Why Is The Transportation Industry Cyclical In Nature?

Cyclic Business
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Question 1. Why is the transportation industry cyclical in nature?
The transport industry is one that goes through the business cycle and is quite sensitive to the business environment. This is to mean that the industry is affected by the economic prosperity and expansions that take place within the economy. Whenever the there is a rise in the revenues, this is closely linked to the economy and the same is true. To put this into perspective, the transport sector has its revenues tied to the growth that is experienced in the economy. As such, when there is growth and prosperity within the economy, the industry experiences the same sense of growth and prosperity. When the economy is struggling, the industry will also tend to suffer the same consequences. It is thus common to see that most of the companies in the industry will lay off some of their workers when the economy is slowing down and hire them back when the economy is growing. This is to mean that in the industry, where there are downturns, there is an element of prioritizing the expenses and this leads to potential cutoffs (DestinHaus LLC, 2017). This reduces the risk associated with the nonessential elements of the business processes. At the same time, it ensure that the industry is able to handle the tough economic downturns, by making sure that they are only dealing with the most essential parts of the business processes. The industry has to work through the four main phases of the business cycle, which are expansionary, peak, contractionary and the trough phase. In the expansion phases there is high productivity, stocks are high and rate of unemployment is low. Most of the industries are expanding and the employees are also gainfully being compensated (DestinHaus LLC, 2017). This also means that most of the people are ...