Transportation Logistics Exercise Questions Ch8-9

D Loredon


E. Bateh

Ch.8 Water Carriers & Pipelines

December 2, 2019

Chapter 8 Exercise Questions

1. The integrated ownership of pipelines was initially used by some oil companies to gain control of oil-producing areas. How did they use their transportation network to gain market control? What other reasons can be offered for integrated ownership? Are these reasons valid in today’s business environment?

2. The pipeline industry has approximately 100 companies, as compared to the motor carrier industry with more than 50,000. What are the underlying economic causes for this difference, given the fact that they both carry approximately the same volume of intercity ton-miles?

3. The typical pipeline company has high fixed costs. What economic factors account for this situation? What advantages and disadvantages does their cost structure present?

4. Pipelines account for more than 20 percent of the intercity ton-miles but less than 5 percent of the revenue paid by shippers to transportation companies. What factors account for this contrast? Is this situation likely to change? Why or why not?

5. The economic and market position of the pipelines has been described as mature and stable with little likelihood of significant growth in the near future. Do you agree? Why or why not?

6. Water carriers played a dominant role in the transportation system of the United States in the 18th and 19th centuries. Why has their relative position declined during the 20th century? Are they still an important component of the total transportation system? Why or why not?

7. What would be the impact of higher fuel charges on the water carrier industry? Provide a rationale for raising their user charges.

8. Technology often offers the potential of improving efficiency and effectiveness of transportation companies, but water carriers do not appear to have applied much new technology to improve their service. What impediments slow technological progress in the water carrier industry?

9. Intermodal competition is more intense than intramodal competition for water carriers. Why?

10. Why are pipelines unknown to many individuals? Do you think the pipelines should advertise to change this?

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