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Business Logistics Management
6. Transport Fundementals
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Importance of an Effective Transportation System
• Greater competition
• Economics of scale
• Reduced prices
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Greater Competition
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Economics of Scale
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Reduced Prices
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Service Choice and their Characteristics
• Service choice– Rail, Trunk, Water, Pipe, Air
• Price
• Transit time
• Variability
• Loss and damage
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Price
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Transit Time
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Variability
• Weather
• Traffic congestion
• Number of stops
• Consolidate shipments
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Single Service Choice
• Rail
• Truck
• Air
• Water
• Pipeline
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Rail
• Mid- hauler – 720 miles
• Slow mover – 22mile/hr
• Low/Mid-valued products - material
• CL and LCL
• Mid-shipment
• Variability is low
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Truck
• Short hauler – 274-646 miles• Fast mover – 60-80 mile/hr• Mid- valued products – semifinished or finished pr
oducts• TL and LTL• Small shipment• Variability is low• Door to door service
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Air
• Very long hauler – 1300 miles
• Very fast mover – 600 mile/hr
• High- valued products –products with high time constraints
• Mid- shipment
• Variability is high
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Water
• Mid/Long hauler – 550-1775 miles
• Mid- mover – 50-70 mile/hr
• Mid- valued products –products with low time constraints
• Very large shipment
• Variability is middle
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Pipeline
• Long hauler
• Very slow mover – 3-4 mile/hr
• Very low- valued products – material
• Large shipment
• Variability is very low
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Intermodal Service• Rail and Trunk• Rail and Water• Rail and Air• Rail and Pipeline• Truck and Air• Truck and Water• Truck and Pipeline• Water and Pipeline• Water and Air• Truck and Water
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Trailer and Flatcar
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Containerized Freight
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Agencies and Small Shipment Services
• Freight forwarders
• Shipper`s association
• Transport brokers
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International Transportation• Physical plant
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Agencies and Services
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Transport Cost Characteristics
• Variable and Fixed Costs– Distance and Volume
• Common or Joint Costs
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Variable and Fixed Costs
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Cost Characteristics by Mode
• Rail
• Water
• Air
• Pipeline
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Rail
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Pipeline
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Rate Profiles
• Volume related rates
• Distance related rates– Uniform, Proportional, Tapering, Blanket
• Demand related rates
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Uniform
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Proportional
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Tapering
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Blanket
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Demand Related Rates
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Line-haul Rates• By product
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Class Rates
• By shipment size
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Other Incentive Rates
• By Route
• Miscellaneous Rates– Cube Rates– Import-Export Rates– Deferred Rates– Released Value Rates– Ocean Freight Rates