Determinants of “Sticky Costs”: An Analysis of Cost Behavior using United States Air Transportation Industry Data

2014 ◽  
Vol 89 (5) ◽  
pp. 1645-1672 ◽  
Author(s):  
James N. Cannon
Keyword(s):  
United States ◽  
Air Transportation ◽  
Data Availability ◽  
Transportation Industry ◽  
Industry Data ◽  
Cost Behavior ◽  
Idle Capacity

ABSTRACT This paper examines determinants of sticky cost behavior, costs that increase faster than they decrease as demand fluctuates. The majority of the literature infers that sticky costs arise because managers retain idle capacity as demand falls, but add capacity as demand grows. I use United States Air Transportation industry data to confirm that managers do retain idle capacity when demand falls. However, I also find that sticky costs arise because managers lower selling prices to utilize existing capacity when demand falls, but add capacity (rather than raise selling prices) when demand grows. Finally, I find that sticky costs arise because managers incur more cost when adding capacity as demand grows than they incur when they add capacity as demand falls. Conversely, I find evidence of anti-sticky costs that occur because managers save more cost by removing capacity when demand falls than they save by removing capacity when demand grows. Data Availability: Data are available from the author upon request.

scholarly journals Cargo Handling By Truckers And Competitive Advantage: Is There A Relationship?

2011 ◽  
Vol 4 (1) ◽  
pp. 87
Author(s):  
Jeff Kennedy
Keyword(s):  
United States ◽  
The United States ◽  
Truck Drivers ◽  
Transportation Industry ◽  
Industry Data ◽  
Cargo Handling ◽  
Labor Statistics ◽  
Mode Of Transportation ◽  
Bureau Of Labor Statistics ◽  
New Jobs

The transportation industry is one of the largest employers in the United States. In fact, employment in the transportation industry is expected to increase from 4,205,000 jobs in 2002 to 5,120,000 jobs in 2012, an increase of 914,000 jobs, with truck drivers, including heavy and tractor-trailer drivers adding 337,000 new jobs (U.S. Bureau of Labor Statistics, 2006 and NAICS Industry Data, 2004). Truck drivers are a valuable and unique resource in today's economy because companies rely on trucks to pick up and deliver merchandise. No other mode of transportation delivers door-to-door. While some goods may travel most of the way by ship, train, or airplane, almost every good is carried by truck at some point en route to its destination. (West, 1-46)

scholarly journals The Impact of COVID-19 on Air Transportation Network in the United States, Europe, and China

2021 ◽  
Vol 13 (17) ◽  
pp. 9656
Author(s):  
Xiaoqian Sun ◽  
Sebastian Wandelt ◽  
Hartmut Fricke ◽  
Judith Rosenow
Keyword(s):  
United States ◽  
Transportation Network ◽  
Air Transportation ◽  
The United States ◽  
Transportation System ◽  
Transportation Industry ◽  
Short Term ◽  
The Rich ◽  
Flight Cancellations ◽  
The Impact

The air transportation industry has undergone unprecedented changes throughout the COVID-19 pandemic, as measured in terms of flight cancellations, aircraft retirements, airline bailouts, and disconnection of worldwide communities. In this study, we performed a cross-comparison of the impact COVID-19 had on three aviation centers of the world—the United States, Europe, and China. Methodologically, we analyzed the air transportation system as complex networks and by using time series analysis. We discovered that the peak of COVID-19 impact was around April/May 2020, followed by a strong recovery mostly in domestic subsystems. We found a homogeneous impact on the United States, a strong heterogeneous impact on Europe, and a rather short-term impact on China. Domestic flight connectivity recovered much faster than international flight connectivity, particularly for the Chinese air transportation system. Our study provided a comprehensive, data-driven analysis of the COVID-19 impact on air transportation for these three major regions, augmented by references to the rich scientific literature on this subject. We hope that our work opens up pathways to a better understanding and a higher degree of preparedness for future pandemics.

Logistics Costs Behavior and Management in the Auto Industry

2015 ◽  
Vol 31 (4) ◽  
pp. 389-408 ◽  
Author(s):  
Marcela M. Porporato
Keyword(s):  
Real Life ◽  
Systems Design ◽  
Management Control ◽  
Data Availability ◽  
Manufacturing Companies ◽  
Bottom Line ◽  
Related Data ◽  
Profitability Analysis ◽  
Confidentiality Agreement ◽  
Cost Behavior

ABSTRACT This case, based on a real-life situation of how logistics costs function in daily operations, aims to provide students with the opportunity to understand how logistics costs are calculated and how the inter-organizational nature of these costs affects the profitability of two companies. The case hinges on understanding cost behavior (fixed and variable) and on management control systems design. Although logistics costs represent a small fraction of total costs in manufacturing companies, they can negatively affect the bottom line if left unattended. Students are presented with data relating to a three-year project in the automotive industry that shows that the project has been experiencing a sustained increase in costs that has eroded its profit margin. While it appears that logistics costs are the problem, it cannot be verified until the contracts are studied. In addition, the financial- and contract-related data provided are sufficient to extend the profitability analysis to the provider of logistics services. This case is suitable for management accounting courses at the master's or advanced undergraduate level; it has been tested and well received by students who want to gain a greater understanding of logistics costs—their nature, behavior, possible containment strategies, and inter-organizational effects. Data Availability: Some of the data are from public sources, but the logistics contracts and cost schedules are private; the confidentiality agreement with the two companies requires masking certain details and modifying the numeric data.

Unraveling the Black Box of Cost Behavior: An Empirical Investigation of Risk Drivers, Managerial Resource Procurement, and Cost Elasticity

2015 ◽  
Vol 90 (6) ◽  
pp. 2305-2335 ◽  
Author(s):  
Martin Holzhacker ◽  
Ranjani Krishnan ◽  
Matthias D. Mahlendorf
Keyword(s):  
Financial Risk ◽  
Demand Uncertainty ◽  
Empirical Investigation ◽  
Health Planning ◽  
Data Availability ◽  
Cost Elasticity ◽  
Cost Structures ◽  
Cost Behavior ◽  
Prior Literature ◽  
Contract Labor

ABSTRACT This paper extends prior literature on cost behavior by providing insights into how firms achieve changes to cost structure in response to two important risk drivers, i.e., demand uncertainty and financial risk. Using theory from labor economics, supply-chain management, and finance, we posit that demand uncertainty and financial risk influence cost management activities. Specifically, we argue that firms are likely to alter resource procurement choices to increase cost elasticity in response to these two risk drivers. We use data from California hospitals that allow for the calibration of three distinct resource procurement choices that increase cost elasticity: outsourcing, leasing of equipment, and hiring contract labor. Mediation analysis using 2,202 hospital year observations indicates that both demand uncertainty and financial risk influence cost elasticity. Importantly, these effects are mediated by the three aforementioned resource procurement choices. Overall, our findings support the view that firms make procurement choices to manage the risk associated with cost structures. Data Availability: Data used in this study are publicly available from the Office of Statewide Health Planning and Development (see: http://www.oshpd.ca.gov/). JEL Classifications: I18; M41.

scholarly journals ORGANIZATIONAL CHANGE FOR THE ENVIRONMENTALLY SUSTAINABLE AIRPORT MANAGEMENT

2011 ◽  
Vol 1 (2) ◽  
pp. 13-20 ◽  
Author(s):  
Vildan Durmaz
Keyword(s):  
Organizational Change ◽  
Air Transportation ◽  
Environmental Management System ◽  
Organizational Response ◽  
Transportation Industry ◽  
Crucial Issue ◽  
Airport Management ◽  
Environmentally Sustainable ◽  
Effective Implementation ◽  
Airport Capacity

Air transportation industry is a globally growing industry. As an inseparable part of this industry, airport management is also becoming more crucial issue to be dealt with. Airports offer economic and social benefits to the society, but also environmental impacts of airport operations are increasing due to high traffic growth. While airport capacity is increasing, airport operators are being responsible for mitigating environmental constraints. Today to implement airport environmental management system is seen as a critical way of solution. To ensure effective implementation of this system, an organizational change with definite roles, responsibilities and structure are needed. This study illustrates a way of organizational response to market forces and national regulations guiding the achievement of sustainable airports by determining the structure and the roles in an airport organization.

Complete Count of U.S. Transportation Workforce

2000 ◽  
Vol 1719 (1) ◽  
pp. 259-266
Author(s):  
Basav Sen ◽  
Michael A. Rossetti
Keyword(s):  
The United States ◽  
Double Counting ◽  
Transportation Industry ◽  
Industry Data ◽  
Definition Of ◽  
Nonfarm Employment ◽  
Employment Data ◽  
Transportation Activity ◽  
The U.S ◽  
Complete Count

Described are the development and application of an original methodology for a comprehensive and consistent count of transportation-related employment in the United States. In addition, the study represents a general example of how transportation analysts can effectively use and combine classification-based data to answer specific crosscutting questions. The method involved computing the union of two different sets of transportation employment data: transportation industry data, counting all workers in industries that provide or support transportation, and transportation occupational data, counting all workers performing transportation functions. A union, instead of a straightforward sum, was used to avoid double counting of workers employed in the defined transportation and transportation-related industries. A broad definition of transportation-related industries and occupations was used, allowing a complete accounting of employment generated by transportation in the economy. It was concluded that transportation industries account for 13 million workers, or about 10 percent of total nonfarm employment of 128.4 million, and transportation occupations outside of transportation industries accounted for another 3.5 million workers, or about an additional 3 percent of nonfarm employment. Thus, about 16.5 million workers either work directly in or support transportation activity in the U.S. economy; this constitutes about 13 percent—approximately 1 in 8 jobs—of the nonfarm workforce.

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