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Submitted By:
Ruchi Tyagi
Karan Aditya Abrol
Mehul Srivastava
Saurabh Sharma
Shurid Sarkar
Piyush Jagwani

INTRODUCTION Name of Institution
• Transportation :- Transport or transportation is the movement of people
and goods from one location to another.

• Logistics :- Logistics is the management of the flow of goods, information and

other resources, including energy and people, between the point of origin and
the point of consumption in order to meet the requirements of consumers.

• Transportation and Logistics :-

 Mobilize global inventory.
 Get the right goods to the right customer and place at the right time in
the right condition for the right price, even as you comply with trade
 Get the sale and deliver on your commitment, while reducing costs,
boosting service, and avoiding customs delays and fines.

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Relationship of Transportation to other
business function
 Traffic Management and Transportation.
 Purchasing.
 Customer Service.
 Product Pricing.
 Distribution Locations

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Transportation Infrastructure
Transportation is a visible element of logistics. Consumers are accustomed to
seeing trucks and train transporting products or parked at business facilities.

• Transportation Functionality :-
a). Product Movement :-
 Basic value is to move inventory to a specified destination.
 Financial Resources ex. 60% of U.S total logistics cost is related to transportation.
 Environment Resources
- largest consumer of fuel and oil.
- air pollution and noise pollution.

b). Product Storage :-

 Less visible element of transportation.
 Vehicles can also be used for product storage.
 Diversion implication.

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• According to the
investigation of National
Council of Physical
Distribution Management
(NCPDM) in 1988, the cost
of transportation, on
average, accounted for
6.5% of market revenue
and 44% of logistics costs.

The Effects of Transportation
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on Logistics Activities

• Transportation plays a connective role among the

several steps that result in the conversion of resources
into useful goods in the name of the ultimate consumer.

• It is the planning of all these functions and sub-functions

into a system of goods movement in order to minimize
cost maximize service to the customers that constitutes
the concept of business logistics

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• There have been major changes in the

number and location of facilities with the
closure of many single-user warehouses
and an expansion of consolidation
facilities and distribution centre.
• These developments reflect factors such
as better transport services and pressures
to improve logistics performance.

The Role of Transportation in Service
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• The role that transportation plays in logistics system is more

complex than carrying goods for the proprietors.
• By means of well-handled transport system, goods could be sent to
the right place at right time in order to satisfy customers’ demands.
• Transportation is the base of efficiency and economy in business
logistics and expands other functions of logistics system
• In addition, a good transport system performing in logistics activities
brings benefits not only to service quality but also to company

Transportation Principles Name of Institution

• Economy of Scale :-
The more items (weights) is transported, the less the transportation
costs per item (unit of weights)

$ 100 / good
cost per good

$ 10 /good

Number of goods in shipment 10

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• Economies of Distance Tapering Principle

– The larger the distance, the less the transportation costs per unit of
distance (e.g., per mile)

i le
0 /m
Transportatio $.1 $.05/mile
n Cost per
Tapering Principle


1 mile 500 miles 1000 miles 11

Shipment Distance
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Legal Types of Transportation
• Common Carriers:
A Common Carrier is the one which provides transportation service to a general public
according to a fixed rate.

Examples- Public airlines, railroads, bus lines, cruise ships etc. operate as common

• Contract Carriers:
These are similar to common carriers but instead of serving to general public, they
provide transport services for a negotiated price to selected customers, defined by
contract agreement. Normally contract carrier rates are less than common carrier
rates. They allow shippers greater control over the transportation resources.

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• Private Carriers:
It is wholly owned or leased by the firm, and is incidental to a company’s
main line of business. Wholly owned transport provides great deal of
flexibility and economy.

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Non Operating Intermediaries

They do not own or operate equipment. These companies are

some where analogous to a wholesaler in a marketing

• Freight Forwarders:
They are for profit businesses that consolidates small
shipments from various customers into a bulk shipment
and then utilize a common surface or air carrier for

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At destination, the freight forwarders splits the

consolidated shipment into the original smaller

• Lower Rate
• Faster transport of small shipments

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• Shipper association:
Shippers associations are operationally similar to freight
forwarders. They are voluntary non profit entities where members,
operating in a specific industry collaborate to gain economies
related to small shipment purchases.

• Brokers:
Transport brokers are agents that brings shippers and carriers
together by providing timely information about rates , routes and
capacities. They may arrange transportation but assume no liability
for it.

Transportation StructureName of Institution
• Transport is performed by modes, such as air, rail, road, water, cable, pipeline
and space.

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Water :-
 Oldest mode of transport.
 moderate fixed costs (ships and freight handling equipment)
low variable costs (labor, fuel)
 Main adv. Of water transport is the capacity to transport extremely large
 Main disadvantage is slow speed and limited range of operation.
 Slow transit time provides a form of storage in transit that can benefit logistic sys.

Air :-
 Least utilized mode of transport because of limited load size and weight lift
 . Fixed cost is lower than rail or road or pipeline. But operating costs are highest.
 Main adv. lies in SPEED this allows other aspects of logistics like warehousing
and inventory to be reduced or eliminated.
 Premium air carriers such as Federal Express, DHL Express etc provides
airfreight services.

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• Rail Transport :-
 high fixed costs (land, tracks) & low variable costs (labor, fuel)
 Improving flexibility
 Intermodal services

• Road Transport :-
 Mostly used mode
 low fixed costs (government builds, maintain Roads) & medium-high
variable costs (labor, fuel)
 Flexible
 Trucks go door to door as opposed to planes and trains.
 Irrespective of the mode chosen ultimately the consignment reaches the
doorsteps of the customer by road.

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Highest fixed costs (right of way & construction costs of equipment) & lowest variable
costs (no labor or fuel)
Slow and dependable
Low energy consumption.
Pipe line operates all the time except when it is shut down for maintainance.

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Intermodal Transportation

Transportation services are achieved by combining modes.

 Piggyback
 Trainships
 Fishyback
 Coordinated Air-truck

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Summary Name of Institution

• The case is about Pilot Chemical Company. It had 5

production plants in Ohio, New Jersey and Texas.
• Most of its freight was liquid and it used trucks, rail and
ship for the transportation of its freight.
• Logistics control was distributed among the plants, with
each site operating independently.
• As a result the Company could not account for the cost-
to-serve elements. They could not determine the cause of
rising costs.
• In order to upgrade their logistics, they opted to
outsource it to ChemLogix a 3PL.

Challenges Name of Institution

• Increase transparency of freight cost

• Providing historical costs, market pricing and
competitive market.
• Mitigate rising “cost-to-serve” issues.

Solution Name of Institution

• Design and implement a customized, web

enabled On-Demand TMS.
• Integrate a centralized team of logistics
professionals to support the transportation
management processes.

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• Optimized freight operations

• Significant reduction in costs
• Optimum vehicle Load and Route
• Shorter Lead-Time
• Transport follow-up

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