Effect of Transport Costs on Route Selection

For routes involving different transportation modes there are modal cost differences that will influence routing options. The above figure presents a route selection problem between two locations (origin a and destination b) and involving two modes; land and sea. It requires selecting one port out of a choice of four (p1 to p4) and assumes that there is a direct land connection between a and each port. The choice of the route is the outcome of comparative operating costs.

  • The first route selection (1) assumes equal transport costs over land and over sea; R{C(sea) = C(land)}. In this case, the costs of moving from the origin to port p3 are equal to the costs of moving from port p3 to the destination. In reality, the direct route is not the best solution because it does not take account of transport costs differences between land and sea.
  • The second route selection (2) assumes two scenarios. In the first, sea transport costs are higher than land transport costs; R{C(sea > C(land)}. Under such an assumption, route R1 minimizes sea transport costs. For the second scenario, land transport costs are higher than sea transport costs; R{C(sea) < C(land)}. Route R2 consequently minimizes land transport costs. Obviously, R2 is much more plausible than R1.
  • The third route selection (3) is the optimal solution, which is the most plausible. It considers that land transport costs increase at a higher rate than sea transport costs, but that land transportation costs are initially lower. Land transport can thus be more advantageous than sea transport for a short distance, enabling to use port p2 instead of port p1.