Mitigating Risk in Transportation Costs

Mitigating Risk in Transportation Costs

Finding ways to move goods from one point to another at a reasonable cost and within an acceptable time frame is a growing challenge for global businesses today. The costs and risks associated with transportation are increasing with the advent of globalization and low-cost-country sourcing. Even for companies with local operations only, they have to supply their products to various parts of a country which increases the costs and risks. Since the cost of gasoline has been on an upward trend, high level of efficiency in transportation is required to lower the costs involved and the risks associated with the costs. Costs concepts in transportation include economic, social and accounting costs. The risks and costs involved increases if the various modes of transport are used. There has been concern over many businesses failure to strategically think when they employ multimodal transportation services. Many businesses prefer the least expensive multimodal model instead of choosing the most effective; this trade-off is very expensive with hidden costs and risks increasing significantly (Molenaar, Anderson, Schexnayder, National Research Council (U.S.)., National Cooperative Highway Research Program., American Association of State Highway and Transportation Officials., & United States, 2010).

In the past two decades, transportation cost of cargo has decreased that has aided in improving productivity and economic growth. Nonetheless, the operations of the market forces and the rising cost of fuel as well as environmental concerns impact on the cost of transporting goods from one place to another. Subsequently, the high cost of moving goods will be felt throughout the economy affecting enter...

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...ersten & Bemeleit, 2006).

References:

Bersani, C., & Proceedings of the NATO Advanced Research Workshop on Advanced Technologies and Methodologies for Risk Management in the Global Transport of Dangerous Goods. (2008). Advanced technologies and methodologies for risk management in the global transport of dangerous goods. Amsterdam: IOS Press.

Kersten, W., & Bemeleit, B. (2006). Managing risks in supply chains: How to build reliable collaboration in logistics. Berlin: Erich Schmidt.

Molenaar, K. R., Anderson, S. D., Schexnayder, C. J., National Research Council (U.S.)., National Cooperative Highway Research Program., American Association of State Highway and Transportation Officials., & United States. (2010). Guidebook on risk analysis tools and management practices to control transportation project costs. Washington, D.C: Transportation Research Board.