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Transportation Costs

Definition

These are the expenses associated with moving goods, services, and commodities from one place to another.

Analogy

Think of transportation costs like a taxi fare. The further you need to go (or the heavier your luggage), the more it's going to cost you.

Related terms

Freight Rate: This is the price paid for shipping or transporting goods. It's like how much you pay per mile in a taxi.

Economies of Scale: This refers to cost advantages that businesses obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale. It's like buying in bulk at a grocery store - the more you buy, the cheaper each item becomes.

Intermodal Transportation: This is when two or more modes of transport are used to move goods from origin to destination. Imagine taking a bus then switching to a train during your commute - that's intermodal transportation!