Chapter 2 (2).pdf transportation economy

Transportation is one of the fundamental pillars of human civilization. It has been the silent engine that drives the world’s economies, connects people and places, and sustains the movement of goods and services that define modern life. To understand the relationship between transportation and the economy, one must first appreciate how deeply transportation systems are woven into every aspect of production, trade, and consumption. From the earliest animal-powered vehicles to high-speed trains and aircraft, the evolution of transportation has mirrored the progress of economies throughout history.

At its most basic level, transportation performs a simple but crucial function — it moves goods and people from one location to another. Yet behind this simple concept lies a complex web of infrastructure, technology, and economic forces. Efficient and reliable transportation systems are the arteries of the global economy; they ensure that raw materials reach factories, finished goods reach consumers, and workers can commute to their places of employment. Without transportation, economic activities would be confined to narrow geographical limits, and modern trade as we know it would not exist.

The Historical Evolution of Transportation

The history of transportation tells the story of human ingenuity. Early societies depended on animal and human power for mobility, limiting trade to local areas. Over time, technological innovations — such as the wheel, sailing ships, and eventually steam power — expanded the reach of trade routes and economies. The industrial revolution of the 18th and 19th centuries transformed transportation forever. Steam engines powered railways and ships, reducing the cost and time of moving goods. This allowed industries to scale up production and reach distant markets, which in turn accelerated economic growth.

A fascinating example of this development in Africa is Somalia’s early railway, built between 1914 and 1927 during Italian colonial rule. The line connected Mogadishu with Afgooye and Jowhar, creating an important inland trade route that stimulated local commerce and linked agricultural producers to urban markets. Although dismantled during World War II, it symbolized the vital role of infrastructure in shaping economic potential. Even decades later, plans to revive Somalia’s railway highlight how transportation remains central to the country’s economic vision.

Modes of Transportation

Transportation has evolved into multiple modes, each serving specific needs. These include road, rail, air, water, pipeline, cable, human-powered, animal-powered, and even space transportation. Each mode contributes differently to the economy. Roads and highways dominate local and regional commerce, railways handle large volumes of freight efficiently, air transport enables global passenger mobility and time-sensitive cargo delivery, and maritime transport remains the backbone of international trade. Pipelines, meanwhile, to transportatio

1. TRANSPORTATION AND
THE ECONOMY
CHAPTER 2
ABDIKARIM MOHAIDIN AHMED
[email protected]

2. Introduction
Transportation
Pervasive and extremely vital function in all
industrialized economies.
critical links between producers and consumers both
domestically and globally.
Requirements for developing the economy.
The most important industry in the world.
Efficient and reliable transportation service is a
critical ingredient for all segments of our
economy.
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3. History of Transportation
3
Source: dtsone.com

4. 4
Source: 23rf.com/

5. 5
1914 -1927
Source: omnia.ie

6. Somalia’s Railway
Constructed between1914 and 1927
The railway connected the capital
cityMogadishuwithAfgooye, and Jowhar).
The line was later dismantled byBritishtroops
duringWorld War II.
Plans for re-establishing the railway were made in
the 1980s by theSiad Barreadministration, but
were aborted after the regime's collapse.
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7. Railway stations
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8. Modes of Transportation
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Animal-powered
Human-powered
Road
Cable
Pipeline
Rail
Air
Space
Water

9. Economics of Transportation
Transportation touches the lives of all citizens in the
world.
It affects their
economic well-being,
safety,
access to other people and places,
environmental quality
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10. Demand for Transportation
Mass Production
Dependency upon transportation.
Regions relying on each others to produce goods
and services that they need or desire.
On a global scale,
international interdependencies.
Supply of agricultural products, manufactured products,
and other types of services.
Transportation is therefore necessary to move these
products.
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11. Cont…
Passenger Demand
people move from areas to another area (on a daily,
weekly, or permanent basis).
Transportation
provides the bridging function between supply and demand
for people to move by providing:
Automobile
Air Transport
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12. Transport Measurement Units
Measured in
weight-distance units (ton-mile)
passenger-distance units (passenger-mile)
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13. World -Air Transport, Passengers Carried
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14. Air Transport Passengers -Somalia
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15. Somalia -Air Transport, Freight
(million Ton-km)
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16. Somalia CPI Transportation
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The transportation sub-index of the CPI basket in
Somalia increased to 110.83 points in April of 2020
from 110.57 points in March of 2020.

17. 17
Source: Federal Highway Administration

18. Demand Elasticity
sensitivity of customers to changes in price
Customers sensitive to price
Price reduction should increase the demand for the item
and
the total revenue should also usually increase.
An increase in price will have the opposite effect
less revenue and
reduction in sales.
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19. Freight Transportation Demand
Dependent upon the demand for a product in
another location
specialization and mass production creates
A need for market expansion at more distance
locations,
And proportionally, increase demand for freight
transportation.
Derived Demand
Value of Service (Landed cost)
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20. 20

21. 21

22. Service Components of Freight
Demand
Transit time
Reliability
Accessibility
Capability
Security
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23. Value of Goods
Transportation systems help determine the economic
value of products.
Place Utility
Time Utility
Quantity Utility
Large-Scale Production (economies of scale)
Land Values
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24. 24

25. Gross Domestic Product (GDP)
25
GDP From Transport in the United States increased to
561.20 USD Billion in the fourth quarter of 2019 from 559
USD Billion in the third quarter of 2019.

26. Cont…
26
GDP From Transport in Turkey increased to 4,095,462
TRY THO in the second quarter of 2016 from 3,875,510
TRY THO in the first quarter of 2016.

27. Transportation and Economic Development
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Transport Infrastructure Investment and
Maintenance Spending as Share of GDP, 2015
Source: transportgeography.org

28. Environmental Significance
Transportation usually pollutes the environment and
exploits natural resources, but many citizens feel
that the overall benefits provided by transportation
exceed these costs.
Concern over the impact of transportation on the
environment
air quality (pollution),
noise, and
water quality.
Safety: injury and loss of life
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29. Social Significance
Transportation
Can enhance the health and welfare of a population
contributes improved health and education delivery
effective communications among regions of a country
Plays a major social role in our economy
Insufficient transportation,
hinders inbound and outbound product flows
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30. Political Significance
Transportation systems are dependent on the
government
design feasible routes,
cover the expense of building public highways, and
develop harbors and waterways
Facilitate national defense
Adequate transportation
create national unity;
the transportation network permits the leaders of
government to travel rapidly to and communicate with the
people they govern.
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31. END
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