Price Elasticity of Demand for Logistics and Transport

Topics: Supply and demand, Price elasticity of demand, Elasticity Pages: 5 (1390 words) Published: March 4, 2012
Ningbo University

Final Paper of Principles of Transportation Course

Price Elasticity of Demand for Logistics and Transport

College: International College

Professional:Business Administration

Full name: 胡 杨

Student number:096150043

(2010 —2011 学年第一学期)
课号:183T01A00 课程名称:运输原理 改卷老师: 学号: 096150043 姓 名: 胡杨 得 分:

Price Elasticity of Demand for Logistics and Transport

Abstract: This article mainly use supply and demand curve model and elastic model to analyze and interpretation the existence of off and peak seasonal phenomenon of express delivery logistics industry in China, especially discuss cause and effect of phenomena such as full warehouse, freight rates, express delivery company's competitive model transformation in the holidays. depending on the model and Phenomenon make recommendations solutions.

Key words: Demand Price Elasticity express delivery transportation

1. Brief introduction
Third-party logistics companies for the provision of goods delivery services will charge a return to compensate for costs incurred in the distribution process, and as a rational enterprise will pursue profit maximization. [1]Price elasticity of demand for Logistics and Transport is referring to degrees of the change in demand caused by changes in prices to a certain extent in a certain period of time. [2]

2. Model description
2.1 Supply and Demand Curve

Q: means quantity, Quantity can mean
either quantity of freight per trip or the
frequency of trips over a fixed amount
of freight
P: means price of goods or service.
D: demand
S: supply

All else equal, as goods’ or service’ price falls, the quantity of demanded in transportation rises & vice-versa. And the quantity supply decline & vice-versa.

Ed --Price elasticity of demand for
Logistics and Transport
Q --Quantity of goods demanded
Z --One of the factors that influence
The demand of certain goods for transportation
△Q --Quantity changes of the demand
Of certain goods for transportation
△Z --Quantity changes of factor Z

Different Ed of goods will influence demand and supply curve. Under a elastic demand (Ed≥1),an increase in supply of transport services, the freight rate falls by a lesser amount along the more price demand. Under a inelastic demand(Ed﹤1), an increase in supply of transport services, the freight rate falls by more than the quantity of demand increases along the more price demand.

3. Actual business phenomena(Case study)
Every year so many online retailers hold promotional activities in public holiday will cause a rapid increase of business in Express delivery, but it also cause some problems such like full warehousing and goods transportation delay. In 2011, Taobao Mall's "Double 12" discount activity attracted many customer places order, but many customers complained about not receiving the goods on time, and some people even said that their desire to shopping have reduced a lot. In the business peak season, Express delivery through the strengthening of transport to improve the efficiency and attempted to raise fees to strengthen market regulation. For example: STO choice increased by 1 RMB in November. A survey shows that the most of customers like low prices and high efficiency of the company when they choose express delivery. For long-term use Express customer, they prefer high-efficiency, higher prices of the company. Currently on the market the delivery costs are low, many courier companies consider change price competition from the current transition to service competition in future. 4. Analysis and discussion of the case

1.For customers: online store markdowns, then a large increase in the number of orders (Ed> 1), leading to sharp increase in the amount of the logistics business, and some...
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