Physical Distribution

Role of Transportation in the Supply Cain

Modes of Transportation
 Role of Transportation in Supply Chain
• The Objective of Transportation
To satisfy customer requirements while minimizing costs and making a
reasonable profit.
 Legal Forms of Transportation
1. Common Carriers
2.Contract Carriers
3. Exempt Carriers
4.Private Carriers
1. Common Carriers
• Offer transportation services to all shippers at published
rates, between designated locations.
• A common carrier is legally bound to carry all passengers
or freight as long as there is enough space, the fee is paid
and no reasonable grounds to refuse exist.
2. Contact Carriers
• Might also be common carriers; however, as such, they
are not bound to serve the general public.
• Contract carriers serve specific customers under
contractual agreements..
3. Exempt Carriers
• Are also for-hire carriers, but they are exempt from
regulation of services and rates.
• Carriers are classified as exempt if they transport certain
exempt products such as produce, livestock, coal or
newspapers
4. Private Carriers
• A private carrier is not subject to economic regulation
and typically transports goods for the company owning
the carrier.
• Flexibility and control of product movements also play
major roles in the ownership of a private carrier.
Mode of Transportation
1. Motor
2. Rail
3. Air
4. Water
5. Pipeline Carriers
1. Motor Carriers (Trucks)
• Most flexible mode of transportation
• Motor carriage offers door-to-door service, local pickup
and delivery and small as well as large shipment hauling.
• It has very low fixed and variable costs and can compete
favorably with rail and air carriers for short to medium
hauls (distances shorter than 1,000 miles) and is still
competitive with other forms of transportation for long
cross-country shipments, particularly if there are
multiple delivery destinations.
Motor Carriers (Trucks) Classification
1. Less-than-truckload (LTL) carriers
- LTL carriers move small packages or shipments that take
up less than one truckload and the shipping fees are
higher per hundred weight than TL fees.
2.Truckload (TL) carriers
- consolidate many small shipments into one truckload,
and then break the truckload back down into individual
shipments at the destination for individual deliveries
2. Rail Carriers
• Rail carriers compete most favorably when the distance
is long and the shipments are heavy or bulky
• Rail service is relatively slow and inflexible; however, rail
carriers are less expensive than air and motor carriers
and can compete fairly well on long hauls.
3. Air Carriers
• Transporting goods by air is very expensive relative to
other modes, but also very fast, particularly for long
distances
• The amount of freight hauled, however, is quite small,
since airlines cannot carry extremely heavy or bulky
cargo
4. Water Carriers
• Shipping goods by water carrier is very inexpensive but
also very slow and inflexible.
• Like rail and air transportation, water carriers are
typically paired with motor carriers to enable door-to-
door pick-up and delivery service.
 5. Pipeline Carriers
• Pipeline carriers are very specialized with respect to
the products they can carry; however, once the
initial investment of the pipeline is recovered, there
is very little additional maintenance cost, so long-
term pipeline transportation tends to be very
inexpensive.
• Pipelines can haul materials that are only in a liquid
or gaseous state and so the growth potential for
pipelines is quite limited.
• The continuous nature of pipeline flow is what
makes it unique. Once the product reaches its
destination, it is continuously available.