Bulk Stuff in Industry Chapter

Background Information:

-Inputs and products are transported in one of four ways:ship, rail, truck, or air. Firms seek the lowest-cost mode of transport, but the cheapest of the four alternatives changes with the distance that goods are being sent. The farther something is transported, the lower is the cost per kilometer (or mile). Trucks are most often used for short-distance delivery and trains for longer distances. If a water rout is available, ship transport is attractive for very long distances, because the cost per kilometer is even less. Air is normally the most expensive alternative for all distances, but an increasing number of firms transport by air to ensure speedy delivery of small-bulk, high-value packages. Regardless of transportation mode, cost rises each time that inputs or products are transferred from one mode to another. For example, workers must unload goods from a truck and then reload them onto a plane. The company may need to build or rent a warehouse to store goods temporarily after unloading from one mode and before loading to another mode. Some companies may calculate that the cost of one mode is lower for some inputs and products, whereas another mode may be cheaper for other goods. Many companies that use multiple transport modes locate at a break-of-bulk point.

Definitions:

Break-of-Bulk Point = A break-of-bulk point is a location where transfer among transportation modes is possible.

Example) A steel mill near the port of Baltimore receives iron ore by ship from South America and coal by train from Appalachia.

Bulk-reducing industry = A bulk-reducing industry is an industry in which the final product weighs less or comprises a lower volume than the inputs. Simply, bulk-reducing industries are economic activities in which the final product weighs less than its input.

* Bulk reducing industry are oriented towards raw materials.



Example) Copper is an example of a bulk-reducing industry. The ore is heavy, so mills are located near the mines in order to “reduce the bulk” so that the final product costs less to transport.

Bulk-gaining industry = A bulk-gaining industry is an industry in which the final product weighs more or compromises a greater volume than the inputs. Simply, bulk-gaining industries make something that gains volume or weight during its production.

Example) An example of a bulk-gaining industry is the production of soft drinks and beer.