transport costs

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The costs of moving goods from place to place. These tend to be higher for goods which are bulky or heavy relative to their value, and for goods which are fragile and thus require careful handling, or which are perishable and thus require rapid transport. Where transport costs are high, it is economic to produce near to the market, and inter-regional and international trade are relatively unimportant. Where transport costs are low, production tends to be footloose. Transport costs have fallen considerably during the last century, which has contributed to an increasing ratio of trade to incomes. The development of cheap air freight has allowed rapid growth of international trade in perishable products such as fresh flowers and vegetables. On average transport costs between countries amount to well under 5 percent of the total value of world trade.

Subjects: Earth Sciences and Geography — Economics.

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