Arsi University

College of Business & Economics

Department of International Trade and Investment
Management

Course Title: Transportation and Freight Management

Credit Hr: 3
Course: ITIM 3042

By Assefa Balda (Ph.D.)

July, 2021
 CHAPTER ONE:
An over view of Interview Transportation
Management
1.1Evolution of Transportation
• From the beginning of history, human compassion has revealed an
urge for mobility leading to a measure of Society's progress.
• For any country to develop with right momentum modern and
efficient Transport as a basic infrastructure is a must.
• Throughout the history of any nation that a proper, extensive and
efficient Road Transport has played a major role.
• Roads are considered as veins and arteries of a nation, passenger
and goods transported are likened to blood in circulation.
 Cont…

What is transportation?
 Transport (British English) or transportation (American
English) is the movement of people and goods from one place
to another.
 Is movement of fright, people and information from one place
to another.
 The term is derived from the Latin words Trans ("across") and
portare ("to carry").
 Transportation function divided in to passenger and freight
transportation.
 Freight transportation is the economic movement of
commodities and products and the effect of such movement is
on the development and advancement of business.
 Cont…
 Now days most sections of the global economies are
operating in an environment which is much more
complex and competitive than it was before.
 Businesses and other organizations are striving to be
more efficient (reducing their cost of doing business)
and more effective (improving customer service) to
survive in such environment.
 A critical element for achieving these two objectives
simultaneously(i.e, efficiency and effectiveness) is the
SC organizations, and transportation is a critical
ingredient for overall SC performance.
 Transportation is the glue that holds the supply
chain together.
 Cont…
The five external forces driving the change in transportation are:
1. Globalization: Some individuals have described globalization as
“the good, the bad, and ugly.”
 with the “ugly” being the global recession/collapse of 2009-10
 the “bad” being the loss of manufacturing and service jobs
 the “good” being the lower prices, wider availability of goods, and
new employment opportunities that we have enjoyed.
2. Technology: It can be viewed as an internal change factor since it
can enhance the efficiency and effectiveness of an organization’s
operations.
 It can also be viewed as an external driver of change since the
rapid development of technology (hardware and software) and its
application by individuals, forces companies to change and
adapt; otherwise, they may perish or die.
 Cont…

3. Supply Chains Integration and Consolidation:

 The power shifts have occurred along supply chains with
consolidation and integration among retailers, wholesalers,
and other members of channels of distribution.
 Retailers have come to recognize the importance of
efficient (read low cost) and effective supply chains for
delivering the best value-price combinations for
consumers.
 Other members of SC such as: transportation companies,
have had to respond to their requests for scheduled
deliveries, special packaging, advanced shipment
notices (ASNs), and other related services.
 Cont…
4. Consumer Empowerment: today’s consumers are empowered by
education, income, and especially by information.
 Their ability to gather information about products and services has
enabled them to obtain the best price-value propositions for their
situation.
 They want and demand quicker response times, more
comprehensive and convenient offerings of products and
services, and more customization of the products they buy.
 they are demanding competitive prices, high quality, flexibility
of operations and service, and responsiveness to their special
needs.
 This consumer revolution has dramatically impacted not only
retailers but also the transportation companies and logistics
services.
 Cont…

5. Government Policy and Regulation: The deregulation of interstate

transportation services, communication companies, and financial
institutions which occurred primarily during the 1980s created a
more competitive environment in these industry sectors.

 In more recent years, a major push by various government agencies

toward sustainability and green supply chains has caused companies
to reexamine their business practices, business models, supply
chains, and so forth.

 Transportation can have a significant impact on the environment,

and some sectors (such as the motor carrier industry) are frequently
cited for their carbon footprint.
1.2 Roles of transportation
• Transportation is a very visible element of
logistics.
• Transportation has the following roles:
Transport contributes in Growth of industries
whose product requires quick marketing.
Transport helps in increase in the demand for
goods.
Transport creates place utility.
Transport creates time utility.
Transport helps in stabilization of price.
 Cont…

Transport ensures even flow of commodities

into the hands of the consumers throughout the
period of consumption.
Transport enables the consumers to enjoy the
benefits of goods not produced locally.
Transport increases mobility of labor and
capital.
For success of war: etc
 1.3 Transport Functionality

 Transportation enterprises provide two major

services:

 Product movement: The primary transportation

value proposition is product movement up and down
the supply chain.

 Product storage: A less visible aspect of

transportation is product storage.
 1.4 Transport principles
• There are two fundamental economic principles that
impact transportation efficiency: these are economy of
scale and economy of distance.
A. Economy of scale: In transportation the cost per unit
of weight decrease as the size of a shipment increases.
 For example, truckload shipments that utilize an entire
vehicle's capacity / full truck load (FTL) have lower
cost per unit of weight than less than truck load (LTL).
 It is generally true that larger capacity transportation
vehicles such as rail and water are less costly per unit
of weight than smaller capacity vehicles such as
trucks and air.
 Cont…
B. Economy of distance: It refers to
decreased transportation cost per unit of
weight as distance increases.
For example, a shipment of 800 miles will
cost less to perform than two shipments of
the same weight each moving 400 miles.
longer distances allow fixed cost to be
spread over more miles, resulting in lower
per mile charges.
 1.5 Participants in transportation operations

Unlike most commercial transactions, transportation

decisions are influenced by six parties:
1. Shipper and Consignee: they have a common interest in
moving goods from origin to destination within a given
time at the lowest cost.
2. Carriers: Carriers are people, businesses or organisations
that operate and offer transportation services for shippers
to maximize its revenue for movement while minimizing
associated costs.
3. Government: The government has a vested interest in
transportation because of the critical importance of
reliable service to economic and social well-being.
 Cont…

Government:
• Desires a stable and efficient transportation environment to
support economic growth.
• Because of the direct impact of transportation on economic
success, governments have traditionally been more involved in
the practices of carriers than in most other commercial
enterprises.

• Traditionally regulate carriers by restricting markets they

could service and regulating prices they could charge.
• also promote carrier development by supporting research and
providing right-of-way such as roadways and airports.
 Cont…

4. Internet: The primary advantage of Internet-

based communication is the ability of carriers to
share real time information with customers and
suppliers.
5. Public: The public, is concerned with
transportation accessibility, expense, and
effectiveness as well as environmental and safety
standards.
 The public indirectly creates transportation
demand by purchasing goods.
 1.6 Demand for Transportation
Transportation affects every person either directly or
indirectly.
 The goods we consume, our economic livelihoods,
our mobility, and our entertainment are impacted by
transportation.
Transportation plays an important role in helping to
bridge the supply and demand gap.
Whether the countries are industrialized or not
industrialized they are not self sufficient.
 People move from areas where they are currently
situated to areas where they desire to be on a daily,
weekly, or permanent basis.
 Cont…
Transportation has a definite, identifiable
effect upon a person’s lifestyle.
An individual’s decisions about where to
work, live, and play are influenced by
transportation.
Generally the demand for transportation is
referred to as a derived demand.
Freight is not usually transported to
another location unless there is a need for
the product.
 1.7 Transportation measurement units

The demand for transportation is usually

measured in weight-distance units for freight
and passenger-distance units for people.
For freight, the usual demand unit or metric is the
ton-mile and for people the appropriate unit is
the passenger-mile.
While neither the ton-mile nor the passenger-
mile is perfect, they are still the best unit of
measure that we have.
The end of Ch 1
Thanks