This action might not be possible to undo. Are you sure you want to continue?
[Ref. Bowersox page 311]
What is transportation?
One of the functions(?) of Logistical
Contribution to Logistical costs?
Transportation functionality (Functions of transportation) 1. Product movement What is moved? Inputs and outputs of a conversion process • Raw Material • Semi Finished items • WIP
• Finished goods
• Packaging material • Rejected material Movement is required up or down the supply chain
Product Storage Product is in storage (inventory.2. containerized in ship. train. trailer or truck • It is unavailable for conversion (production) • Requires maintenance (preservation – milk or other perishable in transit) 10/12/2012 4 . stock) When it is moving.
cost of capital etc. stuck in traffic or waiting 10/12/2012 5 . are applicable Product is in storage when Vehicle is stationary.• All storage costs generated by inventory like insurance.
Vehicles kept moving on circuitous route When loading and unloading is expensive Storage space is not available or limited Airplanes hovering when runway is unavailable for landing 10/12/2012 6 .
To keep production process running 4. To meet objectives of Logistical Management 3. To meet the customers' demand for products & services at minimum cost 10/12/2012 7 . To facilitate trade & business 2.Why is this done? Objectives 1.
environment 10/12/2012 8 .How is this done? What resources are used? Resources used by transportation Time Money Nature.
etc Product loss and damage 10/12/2012 Cost of fuel for prime mover 9 . Financial Costs- Administration Costs. maintenance. hence inaccessible b. Money. salaries. Time.product is locked up during transit. Temporal Costs .Costs generated by transportation a.
c. Environmental Costs Guzzles natural fuels • India consumes about 90% of the total available and imported oil for transportation • Transportation Creates congestion. Nature. 10/12/2012 10 . • Environmental cost is tangible and substantially intangible. air pollution and noise pollution.
items must be moved only when product value is raised 10/12/2012 11 . financial and environmental resources.• As transportation utilizes temporal.
Principles of transportation 1. Economy of scale • Bulk shipping brings down per unit transportation cost 2. 12 . Economy of distance • Cost per unit kilometer decreases as the distance moved increases • Principles of transportation are fundamental 10/12/2012 in evaluating transportation strategies.
Transportation Environment & Transportation decisions Who are the participants in transportation decisions? • Shipper • Consignee • Carrier • The government 10/12/2012 • Public 13 .
10/12/2012 14 .
What is transportation mode? Mode identifies transportation method or form 10/12/2012 15 .
What mode of transport is this? 10/12/2012 16 .
What mode of transport is this? 10/12/2012 17 .
What mode of transport is this? 10/12/2012 18 .
What mode of transport is this? 10/12/2012 19 .
10/12/2012 What mode of transport is this? 20 .
What mode of transport is this? 10/12/2012 21 .
Impact of transport mode on costs of transportation Transport time • Inventory in stores • Inventory in transit – pipeline inventory (Transit capital) • Obsolescence 10/12/2012 22 .
Packaging • Breakage Insurance – • air. high insurance 10/12/2012 23 .
Terminal facilities . shape & speed 24 . railway yards 2. platforms. ships or wagons.well maintained loading unloading facilities. Vehicles.What constitutes Transport Infrastructure? [Transport elements] Factors that affect the smooth functioning of transportation? 1. Their 10/12/2012 size. space for movement of vehicles.trucks.
Rights of way. Routes and sectional capacity-number of lanes 5.3. Nature of product 10/12/2012 8. Weigh bridge facility 7.cost of right to use passage The tax. Carrier organizations 25 . the toll Rails. roads. airways 4. Limit on speed. height 6. weight.
nature of traffic composition 10/12/2012 26 .What are various features of modes or modal characteristics? How do we measure relative weight of each mode? • System mileage. traffic volume. revenue.
7% of total tonne kilometers now moved in India 10/12/2012 27 .Railways – Rail network Stands out in terms of tonne-kilometres moved 226 billion tonne-kilometres and 55.8% of total tonne-kilometers moved in 1982 in India 449 billion tonne-kilometres and 51.
but low operating costs 10/12/2012 28 . switching yards. Facing very stiff competition from roadways. as in US after II World War High capital investment due to right of way. terminals. locomotives and rolling stock.
10/12/2012 29 . Focus on specific products than on broad range Raw material extractive industries away from water ways.
Developments in this area Recent customer friendly attitude Inter modal transport through alliances and acquisitions as in US. providing single window service to customers 10/12/2012 30 .
Development of Specialized Equipment to suit the needs of bulk volume of customers Unit trains Container trains Double stack containers 10/12/2012 31 .
Enclosed tri-level automobile car 10/12/2012 32 .
A unit train. also called a block train 10/12/2012 33 .
Double stack containers 10/12/2012 34 .
konkan railway 10/12/2012 35 .RORO service to road transport .
10/12/2012 36 .
Private container trains -Adani logistics. Boxram CONCOR Dedicated Freight Corridors. DFCs Private participation in developing ICDs 10/12/2012 37 .
Road transport High flexibility and speed Ultimate mode of transport Rapid growth. post war Low capital cost as compared to Railways 10/12/2012 38 .
179.2 billion tonne-kilometres and 44.2% of total tonne kilo-metres moved in 1982 in India 585 billion tonne-kilometres and 56% of total tonne kilo-metres moved in India now 10/12/2012 39 .
Operating costs are higher Ideal for small shipments over short distances Labor intensive Occasional fuel shortages Availability of good quality vehicles Availability & cost of maintenance and spares 10/12/2012 40 .
Bad and unsafe road conditions Carrier organizations and their disputes with government Octroi Old MVA Restrictive permits 10/12/2012 41 .
bypass to cities Pay and use roads – private road builders Express ways 10/12/2012 The Golden Quadrilateral 42 .Developments in this area Entry of several manufacturers of trucksentry of Daimler to produce Mercedes CVs Trailer-tractor sets National grid of multi lane highways Road widening schemes.
10/12/2012 Trailers 43 .
10/12/2012 44 .
canals Main advantage of water transportation is extremely large shipments & low cost 10/12/2012 45 . steamships-1800.Water transport Sailing vessels. diesel driven ships-1920 Limited scope for deep water transport Limited extent of navigable inland water transport -lakes. rivers.
tug-barge combinations Ferries 10/12/2012 46 .Importance of deep water vessels & deep water ports to fully realize benefits of water transport Sailing vessels for IWT Diesel towed barges.
disadvantages are range of operation (not for long distance) and slow speed Ferries.high flexibility.Diesel towed barges.for small water bodies like rivers and bays. 10/12/2012 47 .
Diesel towed barges 10/12/2012 48 .
Ferries for river crossing 10/12/2012 49 .
LASH [Lighters Aboard a SHip]: when a ship is loaded on the high seas from barges. entire barge is lifted and loaded on the ship. instead of loading the cargo lifted from the barge. At the end of the voyage barge is put back on water 10/12/2012 50 .
LASH 10/12/2012 51 .
Inland water Transport is not used to its full
potential in India although we have used
mechanized IWT since early 1800.
Main hurdles appear to be
1. Low priority in policy
2. Construction of dams
3. Receding water levels in the rivers
4. Tough competition by other modes
Developments in this area
Construction of deep water ports: JNPT
Construction of ports with private investment
Port Pipavav, India's first port in the private
sector is operated by APM Terminals, one of the
largest operators of container terminals in the
A consortium led by P&O Australia is setting
up a $200 million Container terminal on BOT
(Build-Operate-Transfer) basis at Jawaharlal
Nehru Port. Trial operation started in April 1999
Agreement signed for construction of a captive
Coal Jetty at Mumbai by Tata Electrics.
oils.coal slurry. iron ore. lime 10/12/2012 55 . petroleum products In India. extensively used for transporting crude and petroleum products More than 5.Pipelines What is transported in a pipe line? Liquids .000 km of pipeline exists in India for crude and petroleum products Slurries . crude.
Huge quantity of water is necessary which is a concern for environment In India pipe line is used for transporting iron ore. 10/12/2012 56 .
Pipelines 10/12/2012 57 .
LPG.Gases and vapors.natural gas. in India LPG pipe line is in existence Pulverized dry bulk material as hydraulic suspension Main features of this mode of transport Reliable all weather means of transport Low energy consumption 10/12/2012 58 .
Pipeline being under ground space occupation is minimal Pipe line operates all the time except when it is shut down for maintenance No empty container or wagon to be brought back 10/12/2012 59 .
right of way and laying of pipeline. This mode of transport can release capacity of other modes for transport of essential commodities 10/12/2012 60 .Highest fixed costs. Pipe lines are stationary Physical state of the commodity is a limitation. and lowest operating costs Not labour intensive Not flexible by nature.
Rope ways Hilly and otherwise inaccessible area Steep gradients Cause minimum ecological imbalance Point of supply and demand can be connected by shortest route Logistics of fruits in Himachal Pradesh 10/12/2012 61 .
Rope way 10/12/2012 62 .
But operating costs are highest Air transport brings distant markets closer - perishables market in gulf countries Overcomes the hassle and cost of setting up depots and service centers overseas 10/12/2012 63 .Air transport Speed of transport is highest Fixed costs are lower than rail or road or pipe line.
Products can be shipped directly from the factory 10/12/2012 64 . Full potential of peak seasonal demand can be taken Test marketing is easy.
TRANSPORTATION MODES FACTORS: (MODAL CHARECTERISTICS) CAPITAL EX OPERATING COST SYSTEM KM II III 63.000 kms IV II III IV V I RAIL ROAD WATER AIR PIPE LINE I V 5000 kms 15.03.ways) TONNE KM 449 Billion Tonne KM 585 Billion Tonne KM II I 66 BTKM (British-T) [Costal hipping] IV IV I III 70 BTKM SPEED III V V AVAILABILTY [ABILITY II TO SERVE A SET OF LOCATIONS] 10/12/2012 65 .000 15544 kms kms [IWT] (Inland W.
Dependability [minimum deviation from schedule, weather, congestion& other problems] Capability [ capacity to tackle any size of the load] Frequency [quantity of scheduled movement]
Freight rate structure Freight (transportation) Rate Structure & Principles: 1. Cover actual cost of transportation. Factors influencing cost of transportation 1a. Fixed costs: Interest on capital Depreciation Insurance premium Facility for servicing,
periodic maintenance etc
Administrative overheads Expenses on fixed facilities like buildings
1b. Semi fixed costs:
Salaries of the staff
1c. Eg. bad roads. war effected sea routes 10/12/2012 69 . Variable costs Cost of fuel and lubricants Maintenance directly attributable to a particular trip – breakdown Damage to the vehicle and also the cargo. hilly roads.
1d.Vehicle utilization Carrier likes to gain maximum mileage out of his vehicle Run the vehicle at top speed to cover max. distance at min time 10/12/2012 70 .
] iii. Road conditions ii.Quote higher rates if following are not conducive to the above i. loading/unloading etc. Obtaining a return load [market factors] 10/12/2012 71 . formalities. Terminal detentions [congestion.
Traffic Bearing Capacity • Value addition by transportation • Higher the value added. Stowability. Density.iv. Nature of goods. shape and size of the product 2. hazardous. consignment light by weight vi. insurance] v. corrosive [liability. opportunity for higher 10/12/2012 rate 72 .
3. Government Policy freight rates are controlled by the state (hiked or depressed) for Items to satisfy basic needs of common man Promotion of certain type of trade Development of certain type of industry 10/12/2012 73 .
4. Profit • Margin for reasonable return on investment • Entrepreneurial time and efforts • Funds for future development of business 10/12/2012 74 .
most expensive.An inexpensive mode for large quantities 10/12/2012 75 .Transportation policy Components of transportation decisions I. Mode Selection • Air .relatively quick and highly flexible but comparatively expensive • Rail . but very fast • Road .
steep gradients 10/12/2012 76 .the slowest but most economical for large overseas consignments • • Pipeline .primarily for oil and gas Ropeways – hilly areas.• Water .
whether product owner performs the function or out sources it. Carrier in house or out sourced . • Private carrier • contract carrier • Public carrier • Exempt carrier 10/12/2012 77 .Transportation network options II.
Trade off situations • • Cost of transportation and cost of inventory Cost of transportation and cost of customer service 10/12/2012 78 .III.
List of clients. Area of operation 4. Strength of fleet 6.IV. for ascertaining reliability 10/12/2012 79 . Business turn over 3. Network .Branch offices or associates’ offices 5. Constitution of the carrier’s organization 2. Carrier Selection 1.current & former.
carriers’ association 10/12/2012 80 . Normal transit time 9.7. Nature and volume of business 8.Reference from banks. Record of claims settlement 10.
V. Route and network selection Route is the path the product takes and network is locations and routes along which a product can be shipped • A logistics manager’s options for scheduling and routing decisions 10/12/2012 81 .
DESIGN OPTIONS FOR A TRANSPORTATION NETWORK Retail stores Supplier Supplie rs Retail stores Retail stores supplier DIRECT SHIPMENT DIRECT SHIPMENT WITH MILK RUNS 10/12/2012 82 .
DESIGN OPTIONS FOR A TRANSPORTATION NETWORK Supplier Retail stores ALL SHIPMENT S VIA DC Retail stores Supplier 10/12/2012 MILK RUNS FROM DC 83 .
Simplicity of operation 4. Long route. hence low cost 3. Decision points are quantity and mode 10/12/2012 84 .Direct shipment network From shipper directly to retailers. Time of transportation is short 5. Warehouses are eliminated 2. Features: 1.
Toyota plant in US Features: 1.deliver like a milkman.Direct shipping with milk runs 1. eg. From a number of suppliers deliver to a single retailer. Transport cost reduction 85 . Truck utilization 10/12/2012 3. Single supplier to a number of retailers . 2. Movement consolidation 2.
DC stores inventory and acts like a transfer point 10/12/2012 86 .All shipments via Central Distribution Center suppliers to Distribution center and Distribution center to retailers Features: 1. 2. Supply chain costs reduction when distances are large.
Outbound transportation cost is low as retailers are close to DC 10/12/2012 87 .3. Economies of scale in inbound transportation to DC.
Consolidation of small lots .Shipping via Distribution Center Using Milk Runs small lot sizes to large number of retailers from DC. Features: 1.reduction of outbound transportation cost 10/12/2012 88 .
Tailored Network Tailor made to the company needs Features: 1. Coordination is complex 10/12/2012 89 . Matches the needs of the company 2.
no.NETWORK STRUCTURE DIRECT SHIPPING DIRECT SHIPPING WITH MILK RUNS ALL SHIPMENTS VIA DC WITH INVENTORY STORAGE ALL SHIPMENTS VIA DC WITH CROSSDOCK ALL SHIPMENTS VIA DC WITH MILK RUNS TAILORED NETWORK PROS NO DC COORDINATI ON EASY LOWER TRANSP COSTS SMALLER INVENTORY MOVEMENT COSOLIDATI ON LOW INVENTORY MOVEMENT COSOLIDATI ON LOWER OUTBOUND TRANSORTA TION COSTS TRANSPORT ATON SUITES TO INDIVIDUAL NEEDS CONS HIGH INVENTORY SIGNIFICANT RECEIVING EXPENSE INCREASED COORDINATION COMPLEXITY INVENTORY COSTS INCREASED HANDLING INCREASED COORDINATION COMPLEXITY INCREASED COORDINATION COMPLEXITY INCREASED COORDINATION COMPLEXITY STILL HIGER COORDINATION COMPLEXITY Fig.22 10/12/2012 90 .
Intermodal Transportation VI. short time & flexibility are optimized for achieving overall cost reduction91 10/12/2012 . Benefits of long haul. Inter-modal transportation Intermodal movements combine the cost and/or service advantages of two or more modes in a single product movement The more popular combinations are TOFC [Trailer On Flat Car] and COFC [Container On Flat Car].
Co-ordination of different modes of transport to avoid wasteful competition Single window service to the customers Encouraging containerization both for internal as well as import/export cargo 10/12/2012 92 .
EXEMPT. PRIVATE COMMON.RAIL COMMON PIGGY BACK ROAD COMMON. PRIVATE COMMON. EXEMPT. CONTRACT. EXEMPT. PRIVATE FISHY BACK WATER TRAIN SHIP AIR AIR TRUCK [BIRDYBACK] WATER OR AIR 10/12/2012 LAND BRIDGE LAND [RAIL OR ROAD] WATER OR AIR 93 . CONTRACT. CONTRACT.
C O F C COFC 10/12/2012 94 .
TOFC 10/12/2012 95 .
TOFC 10/12/2012 96 .
10/12/2012 97 .
Roll On/Roll Off ferries [RORO]: the truck rolls on to the and rolls off at the end of the voyage 10/12/2012 98 .
Roll On/Roll Off ferries 10/12/2012 99 .
10/12/2012 LANDBRIDGE 100 .
Transshipment Transportation goods and materials to the destination using one or more intermediate destinations A technological requirement Air travel to US 10/12/2012 101 .VII.
A means of logistical cost reduction Movement consolidation Use of public carrier Inter-modal transportation Cargo meant for third country lands at an Indian port or airport (land bridge) 10/12/2012 102 .
Customs duty & transshipment Cargo cannot be moved without payment of duty Leads to congestion at gateway ports Customs Act provides a facility of transshipment of cargo without payment of duty. Between a port/airport and other ports/airports/ICDs/CFSs Between gateway port and bonded warehouses 10/12/2012 103 .
Nodal points Railways network • Growth of economy is the responsibility of state • Movement of bulk materials for industrial growth and movement of essential commodities to PDS outlets is important for a prosperous and peaceful society 10/12/2012 104 .
• State owns the net work of railways.• Hence the responsibility for logistics of those items falls on the state. net work that is the cheapest mode of transport for bulk. • State owned rail net work can link these nodes to the best advantage of state and thereby to that of 10/12/2012 national economy. • Nodal points in the value chain of such commodities can enable movement consolidation. 105 .
Nodal points are part of railways logistical infrastructure 2.Some characteristics of nodal points are as under 1. Nodal points should be closer to consumption points. 10/12/2012 106 .
3. Facilities for loading. Terminal and shunting facilities are required at these places. Strategic development of such nodal points in the country strengthens the logistical operations for essential commodities and bulk materials 10/12/2012 107 . unloading & inter modal handling 4.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.