Theory question 101
TransportCommerce 2 (answer five questions)
(a) In what ways does transport aid trade?
(b) Explain the following in connection with water transport (i) freight (ii) charter party
Show the model answer
(a) Any five: moves raw materials to factories and finished goods to markets; creates place utility – goods reach where they are needed; widens the market, making large-scale production possible; makes specialisation and division of labour possible; helps stabilise prices by moving goods from areas of surplus to areas of shortage; makes international trade possible; carries people (traders, workers) and creates employment.
(b)(i) Freight is the charge paid to a shipowner (carrier) for carrying goods; it also refers to the goods carried. If a charterer does not use all the space hired he pays 'dead freight'.
(ii) Charter party is the written contract by which a shipowner hires out a whole ship or part of it to a charterer, for a voyage (voyage charter) or a period (time charter); it states the ship, cargo, ports, freight and other terms.
Explain each way transport helps trade; define both terms precisely.