OUTLINE THE MAIN SOURCES OF UNCERTAINTY IN TRANSPORT FORECASTS AND EVALUATE THE IMPORTANCE OF TRANSPORT TO THE ECONOMY.

Transport is a movement of people and goods for personal and business reasons. It is widely recognized as central to economic growth. It provides an immediate service to a wide range of productive activities in almost all economic sectors. Since demand for transport is derived demand because it depends upon the final output, that is the destination that people need to get to, it will depend upon people’s aims of travelling.
In the modern world most of the activities of people involve the use of transport and, everyday millions of people use cars, buses, trains to get to work, go to holidays, etc.
Many people usually live far away from the place where they work and therefore they have to use transport every day. And what government has to concern about is how to make easier and faster for people to get to their work. Since private transport is considered to be the most convenient mean of transport, many people use their cars every day to travel to work. When the amount of cars exceeds the capacity of roads, congestions might appear which create a big negative external effect and lead to a reduction in productivity, wasting time of people, which they could use to do some work, and environmental pollution. So there are many measures are being taken in order to reduce this impact by promoting other modes of transport such as buses or trains.
Changes in costs of the use of some modes of transport also play a big role in the economy of the country because if these costs increase, for example, people might decide to save more and reduce consumption in order to be able to afford to use buses everyday to get to work. Also since transport sector accounts for a substantial proportion of employment, it affects the employment levels of the country.
Another sector of economy – government spending is also hugely affected by transport because by introducing different policies, investments and promoting substantial types of transport government increases its spending and so other sectors of the economy might suffer from underinvestment. In such cases when government can’t raise sufficient funds, Private Financial Initiative is being introduced which includes using money from private and public sector with contractual agreement.
Freight transport also has a big impact on the economy because the whole supply chain includes transporting goods from one place to another and so without an integrated and efficient transport, the whole production of services and goods might suffer. Example of congestions also might be suitable here because if goods are moved by truck, congestion might delay delivery of goods to customers or some perishable goods might go off and so companies will make losses.
So as we can see transport plays important role in the economy and increases the welfare of people by providing them access to social facilities.
When economists make forecasts about the demand and supply of transport there might some uncertainties appear such as economic and political shock which has a huge impact on the demand for transport and can’t be predicted sometimes. Also the growth of population difficult to predict and so economists are not sure how many people will get driving licenses. When government introduces transport policies it can’t know for sure how this policy will affect the demand for transport and whether it will change or not.
Also it difficult to predict how income will change and how this change will affect the demand for certain types of transport.