Choice of Mode of

Transportation
YouTube clipping on Global Trade:

■ https://www.youtube.com/watch?v=Tzjn-v99fZw
Introduction
■ Conducive global business environment
■ Opportunities for international trade and thus, logistics.
■ Efficient logistics operations give competitive advantage to
industry.
■ Governments investing huge amounts on logistics infrastructure.
■ Trade logistics help in maintaining adequate inventories and avoid
stock-outs and over supply in a cost effective manner.
■ Of all elements of ITL, (customer services; information processing;
packaging, labelling, and marking; transportation; warehousing,
inventory management; etc.) choice of mode of transportation is
considered to be a tough decision.
■ Timely and cost-effective holds the key in international trade, especially with the trade
agreements/partnerships providing opportunities for huge production capacities and
economies of scale.
■ Transportation logistics and its competency, today, has become a key for firm’s
competitiveness in international markets.
■ Choice of mode of transportation is governed by trade-off between shipping time and
cost of transport.
■ Issues such as distance, perishability, weight, and size help determine the mode of
transport.
■ Modal choice decision in ITL is based on a trade-off of factors such as customer service
levels, delivery schedules, required inventory level, and cost of transportation.
■ Cargo (shipment) volume, trade routes, carriers used, and schedule of logistics
operations are key elements of firm’s transportation strategy.
 Forces Shaping Modal Choice
Decisions
CHOICE OF MODE

Lower Logistics Cost

OF TRANSPORT

Proper Inventory Levels

Higher Customer Services
Timely delivery schedules
Importance of Transportation Decision
■ Firms operating in international trade look for seamless, cost-
effective, and timely movement of goods.
■ Transport networks are more critical for countries that have spatial
and scattered population and material resources as they serve markets
that need warehouse and storage facilities at each point.
■ Therefore, efficient transportation operations create time, place, form,
and possession utilities in an economy.
Clipping on Global Supply Chain

■ https://www.youtube.com/watch?v=Bblo8_B32Co
Transportation Decision and Utilities Creation

Possession
Utility

Place TRANSPORTATIO Form

Utility N DECISIONS Utility

Time Utility
 Carrier Selection Determinant in International Trade

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

• Transit time is the total time that elapses from the time the consigner makes the goods available
Transit Time
for dispatch until carrier delivers same to the consignee.

Reliability • Reliability refers the consistency of the transit time a carrier provides.

• Capability refers to the carrier’s ability to provide the equipment and facilities that is required for
Capability
the movement of particular commodity.

Accessibility • Accessibility refers to carrier’s physical access or geographical limits.

Security • Security refers to the arrival of good in the same condition.

Factors Involved in the Choice of Transport
Mode for an International Shipment
■ Importer’s Choice and Bargaining Power – Incoterms, Cargo Preference Law.
■ The Nature of the Traded Cargo – dimension, volume, weight.
■ The Degree of Packing and Associated Costs Involved – each mode of
transport has specifications on packing and involve different costs
■ The Ease of Handling in Cargo Shipment – cargo that can be easily handled
attract lesser costs.
■ Statutory Regulations Concerning Transit of Goods – reefer cargo, terminal
facilities, frequent checks at terminals (during transit), weight and length
restrictions.
Factors Involved in the Choice of Transport
Mode for an International Shipment
■ Regulations regarding Dangerous Cargoes – Stringent rules regarding
packing, stowing, marking, documentation, and mixture of dangerous
cargo with other cargo
■ Suitability of Transport Services for Cargo
■ The Transit Time Required and Related Urgency for Shipment
■ Amount of Insurance Payable on a Particular Mode of Transport
■ Incoterms Used in Sales Contract
■ Freight and Documentation Costs
Modal Choice - Key Considerations
Video :Transport and distribution for international trade
https://www.youtube.com/watch?v=UQU6VJZfPbY

■ The Frequency of Service of Mode of

Transportation
■ Reliability of a Transport Mode
■ Speed of the Transport Mode
■ Cost of Transportation
■ Quality of Transport Service
Innovations & Developments
Affecting Transport Selection Criteria
 Types of ISO Containers

■ Video link of
youtube on Types of
Containers:
https://www.youtube.
com/watch?
v=BQhSuUgsLs4
Innovations & Developments
Affecting Transport Selection Criteria
❑ Increasing use of Inter-Modalism/ and Multi-Modalism in international trade
❑ Development of Ultra-Large Carriers for all kinds of cargo
❑ Development of Reefer ships and Reefer Containers
❑ Development of multiuse and multipurpose ships

❑ Innovations in use of containers with wide range of additional facilities as per requirement of different types of
cargo
❑ The introduction of high cubed container in international trade logistics
❑ The provisions of the sea/air or air/sea combined transport operations leading to a modalism
❑ Increased trade of automobiles with Ro-Ro Ship with easy loading and unloading process of few hours.
❑ Development of Liquid Bulk Cargo vessels with cryogenic process of pumping in and pumping out
 Characteristics of alternative transport modes

Size And Cost

Tempera Transit Time And
Mode Weight Safety Fragility Per Overall Features
ture Reliability
Restrictions Unit
Possible
Little Or No Highly Reliable Product High Cost, Ideal When Speed Is Needed Or To
Air To High Fast And Reliable
Flexibility Regulated Handling Ship High-Value, Low-Bulk Items
Control
Less Slow, Reliability
Virtually Low Cost For Shipping Bulky, Low-Value Goods,
Sea Regulated Variable Reliability Controlled Low Depends On Port
Limited Slowest Form
Than Air Infrastructure

Some
Transport Vehicles
Dimensions Few Nation’s Largest Carrier, Cost-Effective For
Rail Have Vibration And Controlled Low Reliable
Restrictions Restrictions Shipping Bulk Products, Piggyback
Shunting Problems
(Height)

Height And Less

Handling Problems Moderat Versatile & Flexible In Routing & Time Schedules, Efficient
Road Weight Regulated Controlled
Can Occur Often e Reliability For Short-Hauls Of High Value Goods
Restrictions Than Air

Ship Petroleum, Natural Gas, And Chemicals

Pipelines From Sources To Markets. High Investments,
Types of transport carriers
■ Common Carriers
■ Contract Carriers
■ Private Carriers
■ Exempt Carriers
End of the topic

■ https://freighthub.com/en/blog/modes-transportation-explained-best/
■ http://www.logisticdirectory.co.za/blog/international-logistics-modal-choice/