1 Module: Transport and Logistics Management (207KM) - PowerPoint Presentation

Slide1

1

Module: Transport and Logistics Management (207KM)

Week 9

Transportation

Slide2

Learning Objectives

To compare and contrast transportation infrastructures in several countriesTo identify the five modes of transportation and learn about their respective characteristicsTo discuss intermodal transportationTo describe several types of transportation specialists

12-2

Slide3

Transportation

TransportationThe actual physical movement of goods and people between two points and pivotal to the successful operation of any supply chainTransportation influences or is influenced by the following logistics activities:Transportation costs are affected by location of firm’s plants, warehouses, vendors, retail locations & customersInventory requirements are influenced by mode of transport used (e.g. high-speed transport require smaller amount of inventories)

12-3

Slide4

Transportation

Transportation influences or is influenced by the following logistics activities:Mode of transport & classification rules influence packaging requirementsMaterials handling equipment and design of the docks are dictated by mode of transportMaximum consolidation of loads achieved with order-management technology enables larger shipments and reduces transportation costsCustomer service goals influence the type & quality of carrier as well as carrier service selected

12-4

Slide5

Modes of Transportation

Five different typesAirMotor carrier (truck)Pipeline (oil)Rail (narrow, standard and broad gauged)Water (inland or ocean)Wide disparities in the various infrastructures exist among different highly populated countries Lack of certain infrastructure makes it difficult to use that mode domestically

12-5

Slide6

Transportation Infrastructure

of 5 highly populated countries

12-6

Source: The World Factbook 2013Globalization of world’s economy promotes international intermodaltransportation

(10,000-foot runway)

Slide7

Attributes of Different Modes

The attractiveness of a particular mode depends on the following attributes:CostSpeed (i.e. transit time from pickup to destination)Reliability (i.e. consistency of delivery)Capability (i.e. types of product that can be transported)Capacity (i.e. volume that can be carried at one time)Flexibility (i.e. ability to deliver product to customers)In US, the development of Highway System allowed motor carriers to improve their speed, reliability and flexibility that motor carriers now account for the majority of freight revenues instead of railroads.

12-7

Slide8

1st Transportation Mode: Airfreight

The fastest (but expensive) mode, generally for shipment exceeding 600 miles although some motor carriers now offer overnight service of between 600 and 700 milesAccessorial service (i.e. transportation service from shipper to origin airport or from destination airport to consignee) that is supplemental to the line-haul transportation adds transportation cost and time and also increases the number of handling times.Best suited for high-value, lower-volume products that are urgent, perishable or time-specificDimensional weight is used to determine chargeable weight of bulky cargo (i.e. 166 cubic inches per pound or 6000 cubic centimeters per kilogram)Majority of airfreight is carried in passenger airplanes

12-8

Slide9

Chargeable Weight of Airfreight6000 cubic centimeters per kilogram

Gross weight = 850kgsMeasurement of cargo 120cm X 160cm X 115cm (x 2 boxes)75cm X 130cm X 125cm (x 2 boxes)Total volume = 4416000 + 2437500 = 6,853,500 cubic centimeterTotal volume weight = 6853500 / 6000 = 1142.25kgsThe gross weight is 850kgs and volume weight is 1142.25kgs. Hence, airfreight is charged on the basis of volume weight, 1142.25kgs. Here, the chargeable weight is 1142.5kgs. (rounded up to next Half KG)

Slide10

Examples of Airfreight Products

Auto parts and accessoriesCut flowers and nursery stockElectronic or electrical equipment (e.g. iPhones)Fruits and vegetablesMachinery and partsMetal productsPhotographic equipment, parts, and filmPrinted matterWearing apparel

12-10

Slide11

Reliability of Airfreight

Reliability is problematic due to delays caused by:Weather conditions (e.g. fog, snow, thunderstorms)Congestion and resultant delays associated with air passenger transportation (i.e. common problem of belly freight delay)

12-11

Slide12

2nd Transportation ModeMotor Carrier (Trucking)

Highway System has significant impact on economic development. From logistical perspective, companies rank “accessibility to highway” as the most important factor in deciding the locations of manufacturing, assembly and distribution facilitiesPrimary advantage is flexibility but capacity is limited by weight and size restrictions. And, there is speed limits and hours-of-service (HOS) rules in many countries.Highway congestion and weather considerations also affect reliability of motor carrier deliveryCost is generally lower than that of airfreightTwo different classes of motor carriers (LTL vs. TL)

12-12

Slide13

Less-than-truckload Motor Carrier

Shipments are too big to be handled manually but do not fill an entire truck (150 to 10,000 pounds in US)LTL carriers consolidates less-than-truckload shipments from many shippers for multiple destinations through a system of terminals where freight is shifted between vehicles. So, primarily use for dry freight.ProcessLocal pick-up using small trucks to origin terminalOrigin terminal used to load aboard bigger line-haul trucksLine haul to destination terminal near freight’s consigneesUnloaded to small trucks for local delivery

12-13

Slide14

Truckload (TL) Motor Carrier

12-14

TL Carriers dedicate trailers to a single shipper’s (or freight forwarder’s) cargo with amount that physically fill a straight truck or truck trailer (e.g. weight > 10,000 lbs. in US).

Good for refrigerated products, animals & livestock, etc

Shipments tend to move directly from the shipper’s location to the consignee’s locationSuppose a company produces 8,000 pounds of products per day. The company could have one 8,000 pounds LTL shipment each day or 40,000 pounds TL every five days.

Slide15

3rd Transportation Mode: Pipeline

unique one-way transportation mode without vehicles and vehicle operators  most reliableTend to be the slowest mode but capable of transporting large volume of liquid, liquefiable or gaseous products such as petroleum productsSlow speed causes increasing transit times and higher inventory levels in the logistics systemHigh fixed costs, but relatively low cost per unit due to transporting very large product volume

12-15

Slide16

4th Transportation Mode: Railroad

In US, railroad industry is dominated by limited freight carriers that this level of market concentration limits service and pricing options for customersNeither “best” or “worst” on any of the six attributes (speed, reliability, flexibility, cost, capability and capacity)Superior to air, motor, and pipeline, but inferior to water when transporting different kinds of productsLess flexible, but more when compared to air, water, and pipeline Superior to air and motor with regards to volume, but inferior to pipeline and waterLess expensive than air and motor, but more expensive than pipeline and waterFaster than pipeline and water, but slower than air and truck

12-16

Slide17

5th Transportation ModeInland water & ocean carrier

Relatively inexpensiveSlow average speedsFocus on lower value commodities handled by mechanical meansMany different kinds of products can be carriedCarry greater volumes than rail or truckSomewhat unreliable due to weather-related conditions (e.g. icing)

12-17

Slide18

Intermodal Transportation

refers to transportation of container or other equipment that can be transferred from the vehicle of one mode to the vehicle of another mode without the contents being disturbedTwo or more modes are employed to utilize advantages of each while minimizing their disadvantages. Example: piggyback transportation Container on flatcar is shipped to take advantage of low transportation costs of railroad or ocean transport on line-haul along with truck’s ability to provide door-to-door service

12-18

Slide19

Intermodal Transportation: Container

Interchangeable among rail, truck, and water carriers that it is commonly used in intermodal shipments to reduce freight transportation and handling costsGenerally 8 feet wide, 8 feet high and 20-53 feet longVol. of intermodal traffic are commonly measured by number of TEUs (20-foot equivalent container unit)Airfreight containers, unit load devices (ULDs), are designed specifically for contours of fuselage

12-19

Boeing 737-800

1,850 ft3 belly spaceBoeing 777-2005950 ft3 belly space

Slide20

Transportation Specialists

Provide value-added services to prospective customersFreight forwarders (FF)From shipper’s viewpoint, FF are analogous to other carriers to provide retailing function and can be thought of as consolidators of freightTwo types of domestic freight forwardersSurface Vs. AirExists by offering a service with lower rate to shippers that must use LTL rates because they do not generate enough volume to use TL ratesTypically offers pickup and delivery service but does not perform the line-haul service (done by other carriers)

12-20

Slide21

Transportation Specialists

BrokersCompanies that look to match a shipper’s freight with a carrier to transport it with better transportation rateMay consolidate LTL shipments and then turn them over to motor carriers or freight forwardersThird party logistics companies (3PLs)Find clients with complementary transportation needs to maximize equipment utilization and reduce transportation costs to respective clientsExample: Excel logistics deliver repair parts for Chrysler and Ford on the same truck in the same geographic area

12-21

Slide22

Transportation Specialists

Parcel or package delivery carriersParcels are packages weighing up to 150 poundsParcel carriers are companies that specialize in transporting parcels having size and weight restrictions with transportation charges based on weight, distance, shape, modes of transport and other services (e.g. daily pickups, multiple delivery attempts and return of undeliverable packages)

12-22

Slide23

Reference book

1-23

Contemporary Logistics,11

th

Edition

Chp. 12

Authors: Paul R. Murphy, Jr. A. Michael Knemeyer,

Publisher: Pearson