RANSPORT ECNOMIC

AND OPTIMISATION

Submitted by:
AKHSAM. P
R.NO : 001
IMU KOCHI
 TOPICS

1. Market demand in transportation

2. Transport as a derived demand

 DEMAND ANALYSIS
MEANING OF DEMAND
In economics Demand means the quantity of goods
and services which a person can purchase with a
requisite amount of money.
According to Prof.Hidbon, Demand means the
various quantities of goods that would be purchased per
time period at different prices in a given market.
The demand has three essentials-Desire, Purchasing
power and Willingness to purchase.
 DEMAND ANALYSIS
Demand analysis means an attempt to determine the
factors affecting the demand of a commodity or service
and to measure such factors and their influences. The
demand analysis includes the study of law of demand,
demand schedule, demand curve and demand
forecasting. Main objectives of demand analysis are;
1. To determine the factors affecting the demand.
2. To measure the elasticity of demand.
3. To forecast the demand.
4. To increase the demand.
5. To allocate the recourses efficiently
 DEMAND FUNCTION
There is a functional relationship between demand and
its various determinants. I.e., a change in any determinant
will affect the demand. When this relationship expressed
mathematically, it is called Demand Function. Demand
function of a commodity can be written as follows:
D = f (P, Y, T, Ps, U)
D = Quantity demanded
P = Price of the commodity
Y = Income of the consumer
T = Taste and preference of consumers.
Ps = Price of substitutes
U = Consumers expectations & others
 LAW OF DEMAND
The law of Demand is known as the first law in
market. Law of demand shows the relation between price
and quantity demanded of a commodity in the market.
According to Samuelson, Law of Demand states that
people will buy more at lower price and buy less at higher
prices.
It shows the cause and effect relationship between price
and quantity demand.

P D &P D
 INDIVIDUAL DEMAND
It refers to the quantity of a product which an
individual consumer is willing to buy at each price of
that product during a particular period of time, given
this money, income, taste and preference and price of
the other products.

INDIVIDUAL DEMAND SHEDULE

An individual demand schedule is a list of quantities
of a commodity purchased by an individual consumer at
different prices.
The following table shows the demand schedule of an
individual consumer for apple.

Price of apple ( ) Quantity demanded

10 1
8 2
6 3
4 4
2 5

On the basis of the above demand schedule we can draw

the demand curve.
 MARKET DEMAND
It refers to the total quantity of a product which all
individual consumers are willing to buy at each price
over period of time, given their money, income, taste
and preferences and prices of the other products.

MARKET DEMAND SHEDULE

Market demand refers to the total demand for a
commodity by all the consumers. It is the aggregate
quantity demanded for a commodity by all the
consumers in a market.
Market demand can be expressed in the
following schedule.
Demand by consumers
Price of Market
apple () a b c d Demand
10 1 2 0 0 3
8 2 3 1 0 6
6 3 4 2 1 10
4 4 5 3 2 14
2 5 6 4 3 18
 Market
A market is any arrangement that bring buyers and sellers
together.
In a market economy people can trade what they have (or
have produced) for economic resources or goods they would
like to have. Places, institutions, or mechanisms at or through
which these trades take palace are called markets.
Money as a medium of exchange, standard of value, and store
of vale facilitates trade.
 Market (Supply and Demand)
Supply and demand are the forces that make market economies
work.
Modern microeconomics is about supply, demand, and market
equilibrium.
The terms supply and demand refer to the behavior of
people . . . as they interact with one another in markets.

Buyers Sellers
determine determine
demand. supply.
Transport Supply and Demand
Transport Supply
Aij

i j
Modal Supply
Intermodal
Supply

Transport Demand

Tij

i Realized Demand j
Potential Demand
Growth Factors in Transport
Demand
Quantity of Passengers or Freight
Passengers
Freight s
m
n-k
t o
or
r
n ge
Growth in
s se
production and Pa
consumption.
Income growth.

Outsourcing /
Offshoring. KM
Economic
specialization.
Suburbanizatio
Average Distance
n.
 Factors behind Freight Transport
Economy
Demand
General derived demand impact. Linked with the GDP. Function of the
structure of the economy in terms of resources, goods, and services.
Industrial location Effect on ton-kms and on modal choice.
Spatial Structure Effect on ton-kms. Function of international trade structure.
Containerization and intermodal transportation.
International Both concerning trade and transportation. Economic specialization.
Agreements Increased transborder traffic. Simplified custom procedures.
JIT practices and Decreased inventories. More shipments. Smaller line hauls. Shift to faster
warehousing and more reliable modes. Use of 3rd party logistics providers.
Strategic alliances Between carriers, shippers and often producers and retailers. Lower
distribution costs.
Packaging and Increased transportability of products. Lower freight density. Reverse
recycling distribution.
Regulation and Increased competition, level of service and lower costs. Growth of
deregulation intermodal transportation.
Fuel costs, taxes and Large and volatile cost components, specifically for energy intensive
subsidies modes. Preferred mode or carrier.
Infrastructure and Efficiency, operating costs and reliability.
congestion
Safety and Operating speed, conditions and costs. Capacity and weight limits.
environmental
policies
Technology Containerization, double-stacking, automation and robotics, handling and
interchange systems and automated terminals. Information systems (IDE).
Lower costs, increased efficiency and reliability and new opportunities.
DERIVED DEMAND

Derived demand is a term used in economic analysis that

describes the demand placed on one good or service as a
result of changes in the price for some other related good or
service. It is a demand for some physical or intangible
thing where a market exists for both related goods and
services in question. The derived demand can have a
significant impact on the derived good's market price.
Transportation as a Derived Demand
Types of derived transport demand

Direct derived demand.

It refers to movements that are directly the outcome of

economic activities, without which they would not take
place. For instance, work-related activities commonly
involve commuting between the place of residence and the
workplace. There is a supply of work in one location
(residence) and a demand of labour in another (workplace),
transportation (commuting) being directly derived from this
relationship.
 Indirect derived demand

Considers movements created by the requirements of

other movements. For instance, fuel consumption from
transportation activities must be supplied by an energy
production system requiring movements from zones of
extraction, to refineries and storage facilities and, finally,
to places of consumption. Warehousing can also be
labeled as an indirect derived demand since it is a "non
movement" of a freight element.
THANK YOU