Role of transport as an element in logistics

ROLE OF ROLE OF TRANSPORTATION TRANSPORTATION IN THE MOVEMENT OF IN THE MOVEMENT OF GOODS AND SERVICES GOODS AND SERVICES

EBO HAMMOND, CMILTInternational Diploma in Logistics & Transport (GIM PA)

TOPIC OBJECTIVES 1

• It is to help –Appreciate the role and importance of

transport in the logistics chain– Understand the general principles

underpinning transport in logistics– Identify the various carriers/modes and

characteristics–Apply principles and theories in

designing own distribution system 18/08/10 EBO HAMMOND-CMILT 2

TOPIC OBJECTIVES 2

• It is to help– Appreciate the role and importance of packaging

as it relates to transportation– Understand the role of unitization and

containerization and its importance in transportation

– Appreciate the risks in transportation of hazardous goods

18/08/10 EBO HAMMOND-CMILT 3

INTRODUCTION 1• Transportation plays a critical role in the entire

logistics chain• The chain is set in motion with orders from suppliers

for raw materials, semi-finished products, finished products, etc, which are transported from supply sources to production sites

• These raw materials are stored or sent directly to the plant to aid production

• Finished goods are then sent or transported through distribution centres to intermediaries for redistribution and sale to consumers


INTRODUCTION 2

• The management of transport services is an important element in logistics

• The interface between transportation and logistics systems could be described as consisting of Nodes and Modes

• The Node portion involves activities such as warehousing, goods handling, sorting, processing, etc. The Mode portion deals with transportation services in the movement of goods and services

• Transport is the link between nodes


CONCEPT OF NODES AND MODES 1


NodeNode NodeNode NodeNode NodeNodeModeMode ModeMode ModeMode

MODE- For movement or transportation of products/servicesMODE- For movement or transportation of products/services

NODE- For general processing and all handling apart from movementNODE- For general processing and all handling apart from movement



SOURCESOURCE

MODEMODE MODEMODE MODEMODE MODEMODE

NODENODE NODENODE NODENODE NODENODE NODENODE

CONSUMCONSUMPTIONPTION



Raw materials Generation

Transportation

Storage

Node

Node

Users

Mode

Mode

Mod

e

Mode

Source PoinSource Pointt

Consumption PointConsumption Point

CASE STUDY- SUPPLY CHAIN OF ELECTRICITY PRODUCTION –MODES AND NODES (INTERFACE BETWEEN TRANSPORT AND OTHER LOGISTICS ELEMENTS

DEFINITION OF TRANSPORTATION 1 The following synonyms could best provide a clue to

what transportation means- Convey, Move, Carry, Bring, Transfer, Ship

Transportation simply comprises all the various devices, equipment and related activities such as driving, maintenance, vehicles, etc harnessed in physically moving goods and services from point A to B which represents the nodes.

Transport provides spatial mobility which helps to reposition goods and services for consumer accessibility and possession.


DEFINITION OF TRANSPORTATION 2• It adds value to the logistics function by way of

providing time and place utilities. An efficiently managed transport system could reduce the overall cost of products to end-users.

• Transport organisations provide the following extra functions/services:– Packaging– Freight forwarding services– Distributors (wholesalers)– Corporate branding on vehicles– Warehousing/Depots– Reverse logistics management– Others


DEFINITION OF FREIGHT 1

• The following synonyms could best provide a clue to what Freight means- Goods, Cargo, Shipment, Contents, Stowage, luggage, etc

• Freight is anything, other than passengers, carried by a transport mode from point a source point to an end point

• It is usually carried for a fee; and from a consignor to a consignee


DEFINITION OF FREIGHT 2• Freight transportation is sometimes also

referred to as-– Cargo transportation– Physical distribution

• Freight transportation serves as the threaded needle (mode) that weaves the logistics elements (Nodes) together into a seamless logistics dress


STRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS I

• Some of the factors are as follows:– Globalisation; which has lengthened the physical distance covered

and also cost– Information, Communication and Technology; which has facilitated

the flow of information along the chain; helped shortened the chain– Socio-economic; which has increased demand and the need for

convenience thereby affecting choice of mode and speed of flow


Product Design

Raw Material

Sub-assembly

Final-assembly

Consumption

A C

BDGLOBAL ISATION OF PRODUCTION

STRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS I

• Some of the factors are as follows:

– Political; which has at a point integrated markets but on the other hand created physical barriers to transportation through varying legislations

– Environmental- use of green materials, degradation

– Competition; driving down margins, promoting innovation


STRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS II

• Some of the factors are as follows:– Dwindling Natural Resource; which

has resulted in seeking alternative sources of supply such as water, fossil fuel

– Rise of New Economic Powers blocs; which has switched and realigned economic resources flow and changing the balance of economic power and even impacting on political dynamics. Such economic powers are Asia Tigers, China, Brazil, India, South Africa, others


STRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS II

• Some of the factors are as follows:

– Natural Disasters; such as earth quakes, tsunamis, typhoons, floods , drought,. Etc further worsening depletion and destruction of resources

– Population Boom; coupled with economic development driving trade boom and cheap labour

– Financial Crisis (Credit Crunch)- dwindling investible funds for logistics and transport activities


ROLE AND IMPORTANCE OF TRANSPORT IN THE SUPPLY CHAIN

• The various roles played by transportation services in freight movement include the following:– Movement of goods and services physically along the

logistics chain– helps achieve the following logistics utilities such as Time

(When) and Place (Where) and supporting Form Utility – Help build strong brand image through vehicle branding

and marketing– Facilitates customer satisfaction through timely delivery of

goods and services


TRANSPORT PHASES IN THE SUPPLY CHAIN

• Transport movement along the supply chain can be segmented into THREE PHASES such as:– Inbound Phase- which moves mostly

raw materials, semi-finished, sub-assemblies, etc to be added to production. This is the input stage.

– Internal/Operations Phase- which moves goods and services within the confines of production or operations site

– Outbound Phase- which moves finished goods for packaging, storage or distribution to consumption points


Inbound Freight

Internal Freight

Outboard Freight

AVAILABLE MODES AND XTICS 1

There are different types of transport systems available for logistics organisations to choose for the movement of goods and services. The following are the key existing transport modes:◦ Sea transport (Maritime)◦ Road Transport◦ Rail Transport◦ Air Transport◦ Inland Water Transport◦ Pipeline


General Objectives for Mode Selection

It ensures that the goods are delivered safely and on time to the customer. General qualities guiding choice of carrier include:

●Speed of delivery

●Certainty of timing

●Freedom from interruption

●Avoidance of damage

●Avoidance of loss through pilferage

●Quality and/or impact of ancillary services


AVAILABLE MODES AND XTICS 2• Sea/Maritime Transport• This refers to movement of goods and services by the sea/ocean. The

following are the main characteristics of this mode:• Can move great volume of goods due to the availability of big ocean

liners• Generally less expensive in relation to some other modes• Generally less faster in relation to some other modes due to slow

turnaround time and actual voyage time• Has high fixed cost but low variable cost• It has high availability but for those countries which are not land-locked• There is generally flexibility in choice due to existence of many ports

around the world and number of alternative ships Mostly used for cargo consolidation, high volume, heavy weight and

relatively low cost freight.


Sea transport has the following advantages and weaknesses:

AdvantagesAdvantages DisadvantagesDisadvantages

Large volumes of cargo can Large volumes of cargo can be transported in one ship be transported in one ship on one voyageon one voyage

Ships are relatively slowShips are relatively slow

May be cheapest method of May be cheapest method of transporttransport

Ports suffer from Ports suffer from congestions congestions

Flexible particularly Flexible particularly following containerisation following containerisation

Not all ports are well Not all ports are well equipped and some have equipped and some have draught restrictionsdraught restrictions

Similarity in infrastructure Similarity in infrastructure and superstructureand superstructure

Port practices need Port practices need improvingimproving


AVAILABLE MODES AND XTICS 3• Road Transport• This refers to movement of goods and services by the road. It is the

most dominant mode of transportation in the logistics chain. The following are the main characteristics of this mode:– Can move small to medium volume of goods due to capacity constraints– Widely available. It is very ubiquitous– Widely accessible– Has low fixed cost but high variable cost– Moderate to high speed due to fast turnaround time and actual trip time– Faster transit time– High flexibility in choice due to high availability – High throughput and modal integration with other modes

Mostly used for break-bulk cargo, small to medium volume, variable weight and cost freight.


Road transport has the following advantages and weaknesses:


Any dwelling or work place Any dwelling or work place can be serviced by road.can be serviced by road.

Size of the load is restricted Size of the load is restricted by vehicle size and legislationby vehicle size and legislation

Routes can be changed at Routes can be changed at short noticeshort notice

Distance travelled determined Distance travelled determined by driver’s working hours and by driver’s working hours and legislationlegislation

Terminals are less expensiveTerminals are less expensive Speed circumscribed by lawSpeed circumscribed by law

Costs less than competing Costs less than competing transport meanstransport means

Roads may be congested Roads may be congested during peak periodsduring peak periods

Restrictions on heavy vehicles Restrictions on heavy vehicles in certain localitiesin certain localities

Land severance and emissionsLand severance and emissions



• Rail Transport• This refers to movement of goods and services by the rail (tracks).

The following are the main characteristics of this mode:– Can move great volumes of freight– Generally less expensive in relation to some other modes such as road– Generally less faster in relation to some other modes due to slow turnaround

time and actual journey time– It is dependent on other modes for completion of delivery, especially road– High fixed costs, relatively less variable costs– Allows for easy unitization of freight– Low accessibility

• Mostly used for cargo consolidation, high volume, heavy weight and low cost

freight.


Rail transport has the following advantages and weaknesses:


Large volumes of cargo can Large volumes of cargo can be transported on one voyagebe transported on one voyage

Investment in infrastructure Investment in infrastructure and maintenance is and maintenance is expensiveexpensive

May be cheaper than other May be cheaper than other modes (except sea)modes (except sea)

Is limited in volumes it can Is limited in volumes it can transporttransport

Can carry different loads Can carry different loads Network construction has Network construction has major impact on the major impact on the environmentenvironment

Can link with other transport Can link with other transport modesmodes

Operating practices need Operating practices need improvingimproving



• Air Transport– This refers to movement of goods and services by air. The

following are the main characteristics of this mode:– Limited in volume and weight it can carry– Highly expensive carrying cost in relation to some other modes

such as road– fastest mode in actual journey time– It is dependent on other modes for completion of delivery,

especially road– High fixed costs, relatively high variable costs– Medium to high accessibility

• Mostly used for cargo consolidation, low volume, low weight, high cost freight.


Air transport has the following advantages and weaknesses:


Speed of travelSpeed of travel Inflexible as aeroplanes have Inflexible as aeroplanes have to land and take off in an to land and take off in an airport which may be away airport which may be away from final destinations.from final destinations.

Has a good safety recordHas a good safety record Aeroplanes are noisyAeroplanes are noisy

Employs highly trained Employs highly trained professionals professionals

Expensive when compared to Expensive when compared to other transport types.other transport types.

More effective where the More effective where the goods are high value and goods are high value and time sensitivetime sensitive

Terminals very expensive to Terminals very expensive to construct and maintainconstruct and maintain


• Inland Water Transport– This refers to movement of goods and services by inland

water bodies. The following are the main characteristics of this mode:

– Can move medium to high volume of goods – Low cost alternative to road transport– Low accessibility– No right of way– Long transit times– Allows for roll-on-roll-off (RORO)– Low speed

• Mostly used for cargo consolidation, high volume, heavy weight and relatively low cost freight.


• Pipeline Transport– This refers to movement of freight by the pipeline. This mode

is primarily used for liquid or gaseous ‘freight’. The following are the main characteristics of this mode:

– Can move great volumes of liquid freight– Own right of way– Not suitable for general transport– Less expensive in relation to other modal options– Low fixed costs, relatively less variable costs– Security and safety problems– Low accessibility

• Mostly used for cargo consolidation, variable volume and variable cost freight


OPERATIONAL FACTORS CONSIDERED IN ASSESSING MODE CHOICE

• Logisticians need to take into considerations the following factors when selecting the mode(s) to be used for freight haulage. The key factors are as follows:– Type of Product to be transported; solid, liquid, gaseous, living, etc– Value of product to be transported– Weight and volume– Customer expectation and demand– Mode capability; is there enough space to carry product– Distance to be covered– Cost of mode– Terminal and ancillary infrastructure of particular mode– Transit time and reliability– Accessibility– Security and safety– priority


Modal Choice Matrix


Size of order/load

100T Road Road/rail Rail/sea Sea

20T Road Road Road/rail Rail/sea

Pallet Road Road Road/rail Air/sea

Parcel Post/road

Post/road/air

Post/road/air

Post/air

Short Medium Long Very long

Delivery distance

KEY FREIGHT TRANSPORT CONCEPTS 1• Inter-modal Transport (Modal Split)• This simply refers to where more than one mode or different modes of

transport are used to move freight from point A to point B. • ‘The movement of goods in one and the same loading unit or vehicle,

which uses successively several modes of transport without handling of the goods themselves in changing modes’- The European Conference of Transport Ministers.

• Inter-modal (modal split) transport helps facilitate freight movement globally and over different terrains and environmental conditions.



•Inter-modal Transport (Modal Split)Intermodal or combined transport has increased because of:● Globalisation ● The extension of market areas● Concerns on the impact of transport on the

environment● New improved systems of modal interchange● Increasing road congestion● Restrictions on vehicle size, weight limits and

operating times● containerization

KEY FREIGHT TRANSPORT CONCEPTS 1 cont…KEY FREIGHT TRANSPORT CONCEPTS 1 cont…


•Inter-modal Transport (Modal Split)Inter-modal Transport (Modal Split)The following modes are possible:● Containerisation using road, rail, sea and inland

waterway● Sea transport combined with road transport eg.

Roll-On Roll-Off● Sea transport combined with rail transport● Road and rail combinations eg. Trailer on truck

or truck/trailer on train (piggyback)● Swap body systems for road/rail use

KEY FREIGHT TRANSPORT CONCEPTS 1 KEY FREIGHT TRANSPORT CONCEPTS 1 cont…cont…

KEY FREIGHT TRANSPORT CONCEPTS 2• Modal Shift• This is a current concept being pursued by Japan. This

simply refers to a conscious effort to offload freight from one dominant mode (especially road) to other modes (rail/sea). The main factors driving the pursuit of modal shift are:

• Environmental; global warming• Cost savings• Energy • Labour shortages and savings• Traffic • Sustainability• Prevention of deterioration of infrastructure of a mode


KEY TRANSPORT CONCEPTS

• Cargo Consolidation• This simply refers to the aggregation of small

amounts of cargo (mostly from different points into bulk cargo for movement into mostly a single point or destination). Cargo consolidation facilitates inter-modal transportation and modal shift.

• Light trucks move small disaggregated cargo to small depots; a heavy cargo truck moves aggregated cargo (consolidated goods) collected from these depots to a central distribution centre


KEY TRANSPORT CONCEPTS • Break-Bulk Cargo– This simply is the reverse of cargo

consolidation. It is the disagregation of bulk amounts of cargo (mostly from one point, into small different cargo for movement into mostly multiple points or destinations.

– A heavy cargo truck moves consolidated goods to distribution centre; light trucks then move in to pick disaggregated goods to different destinations (depots).


CASE STUDYFORMER CARGO TRANSPORT SYSTEM OF GHS


GHSGHS

GHSGHSGHSGHS

GHSGHS

GHSGHS

GHSGHS

GHSGHS

GHSGHS

GHSGHS

NationalStore

RegionalDistricts

700km300km

500km250km

NEW CONSOLIDATED CARGO PHYSICAL DELIVERY MODEL

NationalStore

GHSGHSGHSGHS

GHSGHS

GHSGHS

Regional Store

Hospitals

CONSOLIDATEDCARGO BREAK-BULK

CARGO


PACKAGING AND TRANSPORTATION

This refers to the packaging of goods to facilitate transportation. It is the art, science, and technology of preparing goods for transport and sale and also a means of ensuring safe delivery of a product to the end-user at overall competitive price. Packaging impacts greatly on transportation efficiency and ensures Time, Place and the maintenance of Form Utility.



• Some of the roles packaging plays in facilitating transportation are as follows:– Protection and preservation from physical,

chemical and mechanical damage– Easy transportation– Easy stowability (able to fully utilize truck space)– Facilitates ease of handling (loading and

unloading)– Facilitates unitization of goods– others



• It must be noted that during transportation of goods through the supply chain, there is the likelihood of breakage, pilferage, deformation, evaporation, which sometimes reduces the quality and quantity of the products. Good packaging helps to prevent and reduce some of the problems mentioned.


18/08/10 EBO HAMMOND-CMILT

• Unitization refers to where goods are packaged or grouped together, in mostly equal quantities, form/shape, weight, height, length, etc to aid handling (loading and unloading) and facilitate transportation.

• Unitization of goods helps achieve the following:

– facilitates inventory management (warehousing, stock taking, loading and unloading)

– Achieve full stowability of transport space– Facilitates smooth transportation

UNITIZATION AND TRANSPORTATION

44

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• Basic device(s)/technology that support and revolutionized unitization are palletization (e.g. wooden pallets) and containerization (e.g. large shipping containers). These in effect have impacted greatly on logistics systems.

• Pallets are load carrying devices which facilitates goods handling. They serve a dual purpose in that they enable goods of similar nature and size to be made up into unit loads and palletized loads can be more easily handled mechanically which reduces the effort required to handle and transport them. The most widely used types are wooden pallets.

UNITIZATION AND TRANSPORTATION

45

CONTAINERIZATION AND TRANSPORTATION

• Containerization is at the heart of international multi-modal freight transportation

• However other modes such as Air use a slightly different type of containers; pipelines transportation are not usually amenable to containerization. Products are moved virtually nakede

• Containerisation or the movement of goods in specially designed units commenced in the 1950s.

• Containers are usually rectilinear/rectangular boxes constructed of steal. Most common sizes of container available are 20ft, 30ft, 40ft and 45ft in length.

• They are produced under International Standards Organisation (ISO) defined specifications.


CONTAINERIZATION AND TRANSPORTATION- FUNCTIONS

• It simplifies the movement of bulk goods across different transport modes. In addition, containers help achieve the following:– Enables goods consolidation– Reduction in goods handling– Reduction in individual packaging requirements depending on the

load within the container– Protection of goods from damage– Provides goods security – Ensures safety of goods– Faster throughput during transit due to no or limited handling at

terminal points– Door-to-door service possible from factory


CONTAINERIZATION ADVANTAGES

The advantages of containerisation include:

●Less packing is needed for shipments, producing substantial cost savings

●The cargo is able to arrive in a better condition

●As a capital-intensive transport system, rates are more competitive

●Much quicker, more reliable transits are possible

●Faster payments of export invoices is possibleFaster transits, usually coupled with more reliable schedules, and ultimately increased service frequency, tend to encourage importers to hold reduce stocks. This results in savings in warehouse costs, lessens risks of obsolescent stocks and reduces importers’ working capital.


CONTAINER CLASSIFICATION

Containers are classified as:●General cargo containers:

oGeneral purpose containersoSpecific purpose containers:

o Closed ventilated containerso Open top containerso Platform based containers (open sided)o Platform

●Specific cargo containers:oThermal containersoTank containers for liquid and gasesoDry bulk containersoNamed cargo types


CONTAINER CLASSIFICATION

●General cargo containers are so called because most types of dry cargo can be carried in these containers. ●Open top containers have a solid removable top or a

canvas top and are suitable for cargo that is too large or too awkward to be packed in via the doors of the container. Also used for “overheight” cargo.●Refrigerated containers are insulated units with

refrigeration as well as heating equipment. These are units used for the transport of perishables and any goods that are sensitive to fluctuations in temperatures.


LECTURE REVIEW

• Definition of Transportation• Definition of Freight• Factors impacting on Transportation• Containerization, Unitization and

Packaging as relating to Transportation• Freight Transportation and Distribution

Concepts• Others


CONCLUSION

• Transportation plays a critical role in facilitating the movement of goods and services from point of origin to point of consumption.

• It is also a value-added activity. Its efficient management will greatly increase the competitive advantage of the organisation over competitors



Education

Role of transport as an element in logistics