Transportation

Abdullah Athar
INTRODUCTION

 Transportation attempts to fulfill three R’s

of distribution management, that is right
product, at right time and at right place.
SCOPE OF TRANSPORTATION

 The availability of inexpensive , efficient and

easily accessed services activates several
critical driver of economic activity.
◦ It provides opportunity for growth in market
competition
◦ It allows deeper penetration into the market
◦ The wider the product distribution and greater
the demand, the more producers can leverage
economies of sale in production and channel
transportation costs.
◦ The more efficient and lower the transportation
cost is, the lower would be selling price.
PRINCIPLES OF TRANSPORTATION FUNCTION

 Transportation, in order to fulfill its objectives of

market growth and increased efficiency in servicing
the market while reducing cost of service, has to
follow certain principles such as,
◦ Continuous flow
◦ Optimize unit of cargo
◦ Maximum vehicle unit
◦ Adaption of vehicle unit to volume and nature of traffic
◦ Standardization
◦ Compatibility of unit load equipment
◦ Minimum of dead weight to total weight
◦ Maximum utilization of capital, equipment and personnel
PRINCIPLES OF TRANSPORTATION
FUNCTION
◦ Continuous flow means uninterrupted flow of
product from producer through each node in
distribution network to the consumer.
◦ Optimize unit of cargo means optimization of
transportation vehicle capacities.
◦ Maximum vehicle unit means splitting larger
shipment into many small shipment will result in
increased cost & decreased efficiency.
◦ Adaption of vehicle unit to volume and nature of
traffic : for example development of two level
carrier for truck is example of optimization
transport that minimizes cost.
PRINCIPLES OF TRANSPORTATION
FUNCTION
◦ Standardization means standardized truck , ship
etc provide economical method of transportation
◦ Compatibility of unit load equipment means
material handling equipment should be
appropriate and suitable.
◦ Minimum of dead weight to total weight means
ratio of dead weight to total weight should be
minimum
◦ Maximum utilization of capital, equipment and
personnel means percentage of time these
equipment and personal are in use.
 RELATIONSHIP OF TRANSPORTATION TO
OTHER BUSINESS FUNCTIONS

 Effective management of transportation is absolutely

necessary for smooth functioning of an enterprise.
This requires coordination with following department
◦ Traffic management
◦ Warehousing receiving and dispatch
◦ Purchasing
◦ Customer services
◦ Product pricing
◦ Distribution location
◦ Inventory planning
TRANSPORTATION
MANAGEMENT
 It includes following
◦ Transportation pricing
◦ Rate negotiations with service provider
◦ Route selection
◦ Transport operations
◦ Diversion and re-consignment
◦ Risk and claims
◦ Export and import
◦ Analysis of transportation cost and services
Transportation modes :

Road Rail

Sea Air

Pipeline
Transportation Modes : Characteristics Comparison

types road Rail water air pipelines

speed 2 3 4 1 5
investment 1 2 3 4 5

Freight cost 4 3 1 5 2

reliability 2 3 4 5 1

frequency 2 3 4 5 1

Capability 4 3 2 5 1

Note “ lowest rank is the best

 Global Transportation Challenges
Parameters Domestic Global Transportation
Transportatio
n
Performance Shorter
Longer ( due to greater distances , customs
Cycle
clearances, more intermediates, more use of
slow sea travel

Documentation Simple
Complex (for customs, banking and foreign
Exchange clearance requirements)

Alliances Few (3PL firms) Multiple (on global front with logistics
service providers, distribution and
manufacturers)
Information flow Simple Multiple channels, varied standards,
Alternative languages
Comparative hazard of transportation modes

Air Sea Road/Rail

Variations in changes Water damage Shocks

in temperature and Corrosive atmosphere Vibrations
pressure Wave impacts Careless Handling
Hostile storage condition Impacts due to breaking
Transshipments
Factor influencing freight cost:

 Volumes
 Distance
 Product density
 Product shape
 Product handling
 Product type
 Market dynamics
Next Unit
Types of distribution network
TRANSPORTATION NETWORK

 Point-to-point network
 Multiple delivery points
 Trans –shipment points
 Nodal network
 Hub & spoke network
Point to point network
 Point to point type of network is quite
common for long distance hands on the
national highways. The points of origin and
destinations are fixed. Complete truck
loading is assured for both ways
Multiple Delivery Points

 Multiple delivery points network is used for

round and trip operations with multiple pickup
and delivery points. For example, the delivery of
filled bottles and pickup of empty bottles of soft
drinks at multiple points (retailers) on the fixed
route
Trans-Shipment Points

 Trans-shipment points are two local area networks

(across national and state highways) having a common
point where loading and unloading takes place for
freight consolidation or break bulk
 The consignment from long-distance fleet is trans-
shipped to local vehicles for distribution across the local
area
Nodal Network

 These networks are used for multi-model

transportation system and include multi-
stops and transshipment pickup and
delivery stations
Hub and Spoke Network

 Hub and spoke network arrangement is like a hub and

spoke of the wheel. The hub acts like a central feeder
point to the distribution centers, which are at the
strategic locations spread across the geographical area.
The high volume and high-speed shipment takes place
from hub to distribution centers through the
predetermined shortest routes called spokes
Selection of service providers

 Define logistics problem

 Identify the problem area
 Establish objective
 Search for service provider
 Proposal evaluation
LEGAL TYPE OF
TRANSPORTATION
 There are four legal types of transportation.
 Common carrier is the one which provides transport service
to a general public according to a published rate schedule.
 Contract carriers are similar to common carriers but instead
of servicing to the general public, they provide transport
services for a negotiated price to selected customers defined
by contract agreement.
 Exempt carriers for hire company differs from the other two
in that they are not regulated with respect to routers, areas
served and rates. It enjoys exempt status based on product
transported and nature of operation.
 Private carriers are distinguished by the fact that they are
wholly owned or leased by the firm and are indispensable for
a company’s main line of business.
LEGAL TYPE OF
TRANSPORTATION
 In addition to these types of carriers, new
forms of transport services like freight
forwarders, parcel post have grown
dramatically in the last ten years
CATEGORIES OF TRANSPORT
MODES
 Two categories of transport modes can be
defined-single-service are multi-modal.
 Single service choices: here most of the
freight transportation take place through
road and rail.
 Multi-modal transport came about in 1960s.
The primary motive behind developing
intermodal transportation was to cut down
the cost of cargo handling, reduce ships time
in port, achieve economies of scale
CATEGORIES OF TRANSPORT
MODES
 Intermodal shipping uses multiple modes
of transportation to complete a single
long-distance movement of freight.
Piggyback fishyback, trainship and airtruck
are few of the popular intermodal
combinations.