For any business, the cost of transportation is normally the largest single
item in the overall cost of physical distribution. It doesn't necessarily
follow, though, that a manufacturer should simply pick the cheapest
available form of transportation. Many companies today use the total
physical distribution concept, an approach that involves maximizing the
10 efficiency of physical distribution activities while minimizing their cost.
Often, this means that the company will make cost tradeoffs between the
various physical distribution activities. For instance, air freight may be
much more expensive than rail transport, but a national manufacturer
might use air freight to ship everything from a single warehouse and thus
15 avoid the greater expense of maintaining several warehouses.