Transport Logistics

iv) Need to develop transport policies in a wider context

Since supply chains are often insensitive to transport costs, given favourable trade-offs with

respect to inventory holding, labour/production and procurement costs, the total costs of transport

should be analysed in the context of logistics.

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18

As companies seek to rationalise their production, source goods from a wider area and service a

larger market, they need to move their goods over greater distances. This increases the demand for

freight transport, leading to transport and environmental problems. However, as planning

requirements, taxation regimes, labour supply and scale economies drive decisions on the part of

companies, they may not be influenced by freight transport policy. Therefore, the decisions that most

affect freight transport demand are often taken without regard to freight transport policy. If

governments are to be effective in reducing the transport intensity of an economy, they should address

transport demand as part of a broader policy framework, which could include, among other elements,

fiscal planning, labour policy, environmental policy and regional planning.