Transportation.

Transportation involves the physical movement or flow of goods. The transportation system is the physical link that connects customers, raw material suppliers, plants, warehouses and channel members. These are the fixed points in a logistics supply chain.

The basic modes of transportation are water, rail, motor carrier, air and pipeline. Water being the slowest mode with rail, motor carrier, and air following in order of speed of delivery. Generally, the order is reversed when looking at costs.

Selection of the appropriate carrier has several steps. First the firm selects a transportation mode. The shipper must compare the service desired with the rate or cost of service. Service usually means transit time or the time that elapses from the time the consignor makes the goods available for dispatch until the carrier delivers to the consignee. Pickup and delivery, terminal handling and movement between origin and destination account for the time involved in transporting goods.

The firm must balance the "need for speed" with the costs inherent in the mode of transport. This includes the rate charged for the service, minimum weight requirements, loading and unloading facilities, packaging, possible damage in transit, and any special services that may be desired or required. If next day delivery is imperative, the shipper will utilize an air freight carrier but will pay a premium price for such rapid service. If time is not a particularly critical element the shipper may elect to use rail or a motor carrier, or may even utilize a water carrier if time is inconsequential. Water-based modes of transportation are the least expensive and are used for commodity type products such as grain, coal, and ore. Some firms even utilize more than one mode of transportation, called intermodal transport, to move their goods.

Once a mode is selected, the shipper must decide the legal classification or type of carrier they wish to utilize: common, regulated, contract, exempt or private.

Common carriers serve the general public at reasonable prices and without discrimination. They cannot refuse to carry a particular commodity or refuse to serve a particular point with the scope of the carrier's operation. Common carriers are liable for all goods lost, damaged, or delayed unless caused by an act of God, an act of a public enemy, an act of public authority, an act of the shipper, or some defect within the good itself.

Regulated carriers are required to provide safe and adequate service and facilities upon reasonable request and are liable for damage up to limits established by the carrier. Regulated carriers can be motor carriers or water carriers and are subject to minimal federal controls.

A contract carrier does not serve the general public, but, rather serves one or a limited number of contracted customers. They have no legal service obligation. They often provide a specialized service and usually have lower rates than common or regulated carriers.

Exempt carriers are exempt from regulation regarding rates and services. Exempt status comes from the type commodity hauled or the nature of the carrier's operation. Exempt motor carriers are usually local and typically transport such items as agricultural goods, newspapers, livestock, and fish. Exempt water carriers transport bulk commodities such as coal, ore, grain, and liquid. Exempt rail carriers transport piggy-back shipments and exempt air carriers haul cargo.

A firm's own transportation is termed a private carrier. Private carriers are not "for-hire" and not subject to the same federal regulations as other types of transport. However, the carrier's primary business must be something other than transportation.

Once the mode and type of carrier is determined a final decision can be made based on other factors. Accessibility is one such factor. Some firms have geographic limits to their routing network. Others may not possess physical access to needed facilities or have the ability to provide the equipment and facilities that movement of a particular commodity may require. Reliability, the consistency of the transit time a carrier provides, is also a key factor. Finally, convenience and communication are other important considerations when selecting a carrier.

Measures that a transportation firm would use to judge its performance include: orders shipped on time, orders shipped complete, order preparation time, product availability, and transit time. From the customer perspective performance can be gauged from orders received on time, orders received complete, orders received damage free, orders filled accurately, and orders billed accurately.

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. The

system, once put in place, must be effectively managed. (Fair et al., 1981)

Traditionally these steps involved separate companies for production, storage, transportation,

wholesaling, and retail sale, however basically, production/manufacturing plants, warehousing

services, merchandising establishments are all about doing transportation. Production or

manufacturing plants required the assembly of materials, components, and supplies, with or

without storage, processing and material handling within the plant and plant inventory.

Proceedings of the Eastern Asia Society for Transportation Studies, Vol. 5, pp. 1657 - 1672, 2005

1661Warehousing services between plants and marketing outlets involved separate transport.

Merchandising establishments completed the chain with delivery to the consumers. The

manufacturers limited themselves to the production of goods, leaving marketing and

distribution to other firms. Warehousing and storage can be considered in terms of services for

the production process and for product distribution. 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 centres. These developments reflect

factors such as better transport services and pressures to improve logistics performance.

3.3 The Role of Transportation in Service Quality

The role that transportation plays in logistics system is more complex than carrying goods for

the proprietors. Its complexity can take effect only through highly quality management. By

means of well-handled transport system, goods could be sent to the right place at right time in

order to satisfy customers’ demands. It brings efficacy, and also it builds a bridge between

producers and consumers. Therefore, 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 competitiveness.

Transportation refers to the movement of product from one location to another as it makes its way from the beginning of a supply chain to the customer’s handle. In this exciting new broad look at the business of transportation, including Supply Chain Management, Logistics, & procurement. Freight transportation costs in the United States amount to about 6% of the GDP.

Many manufacturers & retailers have found that they can use state of the art supply chain management to reduce inventory & warehousing costs while speeding up delivery to the end customer.

Any supply Chain’s success is closely linked to the appropriate use of transportation. Wal- Mart has effectively used a responsive transportation system to lower its overall costs. At DCs, Wal- Mart uses cross-docking, a process in which product is exchanged between trucks so that each truck going to a retail store has products form different suppliers.

Meanwhile, the booming growth in shipments to & from China is creating both bottlenecks opportunities. Many major corporations have invested in significant buying offices in China, India, & elsewhere.

There are two keys players in any transportation that takes place within a supply chain. The shipper is that party that requires the movement of the product between two points in the supply chain. The carrier is the party that moves or transports the product. For eg, when Dell uses UPS to the ship its computers from the factory to the customer, Dell is the shipper & UPS is the carrier.

There are numbers of factors affecting carrier decisions:

Ø The vehicle- related is incurred whether the vehicle is operating or not & is considered fixed for short-term operational decisions by the carrier.

Ø Fixed operating cost is generally proportional to the size of operating facilities. This includes any cost associated with terminals, airport gates & labor that are incurred whether vehicles are operating or not.
Ø Trip-related cost includes the price of labor & fuel incurred for each trip independent of the quantity transported.
Ø Quantity-related cost are loading / unloading costs & a portion of the fuel cost that varies with the quantity being transported.
Ø Overhead cost includes the cost of planning & scheduling a transportation network as well as any investment in information
Technology.

A carrier’s decisions are also affected by the responsiveness it seeks to provide its target segment & the prices that the market will bear. The various modes of transportation include water, rail, intermodal, truck, air, and pipeline & package carriers. Water is typically the least expensive mode but is also the slowest whereas air & package carriers the most expensive & the fastest. Rail & water are best suited for low-value. Large shipments that do not need to be moved in a hurry. Air & package carriers are best suited for small, high-value, emergency shipments. Intermodal TL carriers are faster than rail & water but somewhat amore expensive. LTL carriers are best suited for small shipments that are too large for package carriers but much less than a TL.

Making Transportation Decisions in practice:
Managers should ensure that a firm’s transportation strategy supports its competitive strategy. Firms should evaluate the transportation function based on a combination of transportation costs, other costs such as inventory affected by transportation decisions, & the level of responsiveness achieved with customers.

Managers should consider an appropriate combination of company-owned & outsourced transportation to meet their needs.
Wal- Mart has used responsiveness transportation to reduce inventories in its supply chain. Given the importance of transportation to the success of their strategy, they own their transportation Fleet & manage it themselves. Transportation systems for the new economy need to be very responsive but most also be able to exploit every opportunity for aggregation, some cases even with competitors, to help decrease the transportation cost of small shipments. Managers must use the information technology available to help decrease cost & improve responsiveness in their transportation networks. Satellite based communication systems allow carriers to communicate with each vehicle in their fleet.

The supply chain goal is to minimize the total cost while providing the desired level of responsiveness to customers.

(II) Water transport

Water transport refers to movement of goods and passengers on waterways by using various

means like boats, steamers, launches, ships, etc. With the help of these means goods and

passengers are carried to different places, both within as well as outside the country. Within

the country, rivers and canals facilitate the movement of boats, launches, etc. Since the

goods and passengers move inside the country, this type of transport is called inland water

transport. When the different means of transport are used to carry goods and passengers on

the sea route it is termed as ocean transport. Let us know further about these two types of

water transport.

Ropeway

transport

Man driven Ropes

- Head or back

of human

being

- Carts drawn by

man

- Thelas (push

carts)

- Bicycle

- Rickshaw

Animal driven

- Carts

drawn by

animals

- Sledge

- Animal

Motor driven

- Scooter

and motor

cycle

- Auto

rickshaw

- Car

- Van

- Bus

Rail

transport

- Passenger

train

- Goods

train

Pipeline

transport

Pipes

Road transport

Different Means of Land Transport:Transport

I. Inland water transport

Inland water transport use boats, launches, barges, streamers, etc., to carry goods and

passengers on river and canal routes. These routes are called inland waterways and

are used in domestic or home trade to carry bulky goods. Passenger transport through

waterways is not so popular in our country. Inland water transport system exists only

in few states like. West Bengal, Andhra Pradesh, Assam, Tamil Nadu, etc.

II. Ocean transport

Ocean transport refers to movement of goods and passengers with the help of ships

through sea or ocean waterways. It plays an important role in the development of

international trade. It is also used for transporting goods and passengers in the coastal

areas. Ocean transport has its fixed route, which links almost all the countries of the world.

Sea transport may be of the following two types.

i. Coastal Shipping - In this transport, ships ply between the main ports of a

country. This helps in home trade, and also in carrying passengers within the

country.

ii. Overseas shipping - In this transport, ships ply between different countries

separated by sea or ocean. It is mainly used for promotion and development of

international trade. It is economical means of transport to carry heavy machines and

goods in bulk. Overseas transport is carried out on fixed routes, which connect almost

all the countries. In ocean transport, different types of ships are used to carry passengers

and goods. These may be classified as under.

a. Liners - A liner is a passenger or cargo vessel, which belongs to a regular

shipping company. These ships ply over a fixed route according to a

prescribed schedule or timetable.

b. Tramps - A tramp is a cargo ship, which does not make regular trips but

plies whenever cargo is offered to it. It does not follow a fixed route or a

prescribed timetable like that of liners.

Advantages of water transport

Water Transport has the following advantages:

a. It is a relatively economical mode of transport for bulky and heavy goods.

b. It is a safe mode of transport with respect to occurance of accidents.

c. The cost of maintaining and constructing routes is very low as most of them are naturally

made.

d. It promotes international trade.

Limitations of water transport

Water transport has the following limitations.

i. The depth and navigability of rivers and canals vary and thus, affect operations of

different transport vessels.

ii. It is a slow moving mode of transport and therefore not suitable for transport of

perishable goods

iii. It is adversely affected by weather conditions.

iv. Sea transport requires large investment on ships and their maintenance.

Different Means Water Transport:

Inland transport Ocean transport

Means Boats, Steamers, Barges, Launches Ships, Tankers, Submarines

(III) Air transport

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