Transportation

1
 2

Transportation
Itis important to strike the right
combination between
carrier services & pricing structures
to meet the firms objectives
A wide range of alternatives exist for
product or raw material movements
Hire (vehicles) transportation..
 3

Transportation
Own transportation
Contractual transportation

Service options include:-

Changes in billing
Information availability
Product liability
Pick up & delivery practices
 4

Transport Functionality & Principles

Transportation functionality provides

two major functions:-
Product movement
Product storage
 5

Transport Functionality & Principles

Product movement
A primary transport function is product
movement up & down the value chain
Products should be moved only when it
truly enhances product value
The above is necessary because
transportation requires the following
inputs:-
 6

Transport Functionality & Principles

Temporal :Time related. Because
products are in accessible during the
transportation process
Financial :
Investment in internal fleets may be
required,
Driver expenses
Vehicle operating costs..
 7

Transport Functionality & Principles

Other admn costs : Product loss or damage
Transportation contracts are expensive
Environmental:
Itaccounts for 67% of the total domestic
use of oil in the US!!!!
Air Pollution
Noise Pollution
Traffic congestion
 8

Transport Functionality & Principles

Product Storage
A less common transportation function is
temporary storage
Vehicles make very expensive storage
facilities
It can become necessary due to in-
transit compulsions .
 9

Transport Functionality & Principles

When loading unloading is expensive
and goods have to be moved from one
warehouse to the other after a gap of a
few days
Another reason could be when goods
have to be diverted and original delivery
destination is changed while goods are
in transit
 10

Principles of Transportation
There are two fundamental principles
guiding transportation management
& operations:-
Economy of Scale
Economy of distance
 11

Principles of Transportation
Economy of Scale
Refers to the characteristic that
transportation cost per unit of
weight decreases when the size of
the shipment increases
 12

Principles of Transportation
Economy of distance
Refers to the characteristic that
transportation cost per unit of
distance decreases as the distance
increases
For example a shipment of 800 kms
distance will cost less that 2
shipments of 400 kms each.
 13

Transportation Decisions
Transportation decisions are often
influenced by 5 parties:-
1. The shipper : Original party
2. The consignee: destination party
3. The carrier
4. The Government
5. The public
 14

Transportation Decisions
Public
Information Flow
Goods Flow

Governmen
t

Consignee
Shipper Carrier (Receiver)
 15

Transportation Decisions
Shipper & Consignee: have the common
objectives as under:-
Move goods from origin to destination
Within a prescribed time
At the lowest cost
Services include : specified pickup &

delivery time
Zero loss & damage
 16

Transportation Decisions
Carrier takes a different
perspective :
They desire to maximize their
revenue
Want to charge highest rate
Minimize labor, fuel, vehicle cost
They therefore desire flexibility in
pickup and delivery time
 17

Transportation Decisions
Government and Public wants
to ensure the following :
They desire a stable and
efficient environment to sustain
economic growth
Transportation is an important
factor to achieve the above
 18

Transportation infrastructure
Comprises of the following:-
1. Roads: with Hub & Spoke model
2. Railways: Integration with road transport
3. Waterways :Ports, integration with road,
air transport
4. Air transport : Airports, integration with
road/ waterways.
5. Pipelines