TRANSPORTATION

• The role of transportation is very crucial in national economy, particularly in the

developing country like India.
• Unfortunately it is “most neglected” business organizations in this country
because there is no accountability for failure in meeting commitments on time.
( “chalta hai” attitude)
• Transportation provides value addition through creating place utility & time utility
• It is concerned with a physical movement of goods (inputs & outputs) from the
point of origin to the point of consumption.
• Transportation links various integrated logistics activities
• The failure of this activity has serious effects on lost sales, customer service level
& production downtime

Need For Planning Of Transportation Activities

1. Transportation is one of the largest logistics cost activity

2. It accounts for significant portion of the product selling price
3. In major projects, the cost of transportation accounts for 25% -30% of total
capital cost.
4. Delays in getting inputs / plant & machinery in time not only delays the project
implementation but also increases in the cost of project (which unfortunately
excused as “teething troubles” in this country.)

Transportation Functions

1. Product movement
2. In-transit product storage

Principles Of Transport Operations

A) Economy Of Scale
Transport cost per unit decreases when the volume / weight of the shipment increases

B) Economy Of Distance
The transport cost per unit of distance decreases as distance covered increases

• These are the important considerations for evaluating alternate transport

strategies
• The objective is to maximise the size of the load & the distance that is shipped
while still meeting customer service expectations.

Participants In Transportation Decisions

1. Shipper / consignor :
The objectives of moving goods from origin to destination within prescribed time
at lowest cost
 2. Carrier :
To maximize his revenues while minimizing the cost necessary to complete the
transaction

3. Government :
To maintain high level of interest because of its impact on economy as a whole

4. Consignor :
To receive the goods in shortest time & at cheapest cost

Criteria For Selecting Mode Of Transport

• Nature of the goods to be transported

• Dependability : consistency of service & security of goods
• Speed : refers to elapsed movement time (transit time )
• Cost of hiring the mode of transport
• Availability : services to any desired location
• Flexibility in handling verity of products
• Loss & damage performance
• Easy accessibility : ability to provide door to door delivery
• Capability : ability to handle any transport requirements (product / volume /
weight)
• Frequency : the continuity of scheduled movement
• Government regulations

A) ROAD TRANSPORT

Transportation by roads account for approx. 50-60% of total transport movement (by
Volume) in India. In spite of this fact the road transport industry has not come of age in
the country.

Problems Faced By Road Transport

• Pathetic road conditions

• Shortage of quality fuels (adulteration problem)
• More waiting period (wastage of time at octroi check post in doing formalities)
• Trans-shipments on account of movement restrictions
• Requirement of various permits from different authorities
• Trade in the hands of small & un-organised transporters
• Non-availability of professional persons
• Less importance given to this activity by business organization

Advantages

• Through movement : point to point delivery

• Flexibility in operations : direct access to shippers & final customers
• Comparatively less capital cost involved
 • Broad geographical coverage
• Varity of product handling
• Fast turn around of vehicles (move-stop-move)

Disadvantages

• Delays in transit time due to road conditions & climatic hazards

• Unsuitable for very heavy & large size loads
• Unsuitable for very long distance (export consignments)
• More chances of accidents & damages to goods
• Weight / volume restrictions & legal limits on operating areas

Fleet Performance

A) Fleet Utilization

When the trucks are effectively moving the goods, the idle time is minimized & transport
cost per unit load is reduced

B) Capacity Utilisation

Effective use of available capacities of vehicles in terms of weight & volume

Improving Fleet Performance

• Reducing waiting period

• Carrying only economic loads / consolidation of cargo
• Spreading deliveries throughout the day
• Minimisation of operating delays in loading / unloading / documentation
• Maximisation of returned trip loads

Load Planning

Load planning is the process of meeting the customer’s requirements with availability of
vehicles & manpower and determining the transport routes & schedules accordingly

Factors to be considered for load planning

• Availability of vehicles & manpower

• Customers requirement in terms of time & place
• Environmental factors like road condition, climate, legal requirements
• Methods to be adopted for routing & scheduling

Load Planning Methods

A) Fixed Route System

The vehicle has regular delivery route for each day / week / month and customer orders
are met.
B) Variable Route System:

Planning of the routes according to customers order pattern & desired delivery time.

C) Cost Saving Method ( Clarke & Wright Method)

Two point delivery: A

1st alternative

OA AO = a + a a x
OB  BO = b + b
OA + OB = 2a + 2b

2nd alternative O B
b
OA AB BO = a + b + x

Distance saving = 1- 2 = (2a + 2b) - ( a + b + x) = a + b - x

The same formula can be used for multi-point deliveries & distance & cost saved by
choosing most economic routes can be found out.

B) RAIL TRANSPORT

• This mode of transport carries approx.25 - 30% of total freight traffic.

• The services have improved over last 10 years tremendously.
• Railways have introduced many schemes like FFS (freight Forwarders' Scheme),
door-to- door etc for speedy & low cost services.
• It mainly carries bulk commodities like coal, food grains, steel etc.

Advantages

• Cheapest & fastest mode for bulk cargoes over long distance
• Door deliveries for certain commodities
• Faster claims settlement
• Comparatively secure mode of transport

Disadvantages

• Moves only on specific routes

• Not ideal for very small parcels
• Secondary transport needed
 C) AIR TRANSPORT

• It is the fastest mode available to date for movement of goods from one place to
another.

• Even though it is the costliest mode, it helps in achieving high level of customer
service by effecting fastest delivery.

Advantages

• Meets requirements of international business(export/import)

• Meets seasonal demand at fastest rate
• Reduces time of delivery for meeting emergencies
• Ideal for transporting perishable items / high value items
• Require minimum handling & hence less damages / losses
• Low insurance premium due to less transit risks

Disadvantages

• Comparatively costly mode of transport

• Requires secondary transport mode ( airport to airport only)
• Certain categories of items are not allowed to be transported ( hazardous goods
as specified by IATA)
• Require specific infra structure facilities
• Limitation on shipping space ( only small volume shipments & packaged
commodities can be shipped)

D) SEA TRANSPORT

• In spite of huge coastal line the country has this mode of transport, even though
oldest, has remained in its infancy till date.

• Not much efforts have been put by the government to explode this mode except
for very few selected commodities like iron ore, coal etc.

Advantages

• Meets requirement of international business (export/import)

• Compared to air transport, lower freight rates
• Availability of large shipping space
• Flexibility in handling verity of products (small to bulk)
• Wide coverage within & outside country

Disadvantages
 • Secondary transport needed
• Require specific infra structure facilities
• Require support from secondary transport for delivery to final customer
E) PIPELINE MOVEMENT

• For decades, India has survived on a minimal oil and gas pipeline infrastructure.
So much so that the country has less than 15,000 km of oil and gas pipelines
while France, which is roughly the size of Rajasthan and Punjab combined, has
170,000 km of pipelines. The USA on the other hand, has 329,600 km of
pipelines.

• This mode is most cost effective for transporting liquids & gases.

• It cost barely Rs.1.30 per km. To move every tonne of oil products by pipeline
while trains cost Rs.2.20 per tonne & by road Rs.3.02

• Only 25%of liquid products are moved by pipeline in India.

• In the USA the figure stands at 59%.but the scenario is set to change.

• Over the next 6 years, India is adding 17,000 km of pipeline infra structure to
cater to increasing output of oil & gas in the years to come.

Advantages

• Reliable & continuous mode for movement of liquid products & gases
• All seasons, all whether mode of transport
• Lower operating & maintenance cost
• Under ground hence no additional space required
• Can reach to remote & distant places
• Transit losses are minimum
• Cheapest mode for large quantities over long distance

Disadvantages

• Ideal only for continuous operations (bulk products)

• Ideal only for specific product groups(bulk liquid & gases)
• Initial capital requirement is very heavy.
• Movement restricted by fixed routes
• Continuous vigilance is required for safety purpose.

ROPEWAY TRANSPORT

• This mode of transport is ideal for transporting the goods to hilly & remote places
were roads are not available

• Also ideal for horizontal movement from mines to plant. (cement, coal etc)
Advantages

• Transports bulk material over short distance

• Lower capital costs

• Ideal for hilly areas

Disadvantages

• Limited scope of operations

• Slowest mode of transport

INTER-MODAL TRANSPORTATION

A) PIGGYBACK (TOFC/COFC)

• In piggyback service, a motor carrier trailer or a container is placed on a rail

flatcar and transported from one terminal to another.

• Road-railers or trailer-trains : they combine motor and rail transport in a single

piece of equipment. The trailer has both rubber truck tires and steel rail wheels.

• Over highways, tractor power units transport the trailers in the normal way but
instead of placing the trailer on a flatcar for rail movement, the wheels of the
trailer are retracted and the trailer rides directly on the rail tracks.

B) FISHY-BACK

• There are two types 1) train-ship & 2) container-ship

• They utilize waterways for transporting cargoes. It involves loading of truck trailer
/railcar / container in to barge or ship for line-haul movement.

C) BIRDY-BACK

It is a combination of air & truck movement

INTERNATIONAL INTER-MODAL DISTRIBUTION SYSTEM

1. Land Bridges

It is a service in which foreign cargo crosses a country en route to another country.

2. Mini-Land Bridges

Mini-land bridge (also called as mini bridge) is a special case of land bridge where
foreign cargo originates or terminates at a point within the same country.

3. Micro Bridge
It is a relatively new service being provided by ports in contrast with mini bridge. This
service provides door-to-door rather than port-to-port transportation.

Factors Influencing Transportation Costs

1. The Selected Mode Of Transportation

2. Distance To Be Traveled
3. The Desired Transit Time
4. Product Related Factors
• Density Of Products (Weight / Volume Ratio)
• Stowability (Utilisation Of Vehicle Space )
• Method Of Handling
• Risks & Liability ( High Value Products)

5. Market Related Factors

• Degree Of Inter-Mode Or Intra-Mode Competition
• Location Of Market : Local Or International
• Government Regulations On Mode Of Transport
• Seasonal Demand & Supply Of Vehicles
• Possibility Of Getting Return-Trips (Back- Hauling)

Classification Of Carriers

• Common carrier
• Contract carrier
• Private carrier
• Exempt carrier
• Government carrier

Consideration For Selection Of A Carrier

A) Transportation Cost (Freight Rates)

B) Expected Service Performance

• Transit time
• Reliability : consistency in service
• Capacity : ability to provide transport facilities
• Warehousing facilities
• Quality & skills of operating personnel
• Handling methods: damage / loss records
• Market reputation : cliental / business experience
• Promptness in claims handling
• Responsiveness: to the changing customers & market needs

Post Service Evaluation

• Customer’s satisfaction / feedback

 • On-time pick-up & delivery records
• Performance related to product loss
• Speedy claim settlement
• Overall consistency in services over longer period
Factors Determining Freight Rate Structure:

• Fixed cost of vehicles (capital cost / depreciation / insurance)

• Variable cost (fuel, tyres, maintenance, manpower)
• Desired profits
• Vehicle utilization
• Nature of product
• Public distribution of products
• Government policy

Transport Productivity

All the concerned parties aim at improvement in transport productivity as it is very vital
for success of logistics system & better utilization of national resources.

Areas For Improvement In Productivity

• Transportation systems, methods of operations & procedures

• Infra-structure facilities
• Optimum utilization of available resources
• Environmental considerations

Solutions

• Consolidation of inbound & outbound cargo

• Back-haul use of fleet
• Routing & scheduling system
• Cargo tracing / tracking system
• Implementing health, safety & environment system
• Accountability: incentives / penalties on performance
• Establishment of transport database
 MATERIALS HANDLING SYSTEM

• Materials Handing System decides the speed of movement of goods & services
within organization & between the sellers / Customers / suppliers
• It determines the company’s response level to internal & external customer’s
requirements.
• Before product reaches to the final customer, it passes through series of handling
processes.
• Material handling is the process of movement of raw materials, Work in process
inventory & finished products within a facility most efficiently at the lowest
possible cost.

Materials Movement Cycle

Receipt of Inputs  Storage of Inputs Moving to Production Moving of Finished

goods Warehouses to final Customer

• 15 –20% of the cost of the manufacturing of a product is spent on Material

Handling activities.
• Material handling is an important & specialized function of Industrial activity.
• Even though this activity does not add to the value of the product, it essential
from the point of Space & Time Utility (When & where it is required)
• If this system is not properly designed & implemented it will result in increasing
the cost of procurement, production & distribution.

Objectives of Material Handling

• Efficient movement of the products in to & out of warehouse to improve customer

service & cost control
• Ensure availability of the product when they are needed (Time) & where they are
needed (Place)
• Movement of goods in the right quantity
• Effective utilization of available space in a Warehouse.

Scope of Activities

• Receipt of raw materials, components etc.

• Storage to manufacturing place
• Manufacturing place to warehouses
• Warehouses to Customers

Materials Handling Activities

A) During Receipt of Inputs

• Receipt of vehicles at nominated area

• Unloading the consignments
• Weighing, Sampling & Inspection of inputs
• Storage of inputs in nominated area
• Documentation of inputs received & stored
• MIS

B) During Dispatches of Finished Goods

• Receipt of vehicles
• Weighing & counting of goods to be dispatched
• Movement of goods to exit point
• Loading of goods into vehicle
• Documentation on goods dispatched
• Management Information Service

Arrangements for Receipt & Dispatch

A) Provision of Facilities

• Loading /unloading structures (Truck docks)

• Separate entry & exit points
• Availability of Handling equipments & machinery
• Parking space for vehicles waiting for loading/unloading

B) Adequate Storage Space

C) Enough Area to Accommodate Incoming Goods

D) Storage Nearer To Loading/Unloading Points

E) Weighing Facilities

• Weigh Bridges For Vehicles Carrying Bulk/Large Lots

• Weighing Machines For Small Lots
• Calibration Of Weigh Bridges
• System To Issue weigh Slips

G) Inspection Facilities

• Pre-determined Sampling Procedures

• Testing Facilities
• Speedy Inspection Reports

H) Documentation & Information System

• Ensure proper accounting of incoming & outgoing goods

 • Feedback on material flow & inventory levels to management
• Working out the total cost of activities performed

Materials Handling System

• Inputs are transported from supplier to the plant (unloading / inspecting)

• Unloaded inputs are moved to storage spaces & stacked (Loading, Stacking,
Storing, Weighing, Counting, Sorting)
• Stored Inputs are moved to manufacturing location
(Loading/unloading/counting/weighing)
• Semi finished products are moved from one location to another within the plant or
from plant to another outside processing units (Loading/unloading /
moving/inspecting)
• Finished goods are moved to warehouses for packing/stacking
(loading/unloading/stacking)
• Finished goods are dispatched to customers (moving, Loading & if required
unloading)

Functions Performed During Materials Handling

• Loading / unloading
• Moving /stacking
• Weighing / counting / sampling / inspecting
• Documenting /Generating information (MIS)

Principles of Material Handling

• Planning : All the material handling should be as a result of deliberate plan

• Standardisation : Material handling methods, equipment, controls & software

should be standardized without sacrificing needed flexibility & throughput

• Work Principle : Avoiding unnecessary movement of the products

• Ergonomic Principle : Human capacities & limitations must be recognized to

ensure safe & effective operations

• Unit Load Principle: The load should be uniform to achieve the smooth material
flow.

• Space Utilization : Efficient & effective use of entire available space

• Systems : The material movement & storage activities should be fully integrated
to form a coordinated & operational system (Material flow should keep pace with
needs)

• Automation : Operations should be mechanized & automated whenever feasible

to improve overall operational efficiency
 • Environment: The environmental impact and energy consumption should be
considered.

• Life Cycle Cost : Economic feasibility of material Handling equipment & system
over an entire life cycle

• Preventive & Schedule Maintenance : It is absolutely necessary to maintain all

Material Handling Equipment

Materials Handling Cost

A) Direct Cost:

• Transportation cost
• Manpower Cost
• Equipment cost (Capital & maintenance cost)

B) Indirect Cost (Hidden Cost)

• Cost of lost sales

• Damage to inputs & finished goods
• Delay in transportation
• Deterioration in quality of products
• Waste of Man-hours
• Loss of production Time

Handling Methods (System) Depends Upon

• Type of material to be handled

• Type of movement: vertical / Horizontal (Use of gravitation force)
• Volume to be moved
• Length of the movement: distance to be covered (Short runs / variety of
products>> simple handling system to be Used )
• Frequency of the movement
• Time requirement for the movement
• Cost of the equipment required
• Compatibility of equipment with present system

Manual System

• If the volumes / weights to be handled are low & distance to be traveled is less,
than the manual movement of the products Storage is the best & cheapest option
for material handling.
• Manual Trolleys & order picking equipment : racks, shelves, drawers, lockers etc

Mechanical System:

The system includes vide variety of handling Equipment.

Forklift Trucks:

This equipment represents perhaps the greatest single innovation in material

handling in post war era. It has largely responsible for vide spread of introduction of
pallets or unit load.

It can move loads both horizontally & vertically.

Cranes: They are either floor mounted or overhead mounted drag devices

Conveyors: They excel at straightforward transportation because they eliminate re-

handling before & after each function

Carousals: The entire carousels rotate vertically & bring the desired item to the
operator.

Automated System

Automated Guided Vehicle System

• It does not require an operator

• It automatically rotates & positions itself at the destination without operator’s
guidance.

Robotics: It is a human like machine that can be programmed by micro processor to

perform one or series of activities

Automated Storage & Retrieval System (ASRS)

Amongst the most important storage & order picking equipment are automated
storage & retrieval system, as it provides reduced labour cost & floor space, while
increasing inventory accuracy.
An ASRS is applicable to virtually all types of products and many warehouse
configurations

Advantages

• Reduction in labour cost

• Increase in output rate
• Increases in consistency of services
• Reduction in material handling cost
• Increases accuracy level
• Improvement in the speed of service

Disadvantages

• Heavy initial capital cost

• Downtime of equipment /maintenance may cause interruptions
• Capacity problem
• Lack of flexibility to respond to changing environment
• Perpetual Maintenance cost
• Users training requirement
• Risks of obsolescence.

Material Handling Equipment

Objectives

• Reduction in handling cost

• Reduction in production time
• Better utilization of the space
• Reduction in damages/losses
• Reduction in labour cost
• Better utilization of existing equipment
• Improvement in materials management system

Material Handling Is Undertaken At Every Stage of Logistics Activities and Hence It

Is an Integral Part of Logistics Function

The use of proper methods & Designing of Material Handling System along with
selection of suitable handling equipment and the location of equipment & personnel
handling the activities will result in:

• Higher performance of the system through reduction in the overall cost of

operations (including labour cost)
• Increase in production efficiency (reduction in lead time)
• Increase in profitability of the organization