Quản trị kinh doanh - Role of transportation in the movement of goods and services

ROLE OF TRANSPORTATION IN THE MOVEMENT OF GOODS AND SERVICES 2 TOPIC OBJECTIVES 1 Help Appreciate the role and importance of transport in the logistics chain Understand the general principles underpinning transport in logisticsIdentify the various carriers and characteristicsApply principles and theories in designing own distribution system 3INTRODUCTION 1Without well developed transportation systems, logistics could not bring its advantages into full play.Besides, a good transport system in logistics activities could provide better logistics efficiency, reduce operation cost, and promote service qualityThe improvement of transportation systems needs the effort from both public and private sectors.4INTRODUCTION 1Transportation plays a critical role in the entire logistics chainThe chain is set in motion with orders from suppliers for raw materials, semi-finished products, finished products, etc, which are transported from supply sources to production sites These raw materials are stored or sent directly to the plant to aid productionFinished goods are then sent or transported through distribution centres to intermediaries for redistribution and sale to consumers 5INTRODUCTION 2The management of transport services is an important element in logisticsThe interface between transportation and logistics systems could be described as consisting of Nodes and ModesThe node portion involves activities such as warehousing, goods handling, sorting, processing, etc. The mode portion deals with transportation services in the movement of goods and services Transport is the link between nodes 6INTRODUCTION 3 BOPPCONSUMERSDISTRIBUTERSWAREHOUSE/DIST. CENTREUNILEVERPLANTFORWARDLOGISTICSREVERSELOGISTICSMODE AND NODES (INTERFACE BETWEEN TRANSPORT AND OTHERLOGISTICS ELEMENTS7DEFINITION OF TRANSPORTATION 1The following synonyms could best provide a clue to what transportation means- Convey, Move, Carry, Bring, Transfer, ShipTransportation simply comprises all the various devices, equipment and related activities such as driving, maintenance, vehicles, etc harnessed in physically moving goods and services from point A to B which represents the nodes. Transport provides spatial mobility which helps to reposition goods and services for consumer accessibility and possession. 8DEFINITION OF TRANSPORTATION 2It adds value to the logistics function by way of providing time and place utilities. An efficiently managed transport system could reduce the overall cost of products to end-users. Transport organisations provide the following extra functions/services:PackagingFreight forwarding servicesDistributors (wholesalers)Corporate branding on vehiclesWarehousing/DepotsReverse logistics managementOthers 9DEFINITION OF FREIGHT 1The following synonyms could best provide a clue to what Freight means- Goods, Cargo, Shipment, Contents, Stowage, luggage, etcFreight is anything, other than passengers, carried by a transport mode from point a source point to an end pointIt is usually carried for a fee; and from a consignor (shipper) to a consignee (importer) 10DEFINITION OF FREIGHT 2Freight transportation is sometimes also referred to as- Cargo transportationPhysical distributionFreight transportation serves as the threaded needle (mode) that weaves the logistics elements (Nodes) together into a seamless logistics dress11Some of the factors are as follows:Globalisation; which has lengthened the physical distance covered and also costInformation, Communication and Technology; which has facilitated the flow of information along the chain; helped shortened the chainSocio-economic; which has increased demand and the need for convenience thereby affecting choice of mode and speed of flowPolitical; which has at a point integrated markets but on the other hand created physical barriers to transportationEnvironmental- use of green materials, degradationCompetition,; driving down margins, promoting innovationSTRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS I12Some of the factors are as follows:Dwindling Natural Resource; which has resulted in seeking alternative sources of supply such as water, fossil fuelRise of New Economic Powers blocs; which has switched and realigned economic resources flow and changing the balance of economic power and even impacting on political dynamics. Such economic powers are Asia Tigers, China, Brazil, India, othersNatural Disasters; such as earth quakes, tsunamis, typhoons, floods , drought,. Etc further worsening depletion and destruction of resourcesPopulation Boom,; coupled with economic development driving trade bookFinancial Crisis (Credit Crunch)- dwindling investible funds for logistics and transport activitiesSTRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS II 13The various roles played by transportation services in freight movement include the following:Movement of goods and services physically along the logistics chainhelps achieve the following logistics utilities such as Time (When) and Place (Where) and supporting Form Utilities Product storage-transport vehicle can be used for storage at shipment origin or destinationHelp build strong brand image through vehicle branding and marketingFacilitates customer satisfaction through timely delivery of goods and servicesROLE AND IMPORTANCE OF TRANSPORT 14There are different types of transport systems available for logistics organisations to choose for the movement of goods and services. The following are the key existing transport modes:Sea transport (Maritime)Road TransportRail TransportAir TransportInland Water TransportPipeline AVAILABLE MODES AND XTICS 115General Objectives for Mode SelectionIt ensures that the goods are delivered safely and on time to the customer. General qualities guiding choice of carrier include:Speed of deliveryCertainty of timingFreedom from interruption Avoidance of damageAvoidance of loss through pilferageQuality and/or impact of ancillary services16Sea/Maritime TransportThis refers to movement of goods and services by the sea/ocean. The following are the main characteristics of this mode:Best for dry and bulky items—steel or oilGenerally less expensive in relation to some other modesHas high fixed cost but low variable costSlowBad for perishable or time sensitive goodsLimited to water routesMost efficient hauler for fuel consumptionVery few accidentsThere is generally flexibility in choice due to existence of many ports around the world and number of alternative ships Mostly used for cargo consolidation, high volume, heavy weight and relatively low cost freight.AVAILABLE MODES AND XTICS 217Sea transport has the following advantages and weaknesses:AdvantagesDisadvantagesLarge volumes of cargo can be transported in one ship on one voyageShips are relatively slowCheapest method of transportPorts suffer from congestions Flexible particularly following containerisation Not all ports are well equipped and some have draught restrictionsSimilarity in infrastructure and superstructurePort practices need improving18Road TransportThis refers to movement of goods and services by the road. It is the most dominant mode of transportation in the logistics chain. The following are the main characteristics of this mode:Can move small to medium volume of goods due to capacity constraintsWidely available. It is very ubiquitousWidely accessibleHas low fixed cost but high variable costModerate to high speed due to fast turnaround time and actual trip timeFaster transit timeHigh flexibility in choice due to high availability High throughput and modal integration with other modes Mostly used for break-bulk cargo, small to medium volume, variable weight and cost freight.AVAILABLE MODES AND XTICS 319Road transport has the following advantages and weaknesses:AdvantagesDisadvantagesAny dwelling or work place can be serviced by road. (Last mile service)Size of the load is restricted by vehicle size and legislationLess pilferage of goodsUnsuitability for long distancesRoutes can be changed at short noticeDistance travelled determined by driver’s working hours and legislationTerminals are less expensiveSpeed circumscribed by lawCosts less than competing transport meansRoads are may be congested during peak periodsGreater control of over delivery locations-flexibleRestrictions on heavy vehicles in certain localitiesLess capital costLand severance and emissions20Rail TransportThis refers to movement of goods and services by the rail (tracks). The following are the main characteristics of this mode:Can move great volumes of freightGenerally less expensive in relation to some other modes such as roadGenerally less faster in relation to some other modes due to slow turnaround time and actual journey timeIt is dependent on other modes for completion of delivery, especially roadHigh fixed costs, relatively less variable costsAllows for easy unitization of freightLow accessibilityMostly used for cargo consolidation, high volume, heavy weight and low cost freight. AVAILABLE MODES AND XTICS 421Rail transport has the following advantages and weaknesses:AdvantagesDisadvantagesLarge volumes of cargo can be transported on one voyageInvestment in infrastructure and maintenance is expensiveMay be cheaper than other modes (except sea)Is limited in volumes it can transportCan carry different loads Network construction has major impact on the environmentCan link with other transport modesOperating practices need improvingMost efficient mechanized land transport (Up to 50-70% less energy to transport a given tonnage of freight than road transport )Rigid routing destinations—inflexibleVery safeMultiple handlings of goods—leads to delays22Air TransportThis refers to movement of goods and services by air. The following are the main characteristics of this mode:Limited in volume and weight it can carryHighly expensive carrying cost in relation to some other modes such as roadfastest mode in actual journey timeIt is dependent on other modes for completion of delivery, especially roadHigh fixed costs, relatively high variable costsMedium to high accessibilityMostly used for cargo consolidation, low volume, low weight, high cost freight.AVAILABLE MODES AND XTICS 523Role of Transport in Logistics (4)Air transport has the following advantages and weaknesses:AdvantagesDisadvantagesSpeed of delivery-best for time sensitive items and defined deadlinesInflexible as aeroplanes have to land and take off in an airport which may be away from final destinations.Has a good safety recordAeroplanes are noisyEmploys highly trained professionals Expensive when compared to other transport types.More effective where the goods are high value and time sensitiveTerminals very expensive to construct and maintainNot for large bulky items24Inland Water TransportThis refers to movement of goods and services by inland water bodies. The following are the main characteristics of this mode:Can move medium to high volume of goods Low cost alternative to road transportLow accessibilityNo right of wayLong transit timesAllows for roll-on-roll-off (RORO)Low speedMostly used for cargo consolidation, high volume, heavy weight and relatively low cost freight.AVAILABLE MODES AND XTICS 625Pipeline TransportThis refers to movement of freight by the pipeline. This mode is primarily used for liquid or gaseous ‘freight’. The following are the main characteristics of this mode:Can move great volumes of liquid freightOwn right of wayNot suitable for general transportLess expensive in relation to other modal optionsLow fixed costs, relatively less variable costsSecurity and safety problemsLow accessibilityMostly used for cargo consolidation, variable volume and variable cost freight AVAILABLE MODES AND XTICS 7Role of Transport in Logistics (5)Advantage and disadvantages of pipeline transport26AdvantagesDisadvantagesEnergy consumption is least in pipeline transportationThe most obvious disadvantage lies in the fact that this means cannot be used for transportation of all solids, heavy equipment, etcCost of transportation is least, for large volumes and over long leadsPipeline transportation is highly environment friendlyThe initial costs of laying the pipeline are very highSafety is an intrinsic feature of pipeline transportationProne to sabotage in disturbed areasIncrease/decrease of transportation volume can be effected in pipelines with lower time delay, disturbance and cost27Logisticians need to take into considerations the following factors when selecting the mode(s) to be used for freight haulage. The key factors are as follows:Type of Product to be transported; solid, liquid, gaseous, living, etcValue of product to be transportedWeight and volumeCustomer expectation and demandMode capability; is there enough space to carry productDistance to be coveredCost of modeTerminal and ancillary infrastructure of particular modeTransit time and reliabilityAccessibilitySecurity and safetypriorityRefer to Modal Choice MatrixOPERATIONAL FACTORS FOR ASSESSING TRANSPORT MODES FOR SELECTION 28Modal Choice Matrix Size of order/load100TRoadRoad/railRail/seaSea20TRoadRoadRoad/railRail/seaPalletRoadRoadRoad/railAir/seaParcelPost/roadPost/road/airPost/road/airPost/airShortMediumLongVery longDelivery distance29Inter-modal Transport (Modal Split)This simply refers to where more than one mode or different modes of transport are used to move freight from point A to point B. ‘The movement of goods in one and the same loading unit or vehicle, which uses successively several modes of transport without handling of the goods themselves in changing modes’- The European Conference of Transport Ministers.Inter-modal (modal split) transport helps facilitate freight movement globally and over different terrains and environmental conditions.KEY FREIGHT TRANSPORT CONCEPTS 130Inter-modal Transport (Modal Split)Intermodal or combined transport has increased because of:The extension of market areasConcerns on the impact of transport on the environmentNew improved systems of modal interchangeIncreasing road congestionRestrictions on vehicle size, weight limits and operating timesKEY FREIGHT TRANSPORT CONCEPTS 1 cont31Inter-modal Transport (Modal Split)The following modes are possible:Containerisation using road, rail, sea and inland waterwaySea transport combined with road transport eg. Roll-On Roll-OffSea transport combined with rail transportRoad and rail combinations eg. Trailer on truck or truck/trailer on train (piggyback)Swap body systems for road/rail useKEY FREIGHT TRANSPORT CONCEPTS 1 cont32Modal ShiftThis is a current concept being pursued by Japan. This simply refers to a conscious effort to offload freight from one dominant mode (especially road) to other modes (rail/sea). The main factors driving the pursuit of modal shift are:Environmental; global warmingCost savingsEnergy Labour shortages and savingsTraffic SustainabilityPrevention of deterioration of infrastructure of a mode KEY FREIGHT TRANSPORT CONCEPTS 233Cargo ConsolidationThis simply refers to the aggregation of small amounts of cargo (mostly from different points into bulk cargo for movement into mostly a single point or destination. Cargo consolidation facilitates inter-modal transportation and modal shift.Light trucks move small disaggregated cargo to small depots; a heavy cargo truck moves aggregated cargo (consolidated goods) collected from these depots to a central distribution centre KEY TRANSPORT CONCEPTS 34Break-Bulk CargoThis simply is the reverse of cargo consolidation. It is the disagregation of bulk amounts of cargo (mostly from one point, into small different cargo for movement into mostly multiple points or destinations.A heavy cargo truck moves consolidated goods to distribution centre; light trucks then move in to pick disaggregated goods to different destinations (depots).KEY TRANSPORT CONCEPTS CASE STUDYFORMER CARGO TRANSPORT SYSTEM GHS GHSGHSGHSGHSGHSGHSGHSGHSGHSNationalStoreRegionalDistricts700km300km500km250km35NEW CONSOLIDATED CARGO PHYSICAL DELIVERY MODELNationalStoreGHSGHSGHSGHSRegional StoreHospitalsCONSOLIDATEDCARGOBREAK-BULKCARGO36SummaryTrucking—very flexible to your needs, but prone to accidents Rail—most economic land transportation, but limited in final destinationsOcean—inexpensive, but slowAir—moves at the speed of business, but with a costAssignment akpe na mi!