(a) In what ways does transport aid trade? (b) Explain the following in connection with water transport: (i) freight (ii) charter party.

Answer Details

(a) Ways in which transport aids trade

• It creates place utility: Transport moves goods from where they are produced to where they are needed, making them available to consumers in different places.
• It widens the market: By carrying goods over long distances, transport enables producers to sell to distant and even foreign markets, increasing sales.
• It links producers, wholesalers, retailers and consumers, ensuring a steady flow of goods along the chain of distribution.
• It encourages large-scale production and specialisation: Because goods can be moved to wide markets, producers can safely produce in large quantities and specialise in what they do best.
• It ensures the movement of raw materials, labour and finished goods, and helps to make goods available in the right place and at the right time, preventing scarcity.

(b) Terms in water transport

• (i) Freight: This is the charge or money paid to a shipping company for carrying goods (cargo) by sea from one port to another. The term is also sometimes used to describe the goods (cargo) being carried.
• (ii) Charter party: This is a written agreement (contract) by which the owner of a ship hires out the whole ship, or a large part of it, to a merchant for the carriage of goods for an agreed period or voyage, at an agreed sum. The person who hires the ship is called the charterer.