After this unit you should be able to answer following questions A. Concept Questions B. Short notes 1. Containerization 2.

Nodal Points 3. Principles of transportation 4. Transportation policy 5. Freight rate structure 6. Inland Container Depots 7. Transportation infrastructure 8. Transportation modes 9. Material handling 10.Inter modal transport 11.Piggyback, fishy back, birdy back 12.TOFC, COFC 13.Unit train 14.Milkruns C. Section II descriptive questions [10 marks each] 1. What is transportation mode? Describe various modes of transportation, their advantages and cost elements. 2. Explain various pricing factors for transportation. 3. What is transportation performance? Distinguish between DRP & MRP.
4.

What factors are required to be taken into account while selecting mode of transport to achieve minimum cost? Explain.

5. What is an inland container depot [ICD]? What type of coordination with transportation will be required?
6.

Discuss principles and functions of transportation.

1

7. What is transportation environment and who are the participants in transportation decisions?
8. 9.

Explain transportation infrastructure. What are nodal points? What is their significance in transportation network? Explain how Selection of Carrier is done? Transportation

10.

11. How transportation policy is chalked out for a company? Transportation functionality Transportation is the most visible of all functions of logistics and high contributor to logistics cost. We can see trucks, containers and wagonloads of material being moved from place to place as an activity directly associated with trade and business. We should also appreciate that this is an activity that adds highest amount of cost to the activity of making inputs and outputs available to consumers. Transportation function moves the products to meet customer expectations at minimum cost. Functions of transportation 1. Product movement: What is moved? Raw Material, Semi Finished items, WIP, Finished goods, packaging material, rejected material - movement is required up or down the supply chain. How is this done? What Resources are used? Resources used by transportation: A. Temporal - product is locked up during transit, hence inaccessible. We have to spend a positive amount of time in transporting the material. Time is a

2

resource [temporal resource] that is expended in transportation. During the time the product is locked up costs are incurred in proportion to the time B. Financial - several cost elements like administration costs, salaries, maintenance costs are expended. Loss on account of product loss and damage also needs to be accounted for. Fuel consumed is a big cost in transportation C. Environmental – this activity is a fuel guzzler, eats up natural fuels like oil, directly and indirectly. - 67% of all domestic fuel usage in the US is by transportation activity. Creates congestion, air pollution and noise pollution. Environmental cost is tangible and substantially intangible. As transportation utilizes temporal, financial and environmental resources items must be moved only when product value is enhanced 2. Product Storage: Temporary storage in stationary vehicles or Vehicles kept moving on a circuitous route - Product storage is expensive in a transport vehicle. But some times keeping overall cost in mind this is adopted. A. When unloading and loading is more expensive than storage B. When storage space is limited. [Situation when inventory levels are very high] Principles of transportation 1. Economy of scale

3

economy of scale and economy of distance are fundamental. These parties have very important roles to play in transportation environment. Economy of distance The transportation cost per kilometer comes down as the distance moved increases. Carrier is the service provider who carries the consignment from shipper to consignee. When alternate transportation strategies are evaluated to meet customer service expectation. This benefit is Economy of scale 2. The fixed costs and costs like overheads of loading and unloading are spread over the distance through which the load is moved. Hence in order to gain benefits in terms of reduction in transportation costs logistician tries to consolidate the bulk and then ship the consignment rather than shipping half truck loads or half container loads. Shipper: shipper is a party who wants to transport the goods to his customer in a business transaction 2. Parties to a transportation decision are those who have a stake in the transportation. Hence transportation is planned in a single long lap rather than number of short laps to reach the destination. They are seller. Participants in Transportation Decisions Normal commercial transaction has limited number of parties to the business decision. But a transportation decision has number of parties to the decision. Consignee is the party to whom the goods are sent 3. buyer and directly or indirectly government. 4 .It is common knowledge that per unit transportation cost comes down as the bulk of the items transported increases. They are 1.

Their demand cannot be met without transportation. Public want goods produced at different parts of not only country but also world. They look at transportation from this angle. He gets paid for his service. 5. Government represents general public whose interest they have to protect. fuel and vehicle costs. They want the business to flourish. They are the basic elements of transportation. Flexibility in pick up and delivery times to consolidate movement. Government has a role to play as they are keenly interested in transportation and have a stake in it. Carriers’ strike in our country is a repetitive phenomenon to protest against role of government. They also have to provide the necessary 5 . These are the needs of the above parties. at the same time benefits to reach uniformly all over the country. Transportation makes business happen which is fundamental to the economy of any society.4. Government: government while playing their role exercise control on all the players. Business between them initiates the need for transportation Carrier: What does he want? Revenue maximization and cost [labor. Carrier facilitates the business between shipper and consignee. minimum cost. General public is another party who has a large stake in the transaction involving transportation. zero loss and damage. Roles and perspective of each party Shipper and consignee: Predictable and minimum transit time. He adds value to the supply chain by moving the material from supplier to the customer. timely exchange of information and invoicing. taxation] minimization. minimum taxation. Government also collects tax on the transaction. specified pick up and delivery times. Economic prosperity to the society is the objective of the government of the day.

Eg. oil spills due tankers carrying cargo of crude oil. They have concern for safety as accidents of various kind have been a bye product of transportation. Public What do public want? • Public as consumers trigger transportation activity by demanding products and services of high quality from all over the world at minimum cost. Hunger deaths in India in spite of self-sufficiency in food production are examples to illustrate the interest of the government. Government controls carrier rates and licenses. Conflict of interests raises issues that interrupt smooth transport of goods in the country. What is transportation mode? 6 . has to bear the burden of tax. rise of noise levels. Government wants taxes to support above activities in national interest. Ports and Harbors. Degradation of atmosphere and water. Degradation of the environment is another threat about which public are concerned as transportation is at the root cause of many such concerns. When these parties with separate and distinct interests interact transportation environment is created. Airports and ATC. Government supports transportation by providing a network of roads.infrastructure to support transportation. Government as the main arbiter steps in to iron out these differences in the interests of business. Ultimately the consumer. Government owned carrier service is probably the cheapest option for transportation available to business. general public. It is said that one of the causes that expedited the break up of Soviet Union was the weak infrastructure on account of which products could not be transported to far-flung parts of the country.

Road. Mode selection is an important decision in transportation strategy as it has an impact on cost transportation. If ship is the vehicle used. Water. Transit capital remains blocked during transit time and unavailable for use. when the transit time is quite large the inventory can become redundant when it arrives at the point of use. Pipeline & Air are well known modes of transport extensively used in logistics. Longer the inventory is in transit larger are the costs. ports etc. There are several options available now for moving goods and services from one place to another. These modes have emerged over a period of time representing changes in technology and contemporary business environment. Rail. then we know that it is associated with other parameters of transport like water. We know 7 . risk or liability. The vehicle used indicates all other parameters of the mode. March of bullock cart mode to mode of aviation is the contribution of Science & Technology to logistics performance. smoothness of passage & flexibility Impact of transportation mode on other costs associated with transportation • Movement costs: cost of power to drive the vehicle of transport depends on the mode selected • Inventory costs: It is quite clear that inventory holding costs are temporal costs and are directly proportional to the transit time. We can say such important features are. transit time.Mode of transport identifies transportation method or form. Various important features of these modes like transportation time are discussed elsewhere in these notes. Science & Technology have played major role in development of these modes and relevant infrastructure. Mode of transport determines the transit time and thereby influences these costs • Obsolescence: Specially.

Insurance: This cost obviously proportional to risk of damage and loss in transit as this is the liability of carrier.that in the changed environment. So customer service should be raised to be able to meet customer expectations. But rise in customer service beyond a certain level does not result into increased revenue. 8 . In other words it is only cost and not value. Pilferage: This cost can be eliminated by switching to options like container transport Customer Service Costs: Shortage of product when demanded by the customer leads to customer dissatisfaction and thereby loss of sale for the company. product life cycles are shrinking and hence this cost becomes highly relevant. The second method is cheaper than the conventional. But the current thinking is to reduce response time to customer need rather than increase the stock. Other situations are product deterioration time & expiration date of the product. This is done by improving information flow to anticipate demand and reduce transit time by changing to faster mode of transport. When we try to raise customer service level costs are incurred. This will also depend on handling system. companies stockpile to raise service level. Breakage: This depends on smoothness of transit and handling system associated with the mode. • • • • • Packaging: These costs are mode dependent as bad road condition needs robust packaging and smooth transit does not need such packaging. as costs of inventory are well understood. Conventionally.

shape & speed Right of way. Rails. Prime movers – the powerhouses moving the vehicle of transport shortage of which seriously affect transportation. What are various features of modes or modal characteristics? Modal characteristics are features of a particular mode that indicate the relative importance of that mode. space for movement of vehicles. • Carrier organizations – are the transportation service providers in business. Railways. limitations on speed. airways.passage to move on. Elements of transportation infrastructure • • • • Terminal facilities . If this infrastructure is inadequate transportation gets slowed down resulting into a major obstacle in the growth of trade and business in that area. roads. platforms. airlines. ships or wagons depending on the mode.well maintained loading unloading facilities.Transport infrastructure Infrastructure is the main facilitator for any activity to take place. Transportation is their core business. roadways. How do we measure relative importance of each mode? We measure relative importance of each mode as of now or over a specific time span by 9 . railway yards Vehicles. Good service provides a vital fillip to business and trade. shipping lines are service providers. Their size. If we use this particular passage. Shortage of good locomotives impairs the utility of railway as a mode of transport.trucks. For transportation to take place a strong infrastructure is primary. By measuring these features one can determine the relative importance of each mode. height etc. weight.

measuring the modal characteristics. Rail net work stands for maximum tonne kilometers moved in India now. This a major step for facilitating movement of goods through out the country at a very low cost for promoting trade & business in the country. Revenue: is the amount of transportation business in rupees or dollars transacted by a mode. This trend is quite relevant in India too which has forced the railways to assume a 10 . Modal characteristics are System mileage. This is a better measure as this indicates the tonnage shipped by this mode as well. As a result rail net work is facing very stiff competition there. Post world war business experienced auto boom and rapid spread of road network in the US. Nature of traffic composition: what variety of goods are moved by this mode is a measure to indicate the spectrum of goods handled. nature of traffic composition and revenue. Like total length of roads in the road network in miles or kilometers is System mileage for road as a mode. Traffic volume: is the amount of ton kilometers moved by a mode. This measure explains to what extent road is being used or how popular in business as a mode of transport today. we find that 37. RAIL NET WORK Rail network is fully owned and operated by the government in India.8% of total tonne kilometers moved in 1982 in India. Traffic volume. This speaks of the flexibility of the mode. If we try to compare these figures with US a much more prosperous economy. In simple terms how many rupees worth material is shipped in this mode.4% of ton-miles moved were by rail in 1990. Rail network accounts for 226 billion tonne kilometres and 55. thereby being an important mode of transport in the country. Importance is the popularity or wide spread usage of this mode in business. System mileage: Mileage covered by the modal net work.

All of these are in vogue in the US and some can be seen in India. It will not be very long before we see all of them here. Various modes of transport are used for taking the parcel to the addressee by this business.entire train carrying a single product that can go directly to the customer without getting shunted off in marshaling yards.flexible units with extended chassis that can hold ten containers. In the US.containers in two levels 11 . • • • • • Enclosed tri-level automobile car Cushioned appliance cars Unit trains . We can see an example of this practice in courier business. inter modal transport by railways through alliances and acquisition is practiced to provide hassle free service to customers. Wooing raw material extractive industries that are away from waterways is an example of this customer friendly policy. Articulated cars . Development of Specialized Equipment: as a result of above change in thinking several special equipment are developed to attract customer in an environment of competition.friendly posture in terms of service offered to customers who were taken for granted by the administration until now. switching yards. Double stack containers. Rail network needs a high capital investment due to right of way. To capitalize on this basic advantage railways focus on specific products rather than on broad range. terminals but it operates with low running costs.

fertilizer. unloading. Hunger deaths in a country that is self sufficient in food production is the indicator of our national logistical performance. 1. Too many would be costly and too less would not make the desired change. Hence the responsibility for logistics of those items falls on the state. Problems of our distribution system are well known what is produced never reaches the consumer in time and in good shape. On the other hand. necessary facility for inter modal handling. 3. In the value chain of such commodities. state also has the responsibility to distribute essential commodities through the public distribution system [PDS]. cement etc that are to be made available at consumption centers. State owned rail network could link these nodes to the best advantage of state and thereby to that of national economy. Rail network is the cheapest mode of transport for hauling bulk material in the country. Some characteristics of nodal points are as under. State also owns the network of railways that encompasses entire country. in spite of liberalization. Bulk of material transported is either produced or in some form controlled by the state. state exercises immense influence on the national economy. if the state develops some facilities or nodes. There should be facilities for loading. Nodal points should be closer to consumption points. Nodal points should be connected to consumption centers by roads 12 . Shipments from the nodal points would be by road in trucks or bullock carts 4. pages [343 to 350] In the context of Indian economy. steal. Number of nodal points would depend on volume of distribution. Terminal and shunting facilities are required at these places. KKK. Such materials are coal. large amount of benefit may be derived by way of movement consolidation. Nodal points should be well connected by rail network. 2.Nodal points in distribution system [ref.

High flexibility and speed: this is the strength of roadways.8% by railways. as in railways road transport reaches the goods to the consignee very fast. Nor any other mode can handle the variety as roadways do. Normally. generally 200kms separate one nodal point from another. nodal points are district headquarters where necessary operational support can easily be available. as we saw earlier. Development of such nodal points in the country would give a shot in the arm to logistical operations in the country for essential commodities and bulk materials. post world war. ROAD TRANSPORT Road transport is rapidly pulling the carpet from under the feet of railways. This is 44. Nodal points service an area with a radius of 100kms. As there is no need for shunting and waiting for. roadways moved 179.2% of total tonne kilometres moved by all modes as against 55. Important features of this mode of transport are discussed below.2 billion tonne kilometers in 1982.5. Its popularity is growing everyday. In India. No other mode can connect any given pair of shipper & consignee as roadways. 13 . So. 6.

Vehicle availability: limited availability of trucks poses a constraint. scarcity is experienced once in a while.Ultimate mode of transport: irrespective of the mode chosen ultimately the consignment reaches the doorsteps of the customer by road Low capital cost as compared to railways: railways obviously need huge amount of capital for setting up the infrastructure needed for movement of goods by rails. Maintenance and spares costs and availability of service facilities: as the road network is quite extended and reaches deep in the rural India nonavailability of such services is a problem. There is a feeling that this law is now outdated and new legislation should made to tackle the challenge of current business environment 14 . Octroi: is a long-standing grouse of carriers. We have experience of transportation contractors or carriers going on strikes to project their problems with the government. Disputes with government: on account of conflicting interests between the parties to transportation decision. This feature makes roadways ideal for small shipments over short distances. Octroi posts are notorious for delays and harassment of carriers Old Motor Vehicles Act: the legislation that controls movement of vehicles on the roads is an important law for this business. Occasional fuel shortages: as the fuel is not available in full measure in the country internally. Now as more and more truck manufactures have come into business this difficulty is likely to be short lived. Operating costs are higher: due to fuel requirement and higher labor requirement. This feature along with flexibility forms the formidable strength of this mode.

Main features of water transport are the following. Water transport is classified into deep-water transportation and navigable inland water transportation or domestic water transportation on lakes. Inland water Transport is not used to its full potential in India although we have used mechanized Inland Water Transport [IWT] since early 1800. Developments in this area Entry of several manufacturers of trucks and trailers is relieving the strain from this business. Lack of policy. Mechanized water transport came into being in the form of steamships since 1800. Construction of expressways and a national grid of highways is another important step in this direction. Business is known to have existed between far off lands for a long time in the past. rivers or canals. lack of clarity in thinking receding water levels in rivers and tough competition offered by other modes of transport appear to be the hurdles. Restrictive permits: carriers resent restrictive regime of permits and licenses imposed by the government all over the country. • • • • Low capital costs and low operating costs Low speed Capacity to carry huge bulk Limitation due to availability of harbor 15 . Main advantage of water transportation is its capacity to move extremely large shipments at a very low cost.Bad and unsafe road conditions: pathetic condition of our roads a major stumbling block for business which causes delays. accidents and damage. WATER TRANSPORT This mode is the link between countries separated by water. diesel driven ships came into existence since1920. Sailing vessels existed since far away times.

Pulverized dry bulk material . Pipe lines are stationary 16 . More than 5. crude. vapors and solids in powder form are also transported in pipelines. due to right of way and laying of pipeline.natural gas. Slurries .• • • Maneuverability is low due to size Deep-water ships designed for ocean and lakes are limited to deep-water ports Shallow water vessels like diesel towed barges are flexible but are limited by their range of operations and speed PIPELINES What is transported in a pipeline? Generally liquids like oils. • • • • Not flexible by nature. LPG. and lowest operating costs [not labor intensive].coal slurry. huge quantity of water is necessary which is a concern for environment.cement by hydraulic suspension Main features of this mode of transport • • • Reliable all weather means of transport Low energy consumption Pipeline being under ground space occupation is minimal Pipeline operates all the time except when it is shut down for maintenance No empty container or wagon to be brought back Highest fixed costs. In India pipeline is used for transporting iron ore. petroleum products are transported in a pipeline. in India LPG pipeline is in existence. In India pipelines are extensively used for transporting crude and petroleum products. In addition to the products above slurries. Gases and vapors . lime. iron ore. gases.000 km of pipeline exists in India for crude and petroleum products.

this transport mode is used in emergency rather than in normal times. Rope way connects point of supply and demand by shortest route. This mode is good when gradients are steep as road or rail would take a very long route to negotiate the gradient. • Test marketing is easy. Products can be shipped directly from the factory as time is of high importance 17 . But operating costs are • Air transport brings distant markets closer .• • Physical state of the commodity to be transported is a limitation. This mode of transport can release capacity of other modes for transport for essential commodities ROPE WAYS Used for transporting materials in hilly and otherwise inaccessible area. Moving entire facility to meet peek demand. • Speed of transport is highest highest • Fixed costs are lower than rail or road or pipe line. AIR TRANSPORT Generally. Fruits produced in hilly area are brought to the low land for further transportation to consumption centers.perishables market in gulf countries • Overcomes the hassle and cost of setting up depots and service centers overseas • Full potential of peak seasonal demand can be exploited. Rope way causes minimum ecological imbalance.

These rates are structured round some principles. C. Distance at min 18 . Semi fixed costs: • Salaries of the staff • Miscellaneous maintenance expenses directly related to running of the transport vehicle. Vehicle utilization: Carrier likes to gain maximum mileage out of his vehicle. E. Should cover actual cost of transportation: fundamental principle is that the rate should cover the cost without fail. war effected sea routes 2. bad roads. Factors influencing cost of transportation A. Variable costs: • Cost of fuel and lubricants • Maintenance directly attributable to a particular trip. Hence the carrier would like to run his vehicle at top speed to cover max. If vehicle is idle it is a big loss to the carrier organization. Some of the principles are commercial nature and some of them are structured by the state.Freight rate structure Freight rates are transportation rates charged by carriers for shipping the goods to the consignees premises.g. Damage to the vehicle and also the cargo. Principle of freight rates: 1. Hilly roads. Fixed costs: • Interest on capital invested in the fleet • Depreciation • Insurance premium • Administrative overheads and expenses on fixed facilities B.

Hence vehicle can not be driven fast. If the destination is known for this kind of delays carrier would charge higher rates. insurance]. Such goods are detrimental to the safety of the transport vehicle and operating staff. • Stowability. 3. formalities. O • Nature of goods. But the cost incurred by the shipper while 19 .time. When the load has an odd shape speed of the vehicle is reduced to accommodate the center of gravity. shape and size of the product. Quote higher rates if following are not conducive to the above • Road conditions are bad. If the destination does not offer opportunity for a return load carrier asks for a higher rate as would not be able to utilize his vehicle during return trip. But the other way round probability of return load is very low. • Density. While structuring the rates carrier would like to charge more if opportunity for maximum utilization is limited. So he hikes his rates when the consignment is light. Hence rates are high when such goods are shipped. Traffic Bearing Capacity: transportation adds value by making the product available to the customer. This brings down the utilization apart from being risky. • Terminal detentions [congestion. corrosive[liability.]: a delay at the terminal brings down vehicle utilization as the vehicle is idling. for loading unloading (handling) etc. Hence the carrier doesn’t get paid for the full load. • Obtaining a return load [market factors]. hazardous. consignment light by weight: when the consignment is light by weight the truck becomes full without full load being loaded. Normally if the destination is a production center one would always find return trip to consumption center.

♦ Area of operation. capital investment and margin for reasonable return on investment.transporting should not outweigh the value added. The carrier structures rates keeping this principle in mind. 20 . 5. Selection of Carrier Following care is to be taken while selecting a carrier for shipping the consignment to the consignee. Is it professional? Family or proprietorial? ♦ Volume of business or business turns over. Business should generate enough funds to provide for future development of business. 6. 4. Government Policy: freight rates are controlled by the state for promotion of certain type of trade and development of certain type of industry as per the industrial policy prevalent at that time. ♦ Shipper should carefully see constitution of the carrier’s constitution to assess what kind of an organization he has to deal with. the extent to which the carrier can reach the goods in the country. the length and breadth of business. It should also compensate entrepreneurial time and efforts. Freight rates are hiked or depressed by state the to meet the objectives of the policy. The freight is expected to generate enough money to cover all these requirements. Public use: state introduces the principle that the transportation of essential commodities should be done at a lower rate. to get an idea of the infrastructure the company can afford to provide for business. Profit: Freight rate should cover costs of operation.

highly flexible 21 .most expensive. ♦ Ask for up to date clients list for seeking the opinion of other clients of the carrier. Transportation policy Before one tries to formulate transportation policy for his company one should understand components of transportation decisions. carriers’ associations as a measure of confidence. Transportation decisions weigh cost/benefit with respect to these components before finalizing the choice which would ultimately formulate the policy. The size of fleet owned by the carrier which can be committed to business at any given time.♦ Branch offices or associates’ office.relatively quick and inexpensive. Components of transportation decisions The average transit time quoted by the carrier for some well known destination. ♦ Strength of fleet. ♦ Ask specifically for list current clients. Check if the carrier can manage his his operations at far away places through the network of own offices or the offices of associates. ♦ ♦ Record of claims settlement by carrier to know how good or bad the carrier is whenever there is a claim settlement Reference from other shippers’ banks. ♦ Type of business the carrier is doing will indicate if the carrier is suitable for the shipper. for ascertaining reliability. but very fast Road . • Mode of transportation Air .

In this case. But improved service level ensures customer loyalty and growth in business. • Trade off .primarily for oil and gas Transportation decision here is selection of mode for transportation of goods from our company • Route and network selection Route is the path the product takes and network is locations and routes along which a product can be shipped. Trade off . the transportation decision is selection of network.An inexpensive mode for large quantities Water . We have to identify this level and should not expend resources for improvement beyond this point.cost of transportation and cost of inventory Transportation decision is about establishing the trade off point between cost of transportation and cost of inventory.customer service efficiency & growth in business Improvement in customer service level cost money to the company.Rail . This is the point of trade off which should be identified and we must stop increasing transportation cost beyond this. But the benefit ceases after a point if you go on increasing the transportation cost.the slowest but most economical for large overseas consignments Pipeline . • Carrier in house or out sourced whether product owner performs the function or out sources it. But improvement beyond a certain level may not result into benefits proportionately. 22 . Increased transportation cost results in savings in inventory cost as increased transportation cost crashes transportation time.

Above decisions form the core of transportation policy DESIGN OPTIONS FOR A TRANSPORTATION NETWORK Transportation network options Supplier Supplier s Retail stores supplier Retail stores Supplier Retail stores Retail stores ALL SHIPMENT S VIA DC Retail stores DIRECT SHIPMENT DIRECT SHIPMENT WITH MILK RUNS Supplier NETWORK STRUCTURE DIRECT SHIPPING PROS • NO DC • COORDINATI ON EASY CONS • HIGH INVENTORY • SIGNIFICANT RECEIVING MILK RUNS FROM DC 23 .

Warehouses are eliminated.From shipper directly to retailers. inventory in the warehouse and warehouse costs are gone 24 . as the dispatch goes directly to retailer warehouses are redundant.DIRECT SHIPPING WITH MILK RUNS ALL SHIPMENTS VIA DC WITH INVENTORY STORAGE • LOWER TRANSP COSTS • SMALLER INVENTORY • MOVEMENT COSOLIDATI ON EXPENSE • INCREASED COORDINATI ON COMPLEXITY • INVENTORY COSTS • INCREASED HANDLING • INCREASED COORDINATI ON COMPLEXITY • INCREASED COORDINATI ON COMPLEXITY ALL SHIPMENTS VIA DC WITH CROSSDOCK ALL SHIPMENTS VIA DC WITH MILK RUNS TAILORED NETWORK • LOW INVENTORY • MOVEMENT COSOLIDATI ON • LOWER • INCREASED OUTBOUND COORDINATI TRANSORTA ON TION COSTS COMPLEXITY • TRANSPORT • STILL HIGER ATON SUITES COORDINATI TO ON INDIVIDUAL COMPLEXITY NEEDS A logistics manager’s options for scheduling and routing decisions are –  Direct shipment network . Features: 1.

no other decisions are relevant. 4. Mode and quantity decisions can be changed from dispatch to dispatch 7. Movement consolidation 2. as the distance is long cost per unit is expected to be low. Customer also will have to receive consignments directly from the supplier. Single supplier to a number of retailers . directly connected to customer’s schedule. hence low cost. inventory will have to be held at customer’s place to cover transportation lead time. 6. Simplicity of operation. 3. 2. • Direct shipping with milk runs: 1.2. Toyota plant in US Features: 1.deliver like a milaakman. as the network is simple as it consists of only shipper and retailer management of operation is simple. 5.g. From a number of suppliers deliver to a single retailer E. 25 . Truck utilization 3. Long route. Decision points are quantity and mode. in the absence of warehouse product moves directly. Inventory costs and receiving costs are high. Transport cost reduction • All shipments via Central Distribution Center Suppliers send the supplies to Distribution centers and Distribution center caters to the needs of retailers. Decisions are on dispatch to dispatch basis. Time of transportation is short.

The more popular combinations are TOFC [Trailer On Flat Car] and COFC [Container On Flat Car]. Inter-modal transportation:In addition to the five basic modes of transport. DC stores inventory and acts like a transfer point for supplies to individual retailers 4. Features: 1. Coordination is complex. Supply to DC with movement consolidation results into supply chain costs reduction when distances are large. This may be a new network synthesized from above models.reduction of outbound transportation cost • Tailored Network Tailor made to the company needs. Economies of scale in inbound transportation to DC. 5. From DC Outbound transportation cost is low as retailers are close to DC • Shipping via Distribution Center Using Milk Runs Small lot sizes to large number of retailers from DC. 2. Matches the needs of the company 2. a number of intermodal combinations are available to the shipper. Consolidation of small lots . Intermodal movements combine the cost and/or service advantages of two or more modes in a single product movement.Features: 1. Features: 1. Benefits of 26 . As the tailored network is synthesized management may involve several decisions. Or for some logistical mission one model and for some other mission another model.

EXEMPT. short time & flexibility are optimized for achieving overall cost reduction RAIL COMMON PIGGY BACK ROAD COMMON. CONTRACT. PRIVATE AIR TRUCK [BIRDYBACK] WATER OR AIR LAND BRIDGE LAND [RAIL OR ROAD] WATER OR AIR 27 . PRIVATE FISHY BACK WATER COMMON.long haul. EXEMPT. EXEMPT. CONTRACT. PRIVATE TRAIN SHIP AIR COMMON. CONTRACT.

Expedites door to door pick up and delivery 4. Reduction in paper work 3. Reduction in loss. Container can easily be transshipped. Benefits of owning containers by product owners 28 . Equipped with fittings to facilitate safe and easy handling 3. Internal lining that doesn’t buckle under temperature and can be easily cleaned 6. pilferage and damage of goods 2. Construction to allow circulation of air around cargo. air tight door seals and locks 7. Reduction in packaging cost as container itself acts like a package 8. Easily be stuffed or unstuffed in a short time 4. Robust but still light to ensure several handlings during unbroken transport of goods by several modes 2. Insulation to protect refrigerated cargo. Standardization of handling methods and equipment 7. Consolidation of movement of small lots 6. Optimizes the services of various modes. Interior washable to required hygienic standard 8.Containerization [kkk pages 350 to 362] Containers were introduced in US during 1955 and in India during 1960 Features of a container: 1. Watertight flooring. Potential areas for containerization are food stuff Universal advantages of container as a packaging unit 1. Water tight and air tight outer shell 5. Eliminates multiple handling of contents as this is shipped as a single unit 5.

1. Reduction in packaging cost as container itself is a robust packaging 5. Cargo from shallow ports is loaded on the barges. Reduction in transportation costs if the traffic is two way 4. Mechanized handling equipment Roll On/Roll Off [RORO] High cost of lifting a container from the truck and loading on to a ship made logisticians look for a new idea. Deep water ports 2. Truck loaded with container uses the ship as a mobile bridge! You may have seen passenger buses rolling on to ferries and rolling off after crossing the river. LASH [Lighters Aboard A Ship] All ports are not accessible to deep water vessels. Integration of various modes of transport 2. Good storage system Major benefits of containerization to business 1. the 29 . Product specific internal fittings can be provided 3. Ensures supply of containers 2. Standardized size of containers reduces reduce capital as well as operational costs 4. Control of internal cleanliness as per product need 5. Regularity and reliability of transport service Infrastructure of containerization 1. Concept of RORO is driving the truck loaded with the container directly on to the deck of a ship and driving off the deck on reaching the destination. The deep water ships stand a long way off on sea. Need for enclosed warehouses redundant 6. It can be used for delivery after arrival 6. Reduction in handling time and thereby turn around time of vehicles 3.

Inland container depots Inland Container Depots [ I C Ds ] ICDs are dry ports. One of the objectives of creating ICDs is to facilitate harnessing export potential of hinterland. The huge crane of the ship lifts the entire barge and places it on the deck. Hinterland is deprived of natural deep water ports because of geography. Hence this location analysis is essential. This a large warehouse where containerized cargo is accepted for export. Congestion gets created at natural deep water ports when export cargo arrives from hinterland. The exporter books his cargo at an ICD and completes all export formalities. Deep water ports being limited in number suffer congestion as deep water ships carrying export cargo dock only at deep water ports.barges are towed to the ship. ICDs act like deep-water ports installed inland or interior where the natural benefit of shoreline is non-existing. export import formalities. • connect major ports [able to handle container ships] to hinterland. • ICD to be located after ascertaining export import potential and good road network. Cargo crosses the dock and goes into the waiting ship. This hinders exports. • Serve as consolidation facility and should have handling equipment. Dry ports at a distance far away from the shoreline handle all the import export formalities. After reaching the destination barge is placed on shallow waters to reach the port. Facility to group small consignments and create container loads needs handling equipment. Thereon ICD moves the containers by movement consolidation to natural port. 30 . • facilitate customs clearance. ICDs ensure that businessperson does not have to go to the deep water ports with his cargo for clearing import/export formalities.

• The infrastructure at the ICDs has been strengthened with the deployment of better equipment. • Tariff at the Jaipur and Jodhpur ICDs has been reduced by 20 per cent. The customs department. reduction of transit time from ICDs to ports. four inland container depots (ICDs) at Jaipur. all other goods are transported by road. Jodhpur. compared to three days at other ICDs. surveyors for authentication of stock. along with an air cargo complex at Jaipur's Sanganer Airport act as efficient and convenient gateways for outbound cargo. shipping companies. Of the total export cycle time. This has resulted in the quicker handling of containers. the dwell time is down to 1.  Benefits of containerization can be fully exploited only when we have a good net work of ICDs [Inland Container Depots] While most of the bulk goods are transported by rail. customs house agents and clearing and forwarding agents are all based at the ICDs. recently. Inter modal transfer is a major operation in an ICD.9 days. • Decongest major ports. This is another benefit provided by ICDs which is of immense importance for a country with weak infrastructure like ours.• goods transfer from road to rail and otherwise. ICD consolidates consignments arriving by trucks and transfer the cargo in containers to another mode. banks. Bhiwadi and Bhilwara. say rail for onward movement to a natural port. • increase the export potential of industries in the hinterland and also simplifies import of goods by hinterland. • Although Rajasthan is a land-locked state. 31 . handling agencies.

To overcome the problem of a limited lifting capacity of Indian Airlines. a scheme of bonded trucks has been started.P) Kolkata Pitampur (M.P) Aurangabad Kanpur Malanpur Agra -- 32 . JNPT is directly connected to the following Inland Container Depots: Ludhiana Kerala Nagpur Mumbai (Wadibunder) Chinchwad (Pune) Bangalore Chennai Jaipur Jodhpur Baroda Mirage Kandla Mulund Delhi Sabarmati Pune Hyderabad Visakhapatnam Muradabad (U.• The air cargo complex provides facilities for customs inspection and shipment of non-bulk goods for exports by air.

Sign up to vote on this title
UsefulNot useful