Topic 5: Transportation

Management
Lecturer: Tran Le anh duy
 Learning Objective
Comparing and contrasting transportation infrastructure

Identifying the five modes of transportation and their characteristics

Discussing intermodal transportation

Identifying the legal classification of transportation carriers

 Transportation
Management
 Definition: actual physical movement
of goods and people between two
points, is important to the successful
operation of any supply chain.

 Transportation Management refer to the

buying and controlling of transportation
services by either a shipper or
consignee
 Two Fundamental Transport Costing Principles
 Economy of scale is the cost per unit weight decreases as the
size of the shipment increases
1. At least until you totally fill the carrying vehicle!
2. Cost decreases because the fixed cost of the carrier is allocated
over a larger weight of shipment
 Economy of distance is the cost per unit weight decreases
as distance increases
1. Often called the tapering principle.
2. Longer distances allow fixed cost of the carrier to be spread over
more miles, lowering the per mile charge.
3. Goal is to maximize the size of the load and distance shipped
while still meeting service expectations.
Operating Characteristics Used to Classify
Transport Modes

 Speed is the elapsed movement time from origin to

destination
 Capacity is the ability to handle any load size or
configuration
 Frequency is the quantity of scheduled movements a
mode can handle Operating Characteristics Used to Classify
Transport Modes can handle
 Accessibility is ability of a mode to service any given
pair of locations
 Reliability is the potential variance from expected
delivery schedule
 Transportation
 Seven different types or modes of transportation include:
1. Air
2. Road
3. Pipeline
4. Rail
5. Water
6. In land
water
transport
7. Intermodal
Transport
Comparing and Contrasting
Transportation Infrastructure
Product Intermodal
Mode Speed Accessibility Cost Capacity
Options Capability
Moderat
Truck Very Broad Moderate High Low Very High
e
Railroad Broad Slow Moderate Low Moderate Very High
Very
Air Narrow Fast Low Very Low Moderate
High
Very
Water Broad Very Slow Moderate Very High Very High
Low

Pipeline Very Narrow Very Slow Low Low Very High Very Low
 Transportation Modes: Air
Airfreight
– Generally the fastest mode for
shipment exceeding 600 miles
– Expensive
– Accessorial service, if needed,
adds transportation cost and time
– Best suited for high-value, lower-
volume urgent, perishable or time-
specific deliveries
– Dimensional weight used for rates
Examples of products that move by air
transportation mode

Auto parts and accessories

Cut flowers

Fruit and Vegetable Electronic or electrical equipment

 Transportation
Modes: Air
─ Reliability is problematic due to
delays caused by:
• Weather (fog, snow,
thunderstorms)
• Congestion and resultant
delays with air passenger
transportation
Transportation Modes: Road

– Most important business

user of the Interstate
Highway System
– Primary advantage is
flexibility
– Cost is generally lower
when compared to
airfreight
– Less Than Load vs. Truck
Load
Transportation Modes: Road
LTL FTL
150 to 10,000 pounds Focus on shipments > 10,000 lbs

Too big to be handled manually, too small Close to the amount that would
to fill a truck physically fill a truck trailer

LTL trucks carry shipments from many Possible that large shipments from
shippers several customers can be consolidated
 Transportation
Modes: Pipeline
 Only mode without vehicles
 No need for vehicle operators
 Transportation is one way
 Most reliable mode
 Tend to be the slowest mode
 Accommodates only liquid, liquefiable or
gaseous products
 Capable of transporting large product
volumes
 High fixed costs, but relatively low cost per
unit due to large product volume
Transportation Modes: Rail

 Railroads
– Neither “best” or “worst” on any of the six attributes
– Superior to air, motor, and pipeline, but inferior to water when
transporting different kinds of products
 Less flexibility, but more when compared to air, water, and
pipeline
 Superior to air and motor with regards to volume, but inferior to
pipeline and water
 Less expensive than air and motor, but more expensive than
pipeline and water
 Faster than pipeline and water, but slower than air and truck
Transportation Modes: Water

 Relatively inexpensive
 Focus on lower value bulk commodities handled
by mechanical means
 Many different kinds of products can be carried
 Carry greater volumes than rail or truck
 Slow average speeds
 Not reliable due to its dependence on weather
condition, facilities,…  Unpredicted and
unavoided delay
Transportation Modes: Inland Water

1. High mass-transport
capacity
2. 24hr service
3. High reliability and
transport safety
4. Environmentally friendly
5. Low network density
6. Low transport speed
7. Dependent on weather
conditions
Which type of transport mode that
Vietnam is good at? And Why?
The Box That Made Global
Logistics Possible
Shipping

 Shipping containers were originally

8ft (2.44m) high x 8ft (2.44m) wide
x a nominal 20ft (6.1m) or 40ft
(12.2m) long.
 There are now many variations in
size.
 Container capacity is usually
expressed in Twenty-foot
equivalent units (TEU).
 It is estimated that there are over 17
million containers in use.
The Box That Made Global Logistics Possible
Shipping
 Intermodal
Transportation
 Intermodal transportation
 refers to transportation when using a
container or other equipment that can be
transferred from the vehicle of one mode
to the vehicle of another mode without
the contents being reloaded or disturbed
 Two or more modes are employed to
utilize advantages of each while
minimizing their disadvantages
 Example - piggyback transportation
 Intermodal Transportation
BENEFITS

 Container Utilization:
Lower cost
– Large reusable steel boxes used
for intermodal shipments1
More environmental
friendly – Provide significant reduction in
freight handling costs
Reliability – Are interchangeable among rail,
truck, and water carriers
Piggyback is an intermodal transport that
integrates rail and road service

 Trailer on a flatcar (TOFC)

 Container on a flatcar (COFC)
 Trailer or container is hauled by
truck at origin service hauled by
truck at origin and destination
 Railcar hauls for portion of intercity
travel
 A variety of coordinated service
plans have been developed
Rail Land Bridge
Coordinated air-truck is
commonly used to provide
premium package services

 Many smaller cities lack

airfreight services

 Costs can leveraged with

delivery time by linking
delivery time by linking
the modes
Question: Which transport mode is
the most environmental-friendly
mode? Why ? Moreover, please
give some other example of other
solutions for green transportation
in real life.
 Intermodal Transportation vs Multi-modal
Transportation
Intermodal Transportation
Definition The movement of cargo from origin to destination by several
modes of transport where each of these modes have a different
transport carrier responsible, each with its own independent
contract. Multiple carriers during a single journey. Each leg of
the shipment is be handled by a separate transport carrier. The
Shipper will have several contracts, one with each transport
carrier to handle their specific leg of the shipment.
Advantages • Shippers can choose carriers to take advantage of lower
rates for each transport leg.
• Gain flexibility and specialized handing of loading and
unloading goods at different ports.
• Reduce their carbon footprint by choosing environmentally
friendly carriers
• Increased security of the products being transported
• Shippers have more access to equipment and can better
control capacity and selection of transit schedules.
Multi-modal Transportation
The movement of cargo from origin to destination by several
modes of transport where each of these modes have a different
transport carrier responsible, However under a single contract
or bill of lading. Single carrier during a single journey. The
same transport carrier is responsible for moving the shipment
in all legs, in all modes. In simple terms, Multimodal is using
various modes of transport but with one transport bill of lading.
• Shipment tracking efficiency able to monitor with one
transport carrier from door to door delivery.
• Access to remote parts of the world with responsibility and
liability of the movement with one transport carrier.
• Efficiency in delivery time.
• Minimization of logistics coordination expenses of a
shipper.
 Product freight classification

Density
How heavy a product is in relation to size Ease of handling
Size weight shape

How easy the commodity is to pack into a load

and its ability Stowability
to be loaded on top of other Liability to damage and
commodities. Perishability and its value
theft
Transportation Regulation

Environmental Regulation Safety Regulation

Environment Protection Agency (EPA) is the
federal regulatory agency established to protect
human health and the environment
Current concerns include:
• Noise and air pollution
• Resource conservation
injuries, and fatalities involving large trucks and
Department of Transportation (DOT) is the
federal agency responsible for transportation
safety regulations for all five modes
Federal Aviation Administration (FAA) has
primary responsibility for air transportation
safety
Federal Motor Carrier Safety Administration
(FMCSA) is focused on reducing crashes,
buses
 Transportation
management exercise

Choose the types and modes of

transportation that you choose at
every stage of the supply chain in
your business
Determine the reasons why you
choose those types and modes
(analyze your case)