1. Outline the characteristics of the main modes of transport

Modes of transport are the means of transport, basically road, rail, air, water and pipes. Road has advantages in terms of flexibility, and connectivity, suitable to transport almost all goods. Rail is best suited for movement of bulk of goods, however problems of interchange can reduce the its efficiency. Air has advantage of moving passengers over long distances and in a relatively high speed. Pipes are good in transporting liquids, and gasses, however they tend to promote monopolies.

2. Explain why transport is derived demand

Derived demand is one that caused by demand for some other good and service. As most of the people do not travel just to travel, most of them do it for a certain purpose, therefore the demand for travel is derived.

3. Explain how to measure transport demand

The demand for the transport is determined by many factors, the most important ones are national income, the need to communicate to work and the costs of transport. If those factors are measured, there can be eablished the demand for transport

4. Explain how transport forecasts are made and why?

Various assumptions are made by when forecasting the demand for transport; the GDP growth, the fuel prices, the population growth, car ownership and industrial output and the demand and supply of import goods. The forecasts are done to estimate the need for the future transport network, to estimate where the greatest bottlenecks are going to occur, and to be able to estimate the likely effect of certain transport policies.

5. Explain some of the of the main ways in which transport sector can be described through data

The most important ways of measuring the transport is by assessing the amount of passengers and kilometres they travelled and by assessing the tonnage of freight and kilometres it travelled.

6. Outline economies of scale and their application to transport

There are two types of economies of scale – internal and external. The former are:
The technical economies of scale – when with the increase in output the unit costs fall. It can be applied to transport when a company can increase the size of vehicles, therefore transport in a cheaper manner.
Purchasing economies. when a company is able to buy cheaper, because it is buying a greater bulk of goods. Example in transport is ability to buy cheaper fuel
Managerial economies. When in a large firm more labour can specialise, hence work more efficiently.
Financial economies. When a company can buy more due to the increase in its capacity.
External economies of scale occur when the increase in the size of an industry is leading to fall in long run average costs of an industry.
transport example are airports, where many different businesses are clustering together (ie shops, catering services etc.)

7. Describe contestability in transport markets

Contestability is the extent to which barriers to entry and exit the market are free and costless. Road transport is relatively contestable due to the relatively small entry costs, while the aviation industry is not contestable.

8. Describe barriers to entry and their application to transport

Barriers to entry are all the costs that have to be undertaken by every new entrant to a particular market. The barriers to entry are relevant to the aviation market, where they are relatively high, therefore not many new entrants can enter the market. This reduces the contestability and allows oligopolies to emerge.

9. describe the barriers to entry and their application in to the transport market

A barrier to entry is any obstacle that deters new firms from entering the market. This include:
High set up costs – ie the capital required to set up small haulage company is relatively low, while opening new fly operator is much more expensive
Economies of scale – when the established firms are limit pricing, therefore not allowing new entrants to the market, ie the main freight transporters ie the DHL.
Brand loyalty
Intimidation