Transport Demand

The transportation demand and factors that influence it are very important, because that is the force that stimulates the building of supertankers and 7-kilometres trains.

Demand for transportation is not similar for goods demand, because, with the exception of few cases, transport is not in demand for its own characteristics, and just appears as a mean for achieving something else. Demand for public transport, road freight facilities or cargo shipping is usually derived by some other function, than the demand for food or clothes.

The demand for transportation is determined by, for example, manufacturer, who needs to transfer goods from the factory to the store or a warehouse, so usually the transport itself is not the product demanded. That is one of the objectives of a transport operator to establish a demand pattern for its service. It also has to relate its prices to the perception and consequent demand of its customers, and derive a pricing policy and a development or operating strategy for the transport operation which will optimize the use of the fleet (Cole, 2005).

Stuart Cole (2005) signs six main factors that are determining the demand for transportation.

First factor is the physical characteristics of the goods, which should be transferred. For example, the goods, which require urgent and guaranteed delivery (food with short shelf life or precious metals and jewelry) are usually moved by air. But some low value goods, like coal, steel, other raw materials; or goods, which delivery are not so time critical (cars, heavy machinery), will be moved by rail or heavy tonnage ships.

Price of the transportation also influences the demand. The lower the price, the more people are likely to demand the transport service offered (Cole, 2005). There can be only a few exceptions, like exclusive goods and services. Transport costs can influence the factory location as well. If the transport costs are low, the company will be able to launch a factory on a cheaper land, more distanced from the cities and markets, thereby more tonne kilometers will be

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transport, but in freight transport the effects of different prices are confidential to the hauler and client. However, that is obvious, that if few companies suggest the service of the same quality, the company with the lowest price is likely to get the contract.

The forth meaningful factor, that influences the demand, is the income of the passengers or the scale of companies-clients. As income increases so the amount of travelling for both business and leisure will increase. That is the reflection of the fact, that an individual, who has larger income, has more money he or she can spend on traveling on vacations. Also people with higher income are usually have a job with international connections, thus they have to make more travelling, connected with their business.

The speed of service likewise influences the demand and appears to be the fifth significant factor. It can be viewed from two sides. While watching from the side of a customer, reduced travel or shipment time means, that he should spent less working time in a journey, thus he or she will have more time for something more useful for him or her. Also that means fewer costs for a company that sends a person into business trip, because that person will be able to work more for the same ―price‖.

From the operator point of view, the shorter trip time means that, there will be a possibility to make more journeys in 24 hours, so that increases the productivity of the vehicles.

Thus the operation costs will reduce and an operator will be able to set a lower price, which can encourage the demand growth, and the increased productivity will improve vehicle availability to meet the higher demand without the need to purchase additional vehicles (Cole, 2005).

And, finally, the sixth key point is, of course, the quality of service. It can be divided into two sub points. First of all, the frequency matters. The departure times or arrival times must be adjusted due to the customers’ requirements. Secondly, the service should be standardized.

Sometimes the quality of service becomes key marketing strategy, as it became, for example, for railways in northern Europe. The key points here are comfort, reliability and safety.

Comfort means not only the reflection of living of the majority, but also easy-to-use registration system, waiting rooms, and other facilities.

Stuart Cole (2005) mentions that a frequent reason for loss of patronage by both passenger and freight carriers lies in the failure to deliver goods on time or to get passengers to their destination at the scheduled time. For example, French SNCF railways provided the high

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patronage levels for themselves by the good timekeeping. Safety is also important for all interested parties (passengers/clients, government authorities and operators).

Any accident that becomes accessible for publicity attached to any mode of transportation may cause the demand reduction in short term, but the effect depends on many factors and the length of reduction period can not be exactly predicted.

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