Advances in transportation allow companies to source cheaper raw materials from foreign nations.
This decreases the “cost” of production and allows “producers” to manufacture a higher volume of goods.
The costs of production are divided into the costs of the different factors of production (Raw Materials, Machinery, Labor, Production inputs).
The price in the place of origin and the cost of transporting them to the production plant have an impact on the cost of acquiring the raw materials.
If the transport cost decreases, the cost of acquisition of the raw materials decreases indirectly and consequently the production cost decreases.
If the cost of production decreases, this allows the manufacturer to produce more goods at a lower price, impacting on a lower final price of each product or a greater profitability of the manufacturing company.
On the other hand, the distribution of final products can also be benefited with both a reduction in costs and shipping times thanks to advances in transportation.
In conclusion the consumer doubles the benefits thanks to the improvements in transportation.
