the use of large cargo planes by freightairlines. As the size of the logistics cluster grows, this phenomenon generatesanother positive feedback, since when carriers can use larger conveyances they canreduce their rates, making the cluster more attractive to more companies,increasing the size of the cluster and making it even more attractive to carriers andshippers.A further advantage of locations where there is a large concentration of freightis that more direct conveyance movements can be operated. For example, LTLmovements out of a cluster can utilize more direct movements, bypassing terminalswith fully loaded trailers and reducing handling costs (as well as improvingservice and reducing handling errors and damage to shipments). This phenomenongrows with increasing freight volumes, creating, again, a positive feedback loop.
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