Importance of efficient transportation in Supply Chain

• Transportation is used to reduce costs: The transportation in a supply chain can be used to control costs in a business operation. Freight and fuel costs take up most of the logistics
budget. The right data gives shippers insights into freight flows and other variables that are likely to impact transportation costs to various destinations. This gives them a broader insight
into the transport ecosystem and how it affects the entire supply chain.
• Transportation is used to enhance customer service: The transportation in a supply chain can be used for customer service. As products move from one location to another, and from
the supplier to the customer, the needs of the customer must be at the heart of the transportation system. Making sure products reach a customer in the condition they were shipped in
and on time are essentials of transportation in a supply chain.
• Transportation is used to synchronize with supply chain technology: The daily monitoring of transportation operations is best handled by a transportation management software (TMS).
Among activities tracked by a TMS are route planning, fleet management, fuel costing, supplier relations, cargo handling, and customer communications.
• Transportation is used to boost the economy: To freely move products from domestic to international markets and vice versa, an efficient transportation system is a must. The vast
distances between farms, mines, urban centers and forests demand a sound transportation system so that manufactured products can reach customers as efficiently as possible.
• Transportation is used to bypass geographical limitations: In the US alone, fifty million tons of products are freighted via trucks every day at the cost of more than $50 billion. In Canada,
730.6 million tons of commodities were freighted via trucks in 2014. Compare this to 310.3 million tons of freight transported by railway in the same year.

What is Freight Rate?

• A freight rate is a price at which a certain cargo is delivered from one point to another. The price depends on the form of the cargo, the mode of transport, the weight of the cargo, and
the distance to the delivery destination.
Different modes of transportation in supply chain
• Trucks: Low cost when compared to air transport. Accessibility is the best part of this type of transportation because it can reach tight corners of the country. It can be used for small
and frequent shipments. Major drawback of this transportation system is Range as it cannot deliver goods overseas. Also there is a limit on the quantity.
• Air: This is a premium transportation method. It’s the fastest method of transportation at present. Also the best part of this method is the range up to which it can deliver goods. The
major drawback of this transportation system is high cost. Also there is requirement of further transport methods to take goods to the destination from the airport. It is good for
emergency delivery if the shipment is late so it might not be a necessary option.
• Rail: This is the most consistent delivery system due to its punctual schedule and low cost as well has high quantity transfer. The cost is very low as compared to the air transport and
trucks. It is also efficient in almost all sorts of weathers. The major drawback is the inefficiency in delivering small shipment. Also there is no flexibility of time and location.
• Ships: This is used for delivering very large quantity goods and also limited quantity in containers. The cost of this system is low. It is basically used for port to port transfer. This method
is very slow and also the accessibility is very limited.