Individual Paper

By Author: Sherry Roberts
Total Articles: 99
Comment this article

Introduction
The organization has created diverse strategic measures to ensure that it achieves its objectives in the transportation industry. The growth of the economy creates urgency for the provision of improved and well-developed transport networks. It also requires that there is ready transportation that can connect two nodes in the transportation network. However, the organization focuses on the transportation of people and goods by roads. It is a fact that road transport is the larger than all the other transport modes in the transport industry. The main objective of the industry is to offer quality and cost-effective transit services for passengers and goods from one point to another. It is a system that plays a fundamental role in the growth of a state by contributing to a significant percentage of the Gross Domestic Product of a country. It plays a crucial role in the level of output, income, employment and education within the economy of a state (Quinet& Vickerman, 2004).
Currently in the transport industry is facing high demand for the ferrying of people and goods within the state. The condition ...
... of transportation industry depends on the level of development of the local infrastructure. Even though, there are different forms of public transportation such as buses, taxis or trains public transportation is currently poor. The main reason behind poor transportation is the lower frequency of stops and their poor connections. There are very many macro- environmental factors that impact the transportation industry today (Quinet& Vickerman, 2004). The Macro- environment factors are categorized using the Political Social Technological Environmental and Legal (PESTEL) model. The political factors include the government policy as the level of involvement in the economy. It entails what form of transportation the government aims to provide. The economic factors refer to the interest rates, taxation changes, currency, economic development and inflation. The economic factors affect the cost of the transportation system (Quinet& Vickerman, 2004). The social factors involve modifications made in the social trends that impact the order or preference for the organizations products. It also affects the availability and willingness of people to work. Technological factors reduce the cost while improving the quality and amount of novelty. It benefits the consumers as well as increasing the profits of the organization. Environmental factors entail natural events such as snowing. Finally, the legal factors include the regulations installed to control the industry for example presence of speed limits (Quinet& Vickerman, 2004).
In the transport industry, it is essential to ensure that there is adequate competition in the transport system. It is, however, difficult to maintain adequate competition because established operators tend to dominate certain services. Road transport is growing at rapidly as compared to all the other modes of transport. The road transport industry has very many parts that have varying competitive characteristics and scope for competition. Competition in the transport industry depends on factors such as the origin-destination pairs, the type of passengers transited, and essentially the time frame.
Anti-competitive tactics in the transport industry
Public transport runs successfully in many cities with small population densities. It is a fact that any city with sufficient population density to cause traffic congestion can support a first-rate public transport option. Competitive concerns, however, arise in the un-concentrated track load sector. It is common for leading operators or a collection of small operators to adopt anti- competitive tactics that prevent the provision of alternatives by individual small operators. Some of these tactics include the collusion of the dominant operators to fix prices, allocate markets and block new entrants from a particular route. These anti-competitive practices have a negative impact on the market such as raised costs and impacts on outputs. They also reduce innovation as well as the quality of services expected (Helm& Jenkinson, 1998). The transport sector includes operators running a fleet of varying vehicles. Issues arise regarding the quality of the vehicles as customers make their choices at the terminals from the varying characteristics of the vehicles. Factors such as safety, comfort, elated bliss, and customer care define the quality of transport. The horizontal agreements made between dominant operators limit the passenger’s choice to these aspects. As such there are several issues that arise from such conditions arise when the government seeks to improve regulation. The first issue to consider in the transport industry is on the basis of competition. The second issue to consider is the regulations to utilize when using and building bus stations to ensure equal access by operators to main terminals. It assists operators to establish alternative facilities. Finally, the operator should consider how the government monitors services and controls anti-competitive practices that hinder the supply of alternative services by operators (Helm& Jenkinson, 1998).
Public- private market share
Road transport sector offers a large and expansive market for possible investors. These investors have to share the market with the government provided services that develop competitiveness between the public and the private market. The lack of competition between the two results in high cost of traveling. Each traveler chooses the best form of transport that ensures that they receive the greatest quality services with the least cost incurred (Gubbins, E., 2003). It is impossible for a state to depend fully on the public transport system as the market is very large it will result in the provision of poor quality services. A large percentage of the population in urban areas creates congestion and trouble caused by excessive use of private vehicles. The high density of inhabitants makes space a limited resource. As such most states consider the use of public transport to create a sustainable urban environment. The states introduce competitive tendering which helps decongest the urban areas. Competitive tendering avoids leaving public transport entirely to the market hence preventing serving of only profitable transport routes and avoiding those with less profit. The coordination of services and fares is essential to maximize ridership and extend the benefits of public transport. Due public- private market share, there is a rise in the ridership because the public transport agency can afford to provide higher levels of services with the savings (Helm& Jenkinson, 1998).
State policies and regulations
Some forms of road transportation normally have an elevated level of competition. As such liberation of this sector brings about welfare benefits such as reduction of prices, improvement of services and also enhancements in efficiency. Other controls ensure that there is safe and environment-friendly transition of passengers. The numerous controls, permits, and non-competitive policies affect the consumer welfare. Pro- competitive policies help governments and consumers all over the world all over the world (OECD., 2000). The policies and regulations maintain healthy competition that ensures that consumers attain high-quality prices at appropriate prices. The presence of competition arrangements like the introduction of barriers, lack of contestability, as well as anti-competitive practices, affects the prices of the prices and the quality of services provided. The transportation sector requires competition for the efficient allocation of resources and improvement of the service quality. The policy environment affects the levels of profits and efficiency and also the market structure. Poor policies implemented produce a disaggregated level that impacts the total revenue. It is especially on the direction of change in revenue, total cost, the growth of the investment and the carrying capacity. The policy environment has an effect on the following areas; labor productivity, capital productivity and the total factor productivity (OECD., 2000).
Allocation of terminals
Serious problems over terminals arise from government intervention in the provision and use of the stations that both passengers and the operators do not require. The problem emerges from a misguided planning approach that places the terminal at the center of the center of the passenger transport system. It also organizes transport routes around them. Transport operators perceive the approach as a method of raising local taxes rather than serving passengers. For the provision of efficient passenger services that respond to the demand planning should follow three basic steps. The first step should entail the identification of the demand patterns of the passengers (Mariotti, I., 2014). The second step should include planning bus routes that can best serve that demand pattern. Finally identify the need for stations where passengers need to board and alight. It does not however limit the possibility of operators owning or controlling a terminal that gives them a dominant marketing advantage on services that subsequently deters effective competition. In an attempt to fix the competitive issues, the local government should have a clear responsibility allocated to give land for terminals. The allocation of terminals should relate to the passenger demand patterns as well as the operators desire (Gubbins, E., 2003). The local government and transport operators should collaborate to identify the superlative means of granting the terminals. The stations management should also have the mandate to enter into commercial business as an attempt on finding resources for the terminal. It reduces the cost burden on passengers and promotes the use of formal public transport.
Economic scale and scope of competition
An important issue in the road transport system is the economies and scope in network operation. For example, the operation of long distance has a given economy of scale and scope and scope of competition that produce hub- and- spoke network. The economy of scale and scope of competition in long distance bus network is analogous to the network of airline companies. Some states possess single transport network operators that encourage merging of transport networks to offer both efficiency benefits and reduce the threat of competition. Other countries uphold control rights on particular routes that they offer for tender. It possibly specifies the frequency of service and the quality of vehicle required. Those providing the tenders propose on the basis of the cost of the service they charge passengers (Mariotti, I., 2014). It has several benefits in the transport industry. It limits the domination of payment in operators charge and prevents the creation of principal state-run operators. It also ensures that all the routes must receive a particular level of transportation service. It, however, limits the ability of the operators to start original services or stop providing old services. The approach also deters operator’s ability to reduce their networks in an attempt to meet the customer demands maximally. Some states also limit entry and prices in long- distance road transportation to prevent competition with the rail industry. The limitation of the long distance road transport services encourages their operation to be complementary rather than as a substitute for railway services (OECD., 2000). The economies of scale are crucial in the market as they allow joint transits for passengers who have a strict time frame. Due to this the market tends to become intense over time. As a result, effective competition can emerge if created through intense competition imposition (OECD., 2000).
Some forms of road transport such as local bus services apply competition for- the market rather than the competition in- the- market competition is limited in the form of competitive tendering. It is clear that when several operators on the same route compete it is impossible for the investors to protect the investment they make in their timetable (OECD., 2000). The investment that one company makes in its transportation schedule is susceptible to an assumption by a competing company that plans to provide its services just before the existing company. There may also be situations where two investors race to provide services first or to arrive at the next stop. It might affect the existing timetables where the companies seek to change the timetables often. Furthermore, economies of the networks of scale and scope are likely to be particularly important. It is essentially due to the tendency of travel cards to direct travelers to a single transport network. Most countries utilize competitive tendering to encourage competition for- the- market to preserve incorporated timetables (Helm& Jenkinson, 1998). It also assists states to co-ordinate with other transport services as well as minimizes subsidies.
Preference for transportation
Another issue affecting competition in the transport industry is the preference of mode of transport due to the urgency that prevents the customers from assessing the quality or pricing of the services. The taxi service market experiences the effect of this competitive issue. The level of competition differs in the three parts of the of the taxi service market that is the phone book, taxi stand and hailed- taxi markets (Gubbins, E., 2003). Competition on the phone- booked market is high as travelers can choose the service in the same manner they might purchase other services over the phone. In the taxi stand market, the opportunities for competition depend on the travelers desire to take the first taxi in sight. The hailed- taxi market limits the opportunities for choosing between the taxis. Government policies and regulations help ensure that there is equality in the taxi service market competition. Sometimes the taxis owners create groups that help govern the competition in the market. The suitable safeguards ensure that there remains substantial scope for the liberalization of the taxi market.
Price competition
Price competition is both a beneficial and disadvantageous issue in the road transport industry. The presence of price competitions depends on the number of operators in any form of road transports. With a large number of producers, each operator can provide services at the set market price without the incentive to cut the prices below the set point. Where the operators are few each can increase their sales at the expense of the expense of their rivals by lowering the price of transport services (Helm& Jenkinson, 1998). It may subsequently cause the prices of all the producers to reduce to levels that permit none to achieve satisfactory financial results. It leads to unsatisfactory financial results despite the market’s requirement for output and the increased customers. Price competition involves the investors to compete with the largest resources without considering the economic efficiency. Some states use rate regulations to influence the social cost of transportation and the respective market roles. This form of policy was developed to protect transport networks from transport monopoly exploitation (Mariotti, I., 2014). This form of regulation limits the development of price competition. The restriction of price competition discourages the basic function of forcing innovation and efficiently channeling resources to alternative uses, as well as the most capable producers. The regulation deprives the customers of a range of price and quality alternatives.
Summary
The road transportation industry competes with other transportation modes especially air, rail, and water. Competition for the provision of transportation of passengers mainly occurs over long distances. These other modes of transportation are also part of the transportation market in the transportation industry. It is because they offer strong competitive limitations to the road transport industry. As such the provision of road transport services requires input in infrastructure and the vehicle that make use of the infrastructure. The fluctuation of the charge and capacity building of infrastructure is controversial. These two aspects are important especially when considering the nature and extent of inter- modal competition. Several fields possess an impacting factor over the competitive aspect of this mode of transport. Other factors include the presence of timelines and regulations to liberate and increase the efficiency of road transportation in the provision of affordable and high-quality services. As such when attempting to enter the transport industry it is important to consider all the competitive conditions while doing an environmental analysis. It ensures that there are financial results while maintaining the safety, quality and affordability of transportation.

Reference
Quinet, E., & Vickerman, R. W. (2004). Principles of transport economics., Northampton, MA.
Helm, D.,& Jenkinson, T., (1998). Competition in Regulated Industries., New York., Oxford University Press.
OECD., (2000). OECD Reviews of Regulatory Reform OECD Reviews of Regulatory Reform., OCEAD Publishers.
Gubbins, E., (2003). Managing Transport Operations. 3rd Edition., London., Kogan Page Limited.
Mariotti, I., (2014). Transport and Logistics in a Globalizing World: A Focus on Italy., New York., Springer.

Carolyn Morgan is the author of this paper. A senior editor at Melda Research in 24 hour custom essay. if you need a similar paper you can place your order for a custom research paper from already written essay.

Author is associated with MeldaResearch.Com which is a global Custom Essay Writing and Term Paper Writing Company. If you would like help in Research Papers and Term Paper Help you can visit Custom Writing Service