Transportation Management

Republic of the Philippines

CAVITE STATE UNIVERSITY
Don Severino de las Alas Campus
Indang, Cavite, Philippines
☏ (046) 4150-013 loc 221
www.cvsu.edu.ph

COLLEGE OF EDUCATION
Home Economic, Vocational and Technical Education Department
(HEVTED)

TOUR 25:
TRANSPORTATION MANAGEMENT

MODULE
PRE - TEST
 Transportation Management

TRUE OR FALSE. Write True if the statement is correct, if otherwise, write False on the
space provided before each number.

_______1. The transport sector is an important component of the economy impacting on

development and the welfare of populations.

_______2. At the microeconomic level, transportation and the mobility it confers are linked to
a level of output, employment and income within a national economy.

_______3. At the macroeconomic level, transportation is linked to producer, consumer and

production costs. The importance of specific transport activities and infrastructure can thus
be assessed for each sector of the economy.

_______4. No single transport mode has been solely responsible for economic growth.

_______5. While many of the economic impacts of transportation are positive, there are also
significant negative impacts that are assumed by individuals or by the society in one way or
another.
 Transportation Management

MODULE7
Transportation and the Economy
Learning Outcomes
After the completion of this module, students will be able to:
1. discuss the economic importance of transportation;
2. identify the transportation and economic opportunities;
3. enumerate the types of transport impacts; and
4. analyze the socioeconomic impact of transportation

INTRODUCTION

Transport systems are closely related to socioeconomic changes. The mobility of

people and freight and levels of territorial accessibility are at the core of this relationship.
Economic opportunities are likely to arise where transportation infrastructures are able to
answer mobility needs and ensure access to markets and resources. From the industrial
revolution in the nineteenth century to globalization and economic integration processes of
the late twentieth and early twenty-first centuries, regions of the world have been affected
differently by economic development. International, regional and local transportation systems
alike have become fundamental components of economic activities. A growing share of the
wealth is thus linked to trade and distribution. However, even if transportation has positive
impacts on socioeconomic systems, there are also negative consequences such as
congestion, accidents and mobility gaps. Transportation is also a commercial activity derived
from operational attributes such as transportation costs, capacity, efficiency, reliability and
speed. Transportation systems are evolving within a complex set of relationships between
transport supply – mainly the operational capacity of the network – and transport demand –
the mobility requirements of an economy.

The Economic Importance of Transportation

Like many economic activities that are intensive in infrastructure, the transport sector
is an important component of the economy impacting on development and the welfare of
populations.
When transport systems are efficient, they provide economic and social opportunities
and benefits that result in positive multiplier effects such as better accessibility to markets,
employment and additional investments. When transport systems are deficient in terms of
capacity or reliability, they can have an economic cost such as reduced or missed
opportunities. Efficient transportation reduces costs, while inefficient transportation increases
costs.
The impacts of transportation are not always intended, and can have unforeseen or
unintended consequences such as congestion. Transport also carries an important social
and environmental load, which cannot be neglected. The added value and employment
effects of transport services usually extend beyond employment and added value generated
 Transportation Management

by that activity; indirect effects are salient. For instance, transportation companies purchase
a part of their inputs from local suppliers. The production of these inputs generates additional
value added and employment in the local economy. The suppliers in turn purchase goods
and services from other local firms.
There are further rounds of local re-spending which generate additional value added
and employment. Similarly, households that receive income from employment in transport
activities spend some of their income on local goods and services. These purchases result in
additional local jobs and added value. Some of the household income from these additional
jobs is in turn spent on local goods and services, thereby creating further jobs and income
for local households. As a result of these successive rounds of respending in the framework
of local purchases, the overall impact on the economy exceeds the initial round of output,
income and employment generated by passenger and freight transport activities.
Thus, from a general standpoint the economic impacts of transportation can be
direct, indirect and related:
 Direct impacts: the outcome of accessibility changes where transport enables
employment, added value, larger markets, and time and cost savings.
 Indirect impacts: the outcome of the economic multiplier effects where the price of
commodities, goods or services drop and/or their variety increases. Indirect value
added and jobs are the result of local purchases by companies directly dependent
upon transport activity.
 Related impacts: the outcome of economic activities and firms partly relying on
efficient transport services for both passengers and freight.

Mobility is one of the most fundamental and important characteristics of economic

activity as it satisfies the basic need of going from one location to the other, a need shared
by passengers, freight and information. All economies and regions do not share the same
level of mobility as most are in a different stage in their mobility transition towards motorized
forms of transport. Economies that possess greater mobility are often those with better
opportunities to develop than those with scarce mobility. Reduced mobility impedes
development while greater mobility is a catalyst for development. Mobility is thus a reliable
indicator of development. Providing this mobility is an industry that offers services to its
customers, employs people and pays wages, invests capital and generates income.
The economic importance of the transportation industry can thus be assessed from
both a macroeconomic and a microeconomic perspective:

 At the macroeconomic level (the importance of transportation for a whole

economy), transportation and the mobility it confers are linked to a level of output,
employment and income within a national economy.
 At the microeconomic level (the importance of transportation for specific parts of
the economy) transportation is linked to producer, consumer and production costs.
The importance of specific transport activities and infrastructure can thus be
assessed for each sector of the economy.

Transportation and Economic Opportunities

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Transportation developments that have taken place since the beginning of the
industrial revolution have been linked to growing economic opportunities. At each
development stage of the global economy, a particular transport technology has been
developed or adapted with an array of impacts. Economic cycles are associated with
a variety of innovations, including transportation, influencing economic opportunities for
production, distribution, and consumption. Historically, six major waves of economic
development where a specific transport technology created new economic, market, and
social opportunities can be suggested:

Figure 7.1 Cumulative modal contribution to economic opportunities

Source: Adapted from HOP Associates (2005) “Time, mobility and economic growth”.

 Seaports. The historical importance of seaports in trade has been enduring. This
importance was reinforced with the early stages of European expansion from the
16th to the 18th centuries, commonly known as the age of exploration. Seaports
supported the early development of international trade through colonial empires but
were constrained by limited inland access. Later in the industrial revolution, many
ports became important industrial platforms. With globalization and containerization,
seaports increased their importance in supporting international trade and global
supply chains.
 Rivers and canals. River trade has prevailed through history, and even canals were
built where no significant altitude change existed since lock technology was
rudimentary. The first stage of the industrial revolution in the late 18th and early 19th
centuries was linked with the development of canal systems with locks in Western
Europe and North America, mainly to transport heavy goods. This permitted the
development of rudimentary and constrained inland distribution systems, many of
which are still used today.
 Railways. The second stage of the industrial revolution in the 19th century was
linked with the development and implementation of rail systems enabling more
flexible and high capacity inland transportation systems. This opened substantial
economic and social opportunities through the extraction of resources, the settlement
of regions, and the growing mobility of freight and passengers.
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 Roads. The 20th century saw the rapid development of comprehensive road
transportation systems, such as national highway systems and automobile
manufacturing, as a major economic sector. Individual transportation became widely
available to mid-income social classes, particularly after the Second World War. This
was associated with significant economic opportunities to service industrial and
commercial markets with reliable door-to-door deliveries. The automobile also
permitted new forms of social opportunities, particularly with suburbanization.
 Airways and information technologies. The second half of the 20th century saw
the development of global air and telecommunication networks in conjunction with
economic globalization. New organizational and managerial forms became possible,
especially in the rapidly developing realm of logistics and supply chain management.
Although maritime transportation is the physical linchpin of globalization, air
transportation and IT support the accelerated mobility of passengers, specialized
cargoes, and their associated information flows.

No single transport mode has been solely responsible for economic growth.

Instead, modes have been linked with the economic functions they support and the
geography in which growth was taking place. The first trade routes established a
rudimentary system of distribution and transactions that would eventually be expanded by
long-distance maritime shipping networks and the setting of the first multinational
corporations managing these flows. Major flows of international migration that occurred since
the 18th century were linked with the expansion of international and continental transport
systems that radically shaped emerging economies such as North America and Australia.
Transport played a catalytic role in these migrations, transforming the economic and social
geography of many nations.
Transportation has been a tool of territorial control, particularly during the colonial
era, where resource-based transport systems supported the extraction of commodities in the
developing world and forwarded them to the industrializing nations of the time. The goal to
capture resource and market opportunities was a strong impetus in the setting and structure
of transport networks. More recently, port development, particularly container ports, has
been of strategic interest as a tool of integration to the global economy, as the case of China
illustrates. There is a direct relationship, or coordination, between foreign trade and
container port volumes, so container port development is commonly seen as a tool to
capture the opportunities brought by globalization. The growth of container shipping has
systematically been 3 to 4 times the GDP growth rate, underlining a significant multiplier
effect between economic growth and container trade. However, this multiplying effect has
substantially receded since 2009, underlining the maturity of the diffusion of
containerization and its dissociation from economic growth.
Due to demographic pressures and urbanization, developing economies are
characterized by a mismatch between the limited supply and growing demand for transport
infrastructure. While some regions benefit from the development of transport systems, others
are often marginalized by a set of conditions in which inadequate transportation plays a role.
Transport by itself is not a sufficient condition for development. However, the lack of
transport infrastructures can be a constraining factor in development. The lack of
transportation infrastructures and regulatory impediments are jointly impacting economic
development by conferring higher transport costs, but also delays rendering supply chain
management unreliable. A poor transport service level can negatively affect the
 Transportation Management

competitiveness of regions and their economic activities and thus have a negative impact on
the regional added value, economic opportunities, and employment.
Types of transport impacts
The relationship between transportation and economic development is difficult to
formally establish and has been debated for many years. There are several layers of activity
that transportation can valorize, from a suitable location that experiences the development of
its accessibility through infrastructure investment to a better usage of existing transport
assets through management. This is further nuanced by the nature, scale and scope of
possible impacts:
 Timing of the development varies as the impacts of transportation can precede,
occur during or take place after economic development. The lag, concomitant and
lead impacts make it difficult to separate the specific contributions of transport to
development. Each case study appears to be specific to a set of timing
circumstances that are difficult to replicate elsewhere.
 Types of impacts vary considerably. The spectrum of impacts ranges from the
positive through the permissive to the negative. In some cases transportation impacts
can promote, in others they may hinder economic development in a region. In many
cases, few, if any, direct linkages could be clearly established.

Cycles of economic development provide a revealing conceptual perspective about how

transport systems evolve in time and space as they include the timing and the nature of the
transport impact on economic development (Figure 7.2). This perspective underlines that
after a phase of introduction and growth, a transport system will eventually reach a phase of
maturity through geographical and market saturation. There is also the risk of over-
investment when economic growth is credit driven, which can lead to significant
misallocations of capital, including in the transportation sector. The outcome is a surplus
capacity in infrastructures and modes creating deflationary pressures that undermine
profitability. In periods of recession that commonly follow periods of expansion,
transportation activities may experience a setback, namely in terms of lower demand and a
scarcity of capital investment.

Figure 7.2 Long wave cycles of innovation

Source: Adapted from The Economist, February 20, 1999.
 Transportation Management

Technological innovation and economic growth are closely related and can be articulated
within the concept of cycles or waves. Each wave represents a diffusion phase of
technological innovations creating entirely new economic sectors, and thus opportunities for
investment and growth. Since the beginning of the industrial revolution in the late eighteenth
century, five waves have been identified:
 1st wave (1785–1845). Leaned on innovations such as water power, textiles and
iron. The beginning of the industrial revolution was mainly focusing on simple
commodities such as clothes and tools. The conventional maritime technology relying
on sailships was perfected, supporting the creation of large colonial/trading empires,
mainly by Great Britain, France, the Netherlands and Spain. Significant inland
waterway systems were also constructed. The costs of production and transportation
were significantly reduced.
 2nd wave (1845–1900). Involved the massive application of coal as a source of
energy, mainly through the steam engine. This induced the development of rail
transport systems, opening new markets and giving access to a wider array of
resources. The steamship had a similar impact for maritime transportation and
permitted expanded commercial opportunities in global trade.
 3rd wave (1900–50). Electrification was a major economic change as it permitted the
usage of a variety of machines and appliances and permitted the development of
urban transit systems (subways and tramways). Another significant improvement was
the internal combustion engine, around which the whole automotive industry was
created and expanded the mobility of passengers and freight.
 4th wave (1950–90). The post-Second World War period represented significant
industrial changes with new materials such as plastics (petrochemicals) and new
sectors such as electronics (television). The jet engine expanded the aviation
industry towards the mass market and mobility could be realized nationally and
globally.
 5th wave (1990–2020). The current wave mainly relies on information systems,
which have tremendously modified the transactional environment with new methods
of communication and more efficient forms of management of production and
distribution systems (logistics). This spawned new industries related to personal
computing devices, mainly computer manufacturing and software programming, and
more recently e-commerce as information processing converged with
telecommunications.

Transport, as a technology, typically follows a path of experimentation, introduction,

adoption and diffusion and, finally, obsolescence, each of which has an impact on the rate of
economic development. In this cyclic behavior a high level of benefits and productivity is
realized in the early phase while later phases face diminishing returns. Containerization is a
relevant example of such a diffusion behavior. As most innovations are eventually
abandoned, many technologies go through what can be called a “hype phase” with
unrealistic expectations. In addition, transport modes and infrastructures are depreciating
assets that constantly require maintenance and upgrades. At some point, their useful
lifespan is exceeded and the vehicle must be retired or the infrastructure rebuilt. Thus,
transport investments for their amortization must consider the lifespan of the concerned
mode or infrastructure.
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Socioeconomic impacts
While many of the economic impacts of transportation are positive, there are also
significant negative impacts that are assumed by individuals or by the society in one way or
another. Among the most significant are:
 Mobility gaps. Since mobility is one of the fundamental components of the economic
benefits of transportation, its variations are likely to have substantial impacts on the
opportunities of individuals. Mobility needs do not always coincide due to several
factors, namely the lack of income, lack of time, lack of means and the lack of
access. People’s mobility and transport demands thus depend on their
socioeconomic situation. The higher the income, the higher the mobility, which may
give rise to substantial mobility gaps between different population groups.
 Cost differences. Locations that have low levels of accessibility, such as landlocked
countries, tend to have higher costs for many goods (sometimes basic necessities
such as food) as most have to be imported, often over long distances. The resulting
higher transport costs inhibit the competitiveness of such locations and limits
opportunities. Consumers and industries will pay higher prices, impacting on their
welfare (disposable income) and competitiveness.
 Congestion. With the increased use of transport systems, it has become common
for parts of the network to be used above design capacity. Congestion is the outcome
of such a situation with its associated costs, delays and waste of energy.
 Accidents. Every motorized vehicle contains an element of danger and nuisance.
Due to human errors and various forms of physical failures (mechanical or
infrastructural) injuries, damages and even death occur. Accidents tend to be
proportional to the intensity of use of transport infrastructures which means the more
traffic the higher the probability for an accident to occur. They have important
socioeconomic impacts including healthcare, insurance, damage to property and the
loss of life. No mode is completely safe but the road remains the most dangerous
medium for transportation, accounting for 90 percent of all transport accidents on
average.

The emission of pollutants related to transport activities has a wide range of

environmental consequences that have to be assumed by society, more specifically on four
elements:
 Air quality. Atmospheric emissions from pollutants produced by transportation,
especially by the internal combustion engine, are associated with air pollution and,
arguably, global climate change.
 Noise. A major irritant, noise can impact on human health and most often human
welfare. Noise can be manifested on three levels depending on emissions intensity:
psychological disturbances (perturbations, displeasure), functional disturbances
(sleep disorders, loss of work productivity, speech interference) or physiological
disturbances (health issues such as fatigue, and hearing damage).
 Water quality. Accidental and nominal runoff of pollutants from transport such as oil
spills, are sources of contamination for both surface water and groundwater.
 Land take. Transport is a large consumer of space when all of its supporting
infrastructure and equipment are considered. Furthermore, the planning associated
with these structures does not always consider aesthetic values as is often the case
 Transportation Management

in the construction of urban highways. These visual impacts have adverse

consequences on the quality of life of nearby residents.

POST – TEST

TRUE OR FALSE. Write True if the statement is correct, if otherwise, write False on the
space provided before each number.

_______1. The transport sector is an important component of the economy impacting on

development and the welfare of populations.

_______2. At the microeconomic level, transportation and the mobility it confers are linked to
a level of output, employment and income within a national economy.

_______3. At the macroeconomic level, transportation is linked to producer, consumer and

production costs. The importance of specific transport activities and infrastructure can thus
be assessed for each sector of the economy.

_______4. No single transport mode has been solely responsible for economic growth.

_______5. While many of the economic impacts of transportation are positive, there are also
significant negative impacts that are assumed by individuals or by the society in one way or
another.

*** If you are done. Check your answer by referring to the answer key in the last page of this
module
Transportation Management
 Transportation Management

ACTIVITY

INSTRUCTIONS: INDIVIDUAL ACTIVITY. Make a reflection paper on the socioeconomic

impacts of transportation in the Philippines. The output must be submitted in MS Word or
PDF. This must be passed on or before May 28, 2021 (time as agreed upon by the teacher
and the students).

The output will be evaluated using the following criteria:

✓ Content & Development

✓ Organization & Structure
✓ Format
✓ Grammar, Punctuation & Spelling
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REFERENCE

E -Books
Gross, S., Klemmer, L., (2014). Introduction to Tourism Transport. University of Applied
Sciences, Germany. pages cm. (CABI tourism texts) Includes bibliographical
references and index. ISBN 978-1-78064-214-7
Rodrigue, J., Et. Al. (2013). The Geography of Transport System. 3RD Edition by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RB
Page, J., (2009). Transport and Tourism Global Perspective, 3rd Edition. Pearson Education
Limited. Edinburgh Gate Harlow Essex CM20 2JE England
Supplementary Readings
Dileep, M.R. (2019). Tourism, Transport and Travel Management 1st Edition, Routledge; 1
edition, India.
Lim, R. D. 2011). Understanding Travel and Tours Essentials, Mindshapers Co., Inc.,
Intramuros, Manila, Philippines.

Internet links
https://www.careemergencytoolkit.org/programme-support/18-
administration/8-vehicle-management/
https://www.idrivesafely.com/defensive-driving/trending/routine-vehiclemaintenance-101-
what-you-should-know
https://www.detourista.com/promo/new/philippine-airlines

KEY ANSWERS (PRE-TEST AND POST -TEST)

1. TRUE

2. FALSE

3. FALSE

4. TRUE

5. TRUE