Question

Transportation costs will always lead to

a. a price increase in the exporting country

b. a price increase in both the exporting and importing country

c. a price increase in the importing country only

d. a price increase in the exporting country only.

Answer 1

option (c) is correct that transportation cost always leads to a price increase in the importing country only.

Transportation cost are the cost of transporting an internatonal traded goods form its original location to its final destination.

transporatation cost refers to the cost of moving goods, including freight charges, packing and handling ecpenses, and insurance premiums. trade effects of transportation cost: when transportation cost are included, the high cost importing country will produce more, consume less, and import less. the low cost exporting country will produce less, consume more and export less.

the transportation tend to reduce the volume of trade, the degree of specialilzation in producton among the nation concerned, and thus gains form trade.

and reduce it through:

- explore shipping consolidation opportunities.

- consider warehousing services

- use preventive maintenance

- focus on logistics cost reduction

- use automatic container loading and unloading system to reduce labour cost.