Overview

The U.S. economy and its impact on transportation and logistics management will be the research project interest. The economy and transportation and logistics management have an effect on each other. According to Russell, Coyle, Ruamsook, and Thomchick (2014), “A conjunction of factors and economic developments lies behind rising transportation costs. At the center of today's transport challenges are oil prices” (p. 1). When the oil prices are high, then the transportation costs are going to be high. This often has an effect on things like the economy of scale. The company may still receive a lower cost for bulk items, but the costs will most likely be higher than it normally would if the economy was better. This would, in turn, effect the prices on the store self. The customers would ultimately be paying more for items because the company has to raise the prices in order to still be able to maintain a good profit margin.

Outsourcing is another area that will be discussed. Because of high taxes, a lot of businesses outsource. This is a good and bad thing, depending on the point of view. It is a bad thing for the logistics side of the house because the businesses are moving their warehouses to other countries. They are moving the distribution warehouses to other countries in order to pay lower taxes. However, that affects the economy because jobs in the U.S. are being lost. In some cases, it helps the transportation side of the house because more freight carrier vessels are needed to move the containers back from overseas. The sizes of the freight carrying vessels are also increasing. They are now able to carry four times more than what they were carrying before. This would also mean that more trucks would be needed to move the containers to the stores. Rail is another mode of transportation that would be in high demand because of the need to transport from the seaport. This is good for the transportation business because more trucks and more drivers are needed. But all of the extra need for transportation creates congestion at the maritime ports. One can clearly see by this illustration that the economy and transportation & logistics management fuel each other.

Reference:

Russell, D.; Coyle, J.; Ruamsook, K.; and Thomchick, E. (2014). Supply Chain Quarterly. Logistics. Site visited: http://www.supplychainquarterly.com/topics/Logistics/20140311-the-real-impact-of-high-transportation-costs/