Reasons of Government Intervention in Transportation Industry

Topics: Transportation, Transport, Monopoly Pages: 7 (2066 words) Published: November 27, 2012

Certain function can be carried out satisfactorily only by the central or local government even where the provision of public transport is left entirely to the private sector, the government has an important role to play. If only to ensure through appropriate policy measures that the operating environment is conducive to the development of a suitable transport industry. A fundamental requirement is full government commitment to the success of the transport system even if this requires difficult political decision. In this report, there are few reasons for government involvement in the transport industry with of course based on real-life examples.

Transport is that part of economic activity which concerned with increasing human satisfaction by changing the geographic position of goods or people. It may bring raw materials to where they can be manufactured more easily, or finished goods to places where consumer can make best use of them. Alternatively, it may bring the consumer to places where he or she can enjoy services which are being made available.

There are 5 types of transportation mode which are road, rail, sea, air and pipeline. Each of it has its own characteristics as well as advantage and disadvantages. The transportation industry can be broken down into three major groups of companies; shipping, passenger transport, and equipment manufacturers. In some cases, particularly within shipping and passenger transport, companies provide services in multiple areas of the industry. Shipping companies are responsible for the transportation of supplies, and products to businesses, governments and individual consumers and operate on a global basis. The passenger transport segment provides people with the means to get anywhere on the planet, whether it is by air, sea or land. Finally, the manufacturing segment produces the trucks, planes, ships and railcars along with all the technology that allow transportation to exist in its current form. These manufacturers are just as essential to the transportation of materials and people as are the companies that transport them. Slow economic activity results in lower demand for freight and passenger transportation. According to the IATA, the air transport industry lost more than $4 billion amidst the 2008 global recession. Another major driver of the industry is cost, in terms of ticket prices and financing (demand) and factors of production (supply). Transportation activities heighten during the holiday seasons, impacting the performance of this industry. The major players of the transportation industry are: * Railways: The US has the biggest railway network (approximately 240,000 kms). Other countries with vast railway lines are Russia (154,000 kms) and Canada (72,961 kms).  

* Airways: The major airlines are British Airways, Lufthansa, Qantas, Cathay Pacific, Emirates, Air France-KLM and Southwest Airlines.  
* Shipping and logistics: The chief shipping companies are APM Maersk (TEU capacity: 2,031,886), Mediterranean Shipping Company (1,469,865) and CMA CGM Group (988,141). Government in Transport Industry

Any transport system requires basic regulations in the interest of public safety. A basic framework of rules must be laid down and enforced. Offences must be delineated and punishments prescribed. The doctrine of Laissez-Faire, which drew from the eighteenth-century, holds that the state should not interfere with the activities of private individuals who are showing enterprise but should leave them to do as what seem fit. But it soon become apparent that in reality where the entrepreneur are aiming at the greatest personal profit, was likely to exploit the general public, especially in view of the monopolistic nature of many early transport enterprises. Here are where the line of government to start their involvement in the industry with a lots more additional reasons. Transport policies arise because of the...
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