TRANSPORTATION

…. Load Unitization, Storage &

Transportation
TRANSPORTATION
• Backbone of logistic industries
• The most visible part of logistics operations
• Occupies a major part of the cost
• Growing as a dynamic area of the SCs
• Performance depends on –
• Infrastructure – road, railways, sea ports and airports
• Ropeways and Pipeways are additions
• Network of transports
• Multi-modal operations
• Route planning
• containerization
 TRANSPORTATION: An Introduction
• A unique element of the logistics
• A sub system that moves goods from the point of production to point of
consumption.
• A key to supply chain, products being rarely produced & consumed in one
location.
• All traders in (inter)national level want to minimize the overall
transportation cost
• by selecting the best mode
• By studying the circumstances
• By ensuring the product to reach the customer in time.
Contd.

Transportation costs are generally determined by :

• distances between the point of origin and destination.
• nature of cargo
• mode of transportation.
• size and quantity of cargo to be shipped.
Transportation costs can be controlled by judicious, appropriate and
prudent mode choices and should be constantly reviewed as changes in
the business environment take place.
 Importance of transportation decisions
• In the present environment, efficiency in logistics operations plays an important
role in determining a firm’s competitiveness in international markets.
• The role of transportation is even more important for those economies that have
spatial and scattered population and scattered markets.
• The importance of timely and cost effective transportation in international trade
has increases manifold due to several developments such as regional and free
trade agreements and economic partnership agreements.
• Therefore , efficient transportation operations create time, place, form and
possession utilities in economy.
Carrier selection

Transportation Cost This includes rate, minimum weight, loading and unloading charges.

Transit time is the total time that elapses from the time the consignor makes
Transit Time the goods available for dispatch until the carrier delivers same to consignee.
Reliability refers to the consistency of the transit time that a carrier
Reliability provides.

Capability refers to the carrier's ability to provide the equipment and

Capability facilities that is required for the movement of particular commodity.

Accesibility Accessibility refers to carrier's physical access or geographical limits.

Security Security refers to the arrival of goods in the same condition.

 Factors for choice of transport mode
• Importer Choice and Bargaining power., Cargo Preference Law
• Nature of traded cargo., Perishable, special packing. Currency , gold etc.
• Degree of packing and Associated costs involved.
• Ease of handling cargo shipment.
• Statutory Regulations concerning transit of goods.
• Suitability of Transport Services for Cargo.
• Transit time Required and related urgency for shipment.
• Amount of Insurance Payable on particular mode of Transport.
• Incoterms Used in Sales contract.
• Regulation concerning dangerous goods
• IATA-DGR(Air); IMDG(Marine); ADR(Road); RID(Rail)
Transport mode selection
• In global competitive scenario increase in cost
• Impact on the market development and expansion.
• Proper analysis, evaluation, assessment of trade routes,
• choice of mode of transport, and
• type of carriers
• logistics cost reduction and improvement in the quality of service, along with
profits to a firm.
• attention to the constantly changing methods of (international) physical
distribution system and should try to explore the new opportunities that may
come up and examine the best permutations and combinations of the mode of
transport
Selection criteria of mode of transport.
Exporter should make the decision based on the priority needed for dispatch of
Priority cargo such as deadline nearing and contingency replenishment.

Required delivery Required delivery date(RDD) should match the priority and match against all other
date requirements, movement controllers can select the best mode to get in there.
Size(weight and dimension), value and compatibility influence the choice of mode
of transport as restrictions may dictate a particular mode due to such parameters
Type of Cargo i.e. air versus surface transport

International marketers always try to move the right item on the right mode at the
Economy right time. Economy in logistical operations predominate their decisions.

Available Logisticians should know what is available in market for transportation and keeps
Resources the exporter updated on availability of vehicles and status of rates.
Innovations and developments affecting
transport selection criteria.
• Increasing use of intermodal transportation and trade.
• Development of Ultra large carriers for all kinds of cargo.
• Development of reefer ships and containers.
• Development of multiuse and multipurpose ships.
• Innovations in use of containers as per requirement of different
types of cargo.
• Increased trade of automobiles with Ro-Ro (roll-on, roll-off) ship with
easy loading and unloading process.
• Development of liquid bulk cargo vessels cryogenic process of
pumping in and pumping out.
Principles and Functionality of Transportation
• Principle of Economies of scale-
Transportation cost per unit of weight is inversely proportional to the total
transport size and volume.

• Tapering Principle-
Transportation cost is inversely proportional to distance of transportation.
Principles and Functionality of Transportation

Movements of Physical Safety of

Storage of product
Products goods

Transport
functionality in
International
Logistics
Types of Transport Carriers
• There are four types of transport carriers.
Common Carriers. – public carrier, open to all
Contract Carriers. – leased carrier for a period
Private Carriers. – owned individually, run for own or on rental work
Exempt Carriers. – special carrier like milk van, freezer, water tank,
ambulance, fire-brigades, news van, postal van, carrier for petroleum
and other dangerous goods.
Classification of Transportation
Human and animal transport

Land Transport Road Transport

Railway
Classification of
Air Transport
Transport
Pipeline

Inland Water Transport

Water transport

Water Transport
Modes of transportation
• Surface
• Road
• Rail
• Water
• Sea
• River
• Air
• Pipe lines (for liquid/ gas/ powdered-solids)
Modes of transportation
• Light and small quantity
• Surface
• Road
• Air
• Heavy and bulk quantity
• Rail
• Water
• Sea
• River (In-land)
• Light to medium weight and continuous flow
• Pipe lines (for liquid/ gas/ powdered-solids)
• Ropeways (exceptional requirement in hill areas)
Factors determine the mode
• Speed and availability of service
• Reliability
• Capability
• Frequency
• Cost of freight handling
• Volume, Distance, Product Density, Product Shape, Market Dynamics
• Transportation network
• Other factors
• Routes/planning
• Containerization
Transportation Network
Origin Destination

• Point to point network ….

Destination
Origin Delivery Point
• Multiple delivery points …………………………….
Delivery Point
Origin Destination
• Trans-shipment points Long Distance
Haulage
Local Area
Distribution
Multiple Road Port
Trans-shipment Terminal
Pickup & Distribution Terminal
Point

• Nodal network ………………………………………… Multiple

Pickup & Distribution
Road
Terminal
Road
Terminal
Rail
Terminal
DC DC Multiple Road Air
Terminal
• Hub and Spoke network Terminal
Pickup & Distribution

Mother
DC Hub DC
 LEGACY_Transportation Analysis &
Planning
• Analyzing transportation lanes and modes regularly will ensure that inefficiencies are
identified quickly and solutions can be planned accordingly.
• To help evaluate a supply chain network, the sound transportation analysis looks at many
different factors including
• demand forecasting,
• supplier location and capacity,
• inventory location,
• service level requirements and
• transportation costs.
• Transportation Planning includes
• Diversifying with NVOCCs
• Utilizing FTZs
• Strategic network of distribution centers (dedicated or multi-client models)
• Multi-mode transportation optimization
• Freight management alternatives
• Reverse logistics opportunities
Resources
to help in
cargo
moving:
Common Questions
• How do I maintain control of my logistics operation when outsourcing to one or many providers?
• A proper client-outsourced partner relationship gives the client control through established performance metrics,
and gives the provider the control to execute supply chain functions to meet and exceed these metrics.
Learn more about establishing the right levels of supply chain control in this interview with

• Does getting a slightly better price matter if I can’t get my provider on the phone when I need them?
• Make sure that your provider gives you the contact information of single point of contact, who will be
available at all times if you have questions about your goods in transit. If you can’t locate your provider
when you need an answer, marginal cost savings can turn into a big liability.

• Am I able to have advanced visibility to my freight?

• Does your provider offer 24/7 visibility to your cargo? Current technology supports real-time visibility, and is
now an industry standard, allowing you to see where your goods are at any time. True advanced visibility
is knowing where your cargo is at all times—and being able to talk to a person about where it is going.
Technology and service alleviates uncertainty and allows you to service your own clients.
Common Questions
• Do I have a resourceful partner who will proactively look for solutions to potential transportation problems
—either before my shipment leaves or during transit?
• Your logistics operation should never be placed on autopilot. You should hear from logistics providers
often regarding ways that they can continue to get you a better price, faster delivery or an update of a
possible supply chain disruption that they are monitoring.
• Is being a small fish in a big pond affecting my ability to service my customers?
• Again, saving a few dollars can result in delivery uncertainty when your booking gets bumped for a
company with larger freight volume. These considerations have a much larger impact on your ability to
service customers than do the incremental savings gained by going with the low cost logistics provider. Do
I have a resourceful partner who will proactively look for solutions to potential transportation problems—
either before my shipment leaves or during transit?
• Your logistics operation should never be placed on autopilot. You should hear from logistics providers
often regarding ways that they can continue to get you a better price, faster delivery or an update of a
possible supply chain disruption that they are monitoring. Is being a small fish in a big pond affecting my
ability to service my customers?
• Again, saving a few dollars can result in delivery uncertainty when your booking gets bumped for a
company with larger freight volume. These considerations have a much larger impact on your ability to
service customers than do the incremental savings gained by going with the low cost logistics provider.
Assignment - 4
• What are the various modes of transportation? Explain how these
modes provide competitive advantage in various situations.
 Transportation Management System (TMS)
A transportation management system (TMS) is a subset of supply chain management
 (SCM) that deals with the planning, execution and optimization of the physical
movements of goods. In simpler terms, it's a logistics platform that enables users to
manage and optimize the daily operations of their transportation fleets.
• TMS is offered as a module within enterprise resource planning (ERP) and SCM suites and helps organizations move inbound -- procurement -- and outbound --
shipment -- freight using tools such as route planning and optimization, load building, operations execution, freight audit and payment, yard management,
order visibility, and carrier management. The ultimate goals of using a TMS are to improve shipment efficiency, reduce costs, gain real-time 
supply chain visibility and enhance customer service.
• Typically, TMS serves both shippers and logistics service providers. Manufacturers, distributors, e-commerce organizations, wholesalers, retailers and 
third-party logistics (3PL) companies are some of the major users of TMS software.
• Benefits of TMS - A fully deployed transportation management system can benefit organizations in the following ways:
• Transportation order planning and execution. TMS integrates well with enterprise order management, warehouse management and purchasing systems,
customer relationship management (CRM), supplier relationship management (SRM), and other systems for managing transport demand. It enables users to
plan and manage both international and domestic shipments and determines the cheapest and most efficient carrier and mode using better route planning,
load optimization, carrier mix and mode selection.
• Supply chain visibility and better control of inventory management. TMS enables users to track and monitor the lifecycle of orders and shipments in real time
and get status updates on each. This offers users an accurate forecast for the inventory and improves the visibility and accountability of the supply chain
network.
• Reduce invoice errors. By automating the freight payment and audit processes, users can reduce errors that may arise from manual procedures.
• Transport intelligence. Most TMS software offers users extensive insights and reporting capabilities that provide them with detailed visibility into freight data
and metrics to help pinpoint any discrepancies. With this data, users can make necessary changes to improve service delivery, reduce cost, and create reports.