Share of Transport Costs in Product Prices and Average Domestic Haul Length

Share of Transport Costs in Product Prices and Average Haul Length

Source: Adapted from US Department of Commerce.

There is a distinct difference between the level of transport intensity of goods and the economic sectors they are associated with. This trend is mostly attributed to the material intensiveness of each good in relation to its value. Goods with a high transport intensity tend to have a low added value. The most transport-intensive sectors involve agriculture, forestry, and fishing, which are handling ponderous goods over long distances. For instance, the cost of shipping lettuce between California and New York is about $8,000 per truckload. This is related to the long distance involved, but also to the requirement that the lettuce must be stored at constant temperatures (cold chain in a refrigerated trailer) between 0 and 2 degrees Celsius.

Construction and mining share similar characteristics as ponderous products are transported, but in this case, over much shorter distances. For instance, construction materials such as stone, clay, and glass have the highest transport intensity (27%) and are transported over distances of less than 100 km. In a global setting, wholesale and retail activities are increasingly becoming transport dependent as many manufacturing segments have been offshored. Information processing activities, namely finance, insurance, and real estate, are the least dependent on transportation since they have limited material inputs.