transportation at operation management

The Importance of Transport in Location Selection

The location of economic activities is fundamentally based on geographical concepts of the site and its situation. The site relates to the characteristics of a specific location while the situation concerns the relationships of a location in relation to other locations. Historically, specific sites suitable for defense or commerce have been important factors in the location of cities. In addition to being a factor of spatial organization, transportation is linked with the location of economic activities, including retail, manufacturing and services. In a market economy, location is the outcome of a constrained choice where many issues are being considered, transportation being one of them. The goal is to find a suitable location that would maximize the economic returns for this activity. There is a long tradition within economic geography in developing location theories with a view to explain and predict the locational logic of economic activities by incorporating market, institutional and behavioral considerations. The majority of location theories have an explicit or implicit role attributed to transport since accessibility is an important factor in the location preferences of firms and individuals. As there are no absolute rules dictating locational choices, the importance of transport can only be evaluated with varying degrees of accuracy. At best, the following observations concerning transportation modes and terminals and their importance for location can be made:
• Ports and airports. Convergence of related activities around terminals, particularly for ports since inland distribution costs tend to be high. The location and the level of activity of ports and airports are reflective of global trade patterns.
• Roads and railroads. A structuring and convergence effect that varies according to the level of accessibility. For rail transport, terminals also have a convergence effect.
• Telecommunications. No specific local influence, but the quality of regional and national telecommunication systems tends to ease transactions.
Globalization has been associated with significant changes in business operations and markets. Managing operations in such an environment has become increasingly complex, especially with the globalization of production and consumption. Manufacturing strategies tend to use different locations for each component of a product in order to optimize respective comparative advantages and reduce input costs. Transport requirements have proportionally increased to support and organize the related flows. The requirement of faster long distance transport services has propelled the importance of air transport, especially for freight. Air terminals have thus become a significant location factor for globally oriented activities, which tend to agglomerate in the vicinity. Additionally, the surge in long distance trade has made logistical activities, namely transport terminals and distribution centers, at the forefront of locational considerations. Technological changes have also been linked with the relocation of industrial and even service activities. Global telecommunication facilities can favor the outsourcing of several services to lower cost locations, such as the case of call centers in India indicates.