Business Logistics Management

6. Transport Fundementals

Importance of an Effective Transportation System

• Greater competition

• Economics of scale

• Reduced prices

Greater Competition

Economics of Scale

Reduced Prices

Service Choice and their Characteristics

• Service choice– Rail, Trunk, Water, Pipe, Air

• Price

• Transit time

• Variability

• Loss and damage

Price

Transit Time

Variability

• Weather

• Traffic congestion

• Number of stops

• Consolidate shipments

Single Service Choice

• Rail

• Truck

• Air

• Water

• Pipeline

Rail

• Mid- hauler – 720 miles

• Slow mover – 22mile/hr

• Low/Mid-valued products - material

• CL and LCL

• Mid-shipment

• Variability is low

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

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

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

Pipeline

• Long hauler

• Very slow mover – 3-4 mile/hr

• Very low- valued products – material

• Large shipment

• Variability is very low

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

Trailer and Flatcar

Containerized Freight

Agencies and Small Shipment Services

• Freight forwarders

• Shipper`s association

• Transport brokers

International Transportation• Physical plant

Agencies and Services

Transport Cost Characteristics

• Variable and Fixed Costs– Distance and Volume

• Common or Joint Costs

Variable and Fixed Costs

Cost Characteristics by Mode

• Rail

• Water

• Air

• Pipeline

Rail

Pipeline

Rate Profiles

• Volume related rates

• Distance related rates– Uniform, Proportional, Tapering, Blanket

• Demand related rates

Uniform

Proportional

Tapering

Blanket

Demand Related Rates

Line-haul Rates• By product

Class Rates

• By shipment size

Other Incentive Rates

• By Route

• Miscellaneous Rates– Cube Rates– Import-Export Rates– Deferred Rates– Released Value Rates– Ocean Freight Rates