Logistics Final (Chapter 8-10)

Economy of Distance

: cost per unit decreases as distance increases ♣ Often called tapering principle ♣ Longer distance allows fixed cost of carrier to be spread over more miles, lowering per mile / per unit charge. ♣ Goal is to maximize the size of load and distance shipped while still meeting service expectations (for economy of scale too)

Economy of Scale

: cost per unit decreases as size of shipment increases

Motor Carrier

: expanded rapidly since end of WWII ♣ Nearly 1 million miles of highways ♣ Benefits include; speed of transit, ability to operate door-to-door ♣ More efficient than rail for small shipments & short distances ♣ MOST FLEXIBLE MODE OF TRANSPORTATION ♣ Carries > 80% of US freight ♣ Competes with rail & air for short-to-medium hauls • Short haul; 0-200 miles of drivers home terminal • Long haul; >200 miles from drivers home terminal ♣ Max freight weight; 45,000 pounds • Entire truck weight can't exceed 80,000 pounds • Typical tractor weights 35,000 pounds ♣ Standard trailers 53' long and 8'6" wide and 9' high • Max cube utilization 3509 • Max pallets 60 ♣ Rate structure: flat rate or cost per mile o Less-Than Truckload ♣ Commodities evaluated/grouped on four characteristics • Density (primary); space in relation to weight • Stowing; ability to load other freight in same trailer • Handling; how difficult it is to actually handle the freight • Liability (value & risk); potential claims from damage or loss ♣ There are 18 classes ♣ Rates; each carrier has min. charge for LTL, some have one overall minimum charge, but many carriers are more specific for minimum charges for hard to reach destinations, fuel & accessorials are additional charges applied onto base rate.

Commodity Rates

: for large quantity of product which moves between two locations on regular basis (typical for most rail freight today)

Shipper Associations and Agents

: groups of shippers who employ an agent to consolidate purchases and shipments for them.

Demurrage

: holding container at port beyond certain time limit incurring a penalty charge such as daily rent after the free time ends.

Brokers

: intermediaries that coordinate transportation arrangements for shipper , consignees and carriers, operating on commission basis

Documentation & Pricing Practices

: primary purpose to protect all parties involved o Documentation ♣ Bill of Lading (BOL): basic documentation used in purchasing transport services • Serves as receipt and documents products/quantities shipped • Specifies terms and conditions of carrier liability ♣ Freight Bill: represents carrier's method of charging for transportation services rendered • Can be prepaid or collect ♣ Shipment manifest: lists the individual stops/consignees when multiple shipments are placed on single vehicle o Pricing Practices: have direct impact on logistical operations ♣ Traditionally, logistics pricing was 'bundled' into price for a product/service ♣ Trend has been to de-bundle charges so they become separate and visible to customer ♣ Focus is on delivering value to customer

Cube Rates

: replace the 18 traditional freight classifications of the National Motor Freight Classification (NMFC) with five cube groupings

FOB destination

: seller arranges for transportation and adds charges to sales invoice. Title doesn't pass to buyer until delivery completed. Seller assumes risk for in-transit loss/damage.

FOB origin

: seller state price at point of origin, agrees to load a carrier but assumes no further responsibility. Buyer selects carrier & mode, pays transportation & assumes risk for in-transit loss/damage

Exception Rates

: special rates to provide prices lower than prevailing class rates

NVOCC (non-vessel operating common carrier)

; company who doesn't own or operate the carrying ship, but who contracts with a shipping line for the carriage of good

Private carriers

; person or company that transports its own cargo as part of business that produces, uses, sells, or buys the cargo that is being hauled

Contract carriers

; person who transports freight under contract to one or a limited number of shippers

Exempt carriers

; person/company specializing in services or transporting commodities exempt from regulation by interstate commerce act.

Common carrier

; person/company who transports freight for a fee that can be hired by anyone to transport goods.

Transportation Economics and Pricing

Effective logistics strategy must recognize four interrelated financial topics;

Product Storage Services

In-transit inventory is captive in the transport system, therefore managers strive to reduce in-transit inventory to minimum ♣ Product can also be stored in transport equipment at origin or destination (trailers, containers, rail cars) • Usually more expensive than traditional warehousing, less secure, special handling could be issue.

Regulatory environment

OSHA is extending its regulatory influence over warehouse operations and technology

information-directed

RF wireless, pick to light, and voice picking are various forms of what type of material handling system?

Primary functions of warehouse

Receiving, Storage, Picking, Packing, Shipping

Material Handling systems

These are all examples of??? mechanized, manual, semi-automated, information-directed, automated

market positioned strategy

Warehouse network strategy that is close to customers to maximize distribution services & improve delivery; few suppliers, many customers.

methods of improving stability

What are rope tie, corner posts, steel wrapping, taping, anti skid treatment, breakaway adhesives, and wrapping.

rail

Which mode of transportation has the greatest capability?

stowage planning

act of allocating space on ship in order of discharge points

freight forwarders

businesses that consolidate small shipments from various customers into bulk shipment for common carrier to transport

single zone delivered pricing

buyer pays single price regardless of where they're located (USPS first class letters)

cost of service pricing

carrier estimates cost of providing the service then adds on % profit margin. Commonly used for transport of low value goods or highly competitive situations.

asset based

carrier having its own tractors and trailers and in charge of its own maintenance

Truck-load

carriers used when you have enough to fill the truck or don't want other suppliers cargo on your truck

General Freight Carriers

carry majority of goods shipped, includes common carriers

Information-directed

combine controls of automated handling w/ flexibility of mechanized handling. • Moderate fixed & variable cost w/ high flex and utilization • Offers selected benefits of automation without substantial capital investment • Main drawback is accountability regarding work assignment • Ex. RF wireless, pick-to-light, voice picking

Mixing

combines inventory from multiple origins but also adds items that are regularly stocked at mixing warehouse. ♣ Usually performed at intermediate location between origin & destination, such as cross-docking operation

break bulk

common term to describe when warehouse receive single large shipment and arranges for delivery to multiple destinations

Specialized Situations

completely robotic facilities exist for specialized situations ♣ Some bulk & container loading facilities have gone completely robotic.

Pack

container for individual product/group of products bundled together ♣ Primary, secondary, tertiary

Master cartons

containers used to group individual packs

Durable Pallets

cost 3x as much as wood • Lighter & easier to transport • Take up less space (can be nested) • Eco-friendly • Won't break/less likely to damage • Clean/hygienic/water resistant • More flexible • Safer/easier to handle

Warehousing types

distribution centers, consolidation terminals, break-bulk facilities, cross-docks

break bulk

divides full truckloads of items from single source into smaller, more appropriate quantities for use or further distribution (located closer to customer base so smaller LTL shipments travel shorter distance)

reactive consolidation

doesn't attempt to influence composition & timing of transportation movements, but reacts to shipments as they come. o UPS nightly sorting of package freight for intercity movement

Special Handling Considerations

e-fulfillment, environmental concerns, regulatory environment, returns processing

Material Handling

efficient short-distance movement of goods that usually takes place within confines of building such as a plant, warehouse, or between building & transport.

Mechanized

employ wide range of handling equipment. Most combine different handling devices. Moderate fixed & variable cost with good flexibility. • Ex. Forklift, rider pallet trucks, towlines, tractor trailers, conveyors, carousels

how commodities are evaluated

evaluated based on density, stowing, handling, and liability

Warehouse

facility used to store purchases, WIP, and finished goods inventory

base point pricing

final delivered price is determined by products list price plus transportation cost from desginated base point

Automated Systems

focus on high-rise storage & retrieval: highest fixed cost, lowest variable and labor cost w low flexibility • Potential to automate is elimination of direct labor by substituting capital equipment • Ex. Order selection systems, automated storage & retrieval systems

classification

for the purpose of determining freight rates, the grouping of similar products into uniform classes that are assigned a rating are known as?

Warehousing

function that allows company to receive, store, breakdown, repackage, and distribute items to a manufacturing location or finished products to customer. o Decisions driving warehouse management include site selection, # of warehouse facilities in network, layout of warehouse, and methods of receiving, storing, retrieving, and distributing products & materials

goal of fundamental transport principles

goal: to maximize size of load and distance shipped while still meeting service expectations

Containerization/unitization

grouping master cartons into larger units for handling. ♣ Grouped master cartons are unit loads.

Asset-based carrier

has their own tractors & trailers and responsible for maintenance of all equipment. Replace tractors every 3-4 years and trailers every 7-8

Per diem

holding container off port beyond certain time limit and incurring penalty

Value-added services

include any work that creates a greater value for customers

proactive consolidation

includes preorder planning of quantity and timing with the shipper to facilitate consolidated freight movement

Warehouse Management Systems (WMS)

integrate procedures & software support to standardize storage and handling work procedures; one main use is to coordinate order selection o Discrete selection: when specific customer's order is selected & prepared for shipment as a single work assignment. o Wave or batch selection: when orders are processed through zones of warehouse assigned to specific employees

Reverse logistics

involves Returns management: recalls/products that didn't sell o Remanufacturing/repair o Remarketing o Recycling o disposal

Warehousing Operations

involves handling & storage o objective is to efficiently receive inv, store as it is required, assemble it into complete orders, make customer shipment. Operations will therefore emphasize product flow.

types of material handling systems

manual sorting, mechanized, automated, semi-automated, information-directed

Less-than-truckload:

move small shipments, when you don't have enough to fill truck. Stop at depots and transfer locations to match the load to final location

Handling

must optimize movement continuity & efficiency ♣ Receiving: unloading arriving vehicles ♣ In-storage: moving goods within the warehouse for storage (transfer) or order selection (picking). Items may be moved to staging area in preparation for shipping. ♣ Shipping: verifying order & loading departing vehicles.

Warehouse Network

number & relationship between warehouses that company has in organizational structure. Fundamental questions to be answered in establishing warehouse network are; o How many warehouses are needed o Where should they be located? ♣ Determined by customer service wanted & amount of inventory company is willing to invest in.

Warehouse Decisions

o Handling & Storage Efficiency: warehouse decisions that determine handling and storage efficiency ♣ Site selection ♣ Design ♣ Product mix ♣ Expansion ♣ Material handling ♣ Layout ♣ Sizing ♣ Warehouse management system ♣ Accuracy & audit ♣ Security ♣ Safety & maintenance

Transportation Functionality

o Has Product movement services & product storage services. ♣

Other Warehouse Planning Issues

o Inventory accuracy: typically maintained by annual physical counts or counting portions of inventory on planned basis ♣ Cycle counting: audit of selected inventory on cyclic schedule o Audits: common to maintain safety, assure compliance to regulations and help improve procedures o Security issues: involve protection from pilferage & damage

Other functions of warehouse

o Quality inspection: incoming & outgoing o Repackaging: for specific customer orders o Assembly operation: warehouse operation that puts products together w/ other items/components before shipping them out to final customer ♣ Ex) literature, spare parts, advertising

Intermodal

o interchange of equipment between differing modes of transportation to execute a single transport, which includes; rail, truck, or ocean ♣ Rail & motor carriers or rail & water carriers can offer point to point pickup & delivery service ♣ RO-ROs or roll on, roll off containership truck trailers and containers can be directly driven on and off the ship without the use of cranes ♣ Rate structure: flat (door to door)

Semi-automated

often supplement mechanized equipment; high fixed cost, low variable cost w low flexibility. • Ex. Sortation systems, live racks, robotics, automated guided vehicles (AGV)

Shipping

outgoing shipment of parts, components, and products. Includes packaging, marking, weighing, and loading for shipment.

Non-asset based

person or company doesn't own their own equipment. They contract with asset-based carrier for carriage of goods.

Owner operator

person who owns his/her own tractor and is responsible for maintenance and upkeep. Types; sole source, free agents

Receiving

physical receipt of material, ID, inspection for conformance w/ purchase order (quantity & damage), put-away, and preparation of receiving reports.

traditional warehousing value

place to hold or store inventory

E-fulfillment

places special demands on firm's warehousing and materials handling • Large volume of small orders (difficult to achieve economies of scale in picking operations) • Wide range of products requires large inventories • People-intensive facilities needed to provide flexibility in picking • Consumer expectations require many activities within the warehouse to be electronically scanned/tracked

Packing

placing one or more items of an order into an appropriate container for safe shipping and market & labeling the container w/ customer shipping destination data, & other info

Spot-stocking

positioning of inventory for seasonal or promotional demand

value of service pricing

price based on value as perceived by shipper rather than carrier used for high value goods when no competition exists

combination pricing

price set at value between cost of service minimum and value of service maximum

Unitization

process of grouping cartons into loads • Has basic objective of increasing handling & transport efficiency • Unit loads take 1/5 the time required for manual loading/unloading • Methods of unitization: o Rigid containers - air freight containers, sea-land containers, returnable racks. ♣ Benefits: • Improves overall material movement efficiency • Provides shipment unit that can be reused many times (reduces waste, reduces need to dispose of the container) • Reduces damage in handling/transit • Reduces pilferage • Provides greater protection from environment • Reduces protective packaging requirements o Flexible containers: pallets, slip sheets

unitization

process of grouping master cartons into unit loads

Product movement services

product movement is the transfer of inventory to specified destinations ♣ Restrictive element; in-transit inventory is 'captive', usually inaccessible during transportation ♣ Flexible element; inventory can be diverted during shipment to a new location. Diversion is the term used when shipment destination is changed / re-routed after product is in transit o Transportation consumes time, finances, and environmental resources ♣ Transportation • Accounts for more than 60% of total cost of logistics • One of the largest consumers of oil and gas • Negatively impacts traffic; congestion, noise, air pollution

Full line stocking

provides one-stop shopping capability for goods from multiple suppliers

Public warehouses

provides storage related warehouse functions to companies on short/long term basis, generally from month to month ♣ Own their own equipment, hire their own staff ♣ Fees usually combo of monthly storage fee & pallet-in fee, pallet-out fee. ♣ Advantages: no capital investment/property taxes, flexibility (contract, seasonal products, add storage), lower costs/reduced risk, access to special features/services (temp control) ♣ Disadvantages: potential for incompatible computer systems, specialized services may not be what is required/needed, space may not be available when/where needed

Warehousing Ownership Arrangements

public warehouses, contract, private

Consolidation

receives products from different plants/suppliers, sorts them, and combines them with similar shipments from other plants/suppliers for further distribution

mixing

reconfiguring inventory coming from multiple origins, but also adding items that are regularly stocked at the warehouses

cube out

represents concept of loading a vehicle that reuts in shipping 'full' without reaching weight limit

weigh out

results in shipping air in space that can't be filled w product. (heavy product reaches weight limit before volume is filled)

Storage

safe & secure retention of parts/products for future use/shipment

Warehouse Designs

safety & maintenance issues must also be considered when planning warehouse designs o Accident prevention: comprehensive safety programs & training, accident investigation & follow up o Environmental Protection: spill kits and spill plans o Maintenance: scheduled maintenance of building, material handling equipment, and collision damage prevention

economic regulation

seeks to make transportation accessible and economical to all without discrimination

multiple zone pricing

seller charges different prices for different geographic areas (used by parcel carriers)

delivered pricing

seller includes transportation in product price (ex. bundled pricing)

Storage

should consider product velocity as major factor in determining warehouse layout. It's essential that products be assigned specific locations in warehouse called slots. Slotting determines specific locations based on: ♣ Velocity; how fast goods move ♣ Weight; how heavy product is ♣ Special storage requirements; how large or small, does it require rack or bin storage

net rate pricing

simplified pricing format made possible by deregulation

Modular packaging

standard master carton sizes to achieve modular compatibility • Few organizations can have boxes of only one size but all need to fit on one carton.

Private warehouses

storage facility owned by company that owns the goods being stored. ♣ Generally established by companies w/ large volume or highly valuable goods, or need for some type of specialized storage or handling. ♣ Can be operated as separate division within company. ♣ Can be co-located on site w/ manufacturing or off site. ♣ Advantages: control (offers greater flexibility in designing the warehouse & gives users significant control over operations), visibility (inventory, material flow, handling, supervision, associated costs), cost (operating cost can be 15-25% lower if company achieves at least 75% use) ♣ Disadvantages: high start up cost (capital to build/buy warehouse, risky & long investment), fixed location (not easy to move location if market changes), fixed size & costs (when volume is low, company still assumes fixed costs)

active storage

storage for basic inventory replenishment - focuses on quick movement, includes flow through or cross-dock distribution

extended storage

storage for inventory held in excess of period for normal replenishment

social regulation

takes measures to protect public safety and the environment

Returns processing

traditionally done using manual methods

Product Movement

transfer of inventory to specified destinations Made up of a restrictive element and flexible element.

Specialized Carriers:

transport commodities like liquid petroleum, household goods, building materials, and other types of specialized items.

Cross docking:

unloading materials from incoming truck/railcar and loading them directly onto outbound trucks/railcars with little or no storage in between to reduce inventory costs. Main reasons are to: ♣ Provide central site for products to be sorted & combined for delivery to multiple destinations in most productive/fastest method ♣ Consolidate: combine smaller product loads into one method of transport to save on transportation costs ♣ Break-bulk: break down large product loads in smaller loads for transportation for easier delivery process to customer ♣ Advantages: operational efficiency, inventory efficiency

block method

used with cartons of equal width and length to stack - not as much stability

brick, row, pinwheel

used with different widths and lenghs and interlock for more stability.

Contract Warehouses

variation of public warehousing that handles the shipping, receiving, and storage of goods on contract basis ♣ Contract can be for whole building, defined portion. Usually requires client to commit to services for years rather than months. ♣ Fee structure can be fixed cost, cost-plus, or combo ♣ Company providing space handles employees, equipment, and maintenance. ♣ Advantages: services (client can get specialized services), cost (can be bundled in contract & negotiated at lower cost), control (contract warehousing offers degree of control at reasonable price) ♣ Disadvantages: duration - client company is expected to enter into contract for specific period of time, generally 3 years.

contemporary warehousing value

warehouse functions to mix inventory assortments to meet customer requirement; storage of products held to minimum, storage of inventory is waste in LEAN warehouse.

midway positioned strategy

warehouse network strategy placed between supply source and customers when distribution requirements are high and product comes from various locations; equal suppliers & customers

product positioned strategy

warehouse network strategy positioned close to supply source to collect goods and consolidate before shipping out to customers; many suppliers, few customers.

public warehouse

warehouse ownership type described as service company who owns a warehouse and hires out space and services

contracted warehouse

warehouse ownership type that allows user company to benefit from maintaining control over warehouse activities while leveraging warehouse expertise from provider

Pallet pools

way to overcome traditional problems of disposal & exchange. They are 3rd party suppliers that maintain and lease high-quality pallets throughout the country for a variable fee for single cycle. • Assume responsibility for developing, purchasing, and maintaining pallets as well as providing control and management systems.

Density, stowing, handling, liability

what are the four things commodities are evaluated on?

cost out

when you reach cost/value limit allowed by insurance or liability constraints without reaching cube or weight limit

automated

which material handling system is characterized as having the highest fixed cost, lowest variable and labor costs, and also having low flexibility?

air

which mode of transportation has extremely high variable costs but relatively low fixed costs?

Picking

withdrawing components from stock to make assemblies or finished goods, or to ship to a customer

Advantages of hardwood pallets

• Low cost • Strong material can carry significant weight • Easily replaced if damaged • Fully recyclable • Can be manufactured from recycled supplies o cons: ♣ can be easily damaged ♣ susceptible to contamination & infestation ♣ fire hazard when stored in bulk

Principles of material handling

• Should be moved as little as possible • Reduce time in motion by using shortest routes possible & using automated/mechanical material handling equipment. • Material movement should be in lots rather than individual units • Design of material handling equipment should be such that it can increase efficiency & effectiveness of material movement • Gravity should be used wherever possible • Re-handling & back-tracking of materials should be avoided • Periodic repair, maintenance, & inspection of existing material handling equipment should be performed routinely

Transportation Structure

• consists of right-of-way, vehicles (conveyances), and carriers operating within five basic modes o Mode identifies basic transportation method/form ♣ Motor carrier/truck, rail, air, pipeline, water o Intermodal; combo

Strategic Warehousing

• shift from passive storage to strategic assortment. o Timeline: traditional warehouse - distribution centers - fulfillment centers o Offers manufacturers way to reduce dwell time of parts & materials o Important goal is to maximize flexibility, response to ever-changing customer demand o Can provide both economic and service benefits

Pipeline

♣ Accounts for about 68 percent of all crude and petroleum ton-mile movements in US LOWEST PER UNIT COST FOR TRANSPORTATION, HIGHEST FIXED COST, LOWEST VARIABLE COST OF ALL MODES MOST RELIABLE FORM OF TRANSPORTATION -no emissions, no pallets to return etc. ♣ Little maintenance needed once the pipeline is running ♣ NOT FLEXIBLE limited in variety of commodities they can carry ♣ Materials transported in liquid or gaseous state

Handling

♣ Basic handling considerations ♣ Mechanized systems ♣ Semi-automated systems ♣ Automated systems ♣ Information-directed systems ♣ Special handling considerations

Principles of Handling

♣ Be as standardized as possible ♣ Be designed to provide max. continuous product flow ♣ Involve investment in handling rather than stationary equipment ♣ Be utilized to maximum extent possible ♣ Minimize the ratio of dead weight to payload ♣ Incorporate gravity flow into system design if possible

Master Carton Stacking Patterns

♣ Block method used w/ cartons of equal width & length ♣ Brick, row, and pinwheel are used w/ different widths & lengths. ♣ Except block method, cartons are placed in unit load arranged in interlocking pattern w/ adjoining tiers placed at 90 degree angles to each other. ♣ Load stability is enhanced with interlocking - block pattern doesn't have this. • Stability of stacking is insufficient to secure unit load by itself. • Standard method of improving stability include rope tie, corner posts, steel wrapping, taping, antiskid treatment, breakaway adhesives, and wrapping.

Packing

♣ Consumer: marketing focused ♣ Industrial: logistics focused

Parcel

♣ FedEx: has 2 separate operations; air & ground • Drivers are independent contractors ♣ UPS: has one operation for air and ground, all drivers are UPS employees ♣ Characteristics; parcel shipments usually weigh < 150 lbs • Have multiple service levels; next day, second day air, third day air, ground (1-5 days)

Containerization

♣ Frustration drove Malcolm Mclean (small town truck driver) to invent shipping container.

Basic Handling Considerations

♣ Handling method depends on materials being moved ♣ Bulk materials are handled without use of master cartons (powders/liquids, need specialized equipment) ♣ Unit loads, containers, and master cartons can be handled in many diff ways

Role of Packaging in Logistics

♣ Handling: appropriate for automation? ♣ Stowability: cube efficiency, space utilization ♣ Security: can package be sealed to detect break-in? ♣ Unitization: modular packaging ♣ Information: ID and tracking ♣ Protection: from spoilage or damage • Four most common causes of damage in logistical system: o Vibration o Impact o Puncture o Compression

Rail

♣ Has historically handled the largest number of ton-miles within continental US ♣ Track mileage has declined by over half since 1970 (until 2005 & then stabilized) ♣ Traffic shifted from broad range of commodities to hauling specific freight in traffic segments (bulk items, heavy items) • Carload, intermodal, container ♣ New technologies include articulated cars, unit trains, and double stack cars HIGH FIXED COSTS, LOW VARIABLE COSTS RAIL IS SLOW AND INFLEXIBLE

Hybrid approach

♣ Hub and spoke: centralized warehouse holds most of inventory and is linked to smaller warehouses geographically dispersed which support their local area. ♣ Operating costs are lower bc spoke warehouses are smaller than decentralized model ♣ Inventory is lower bc safety stock is held centrally ♣ Customer service is better bc some inventory is close to customer

Communication & functionality of packaging

♣ Increasingly critical to ID and track packages. ID displays key logistical info • Manufacturer, product, container type, count, UPC, EPC ♣ Tracking provides the ability to determine the exact location of an item ♣ Special handling instructions (glass, temp, hazardous) ♣ Technologies facilitating communication include: bar coding, RFID, GPS, "nested RFID" for items in unit load

Material Handling Equipment

♣ Material Handling Equipment (MHE): equipment used for movement, storage, protection, consumption and disposal of materials within facility/site including: • Transport equipment: industrial trucks, automated guided vehicles (AGVSs), monorails, conveyors, and cranes/hoists • Storage Systems: bulk storage, rack systems, shelving & bins, drawer storage, automated storage systems • Unitizing Equipment: palletizers • Identification and Tracking Systems: labels, bar codes, RFID

Hours of Service (HOS) Rule

♣ Min off duty hours between shifts; 10 hours ♣ Total on duty window in each shift; 14 consecutive hours with 30 minute rest break - max on time duty within 14 hours is 13.5 hours. ♣ Max driving hours limit on consecutive hours driving; 11 hours but can't be consecutive after 8 hours. ♣ Mandatory rest break during shift; can't drive if 8 hours have passed since last break of 30 mins or more ♣ Max cumulative on-duty; 60 hours in 7 days, 70 hours in 8 days (for carriers operating 7 days a week) ♣ Cumulative on-duty 'restart': min length of restart period Is 34 consecutive off-duty hours. Must include 2 consecutive nighttime off-duty period from 1 am to 5 am. ♣ Monetary penalties; carriers can be fined up to $11,000 and drivers up to $2,750

Air

♣ Newest transport mode and least utilized ♣ Accounts for only 1% of intercity ton-miles ♣ Fastest of all modes FIXED COST SECOND LOWEST, VARIABLE COSTS EXTREMELY HIGH ♣ Air-shipped products are generally; high value, high priority, extreme perishability EXPENSIVE RELATIVE TO OTHER MODES ♣ Cannot carry extremely heavy or bulky cargo ♣ Mostly for light, high value goods over long distances quickly (jewelry, fine wine) ♣ Half of goods transported by air are carried by freight-only airlines (fedex) ♣ Palletized - parcel never on pallet

Water/Ocean

♣ Ocean mode is oldest form of US transport dating back to birth of nation ♣ Percentage of ton-miles has stayed between 19 & 30% since 60s ♣ Ranks between rail and truck in fixed cost ♣ Right of way (canals & rivers) maintained by Federal Gov't ♣ INEXPENSIVE ♣ SLOW AND INFLEXIBLE ♣ Competes w/ rail & pipeline ♣ Includes inland waterway, coastal and intercostal, and deep sea ♣ Inland waterway transportation is used for heavy, bulky, low-value materials ♣ b/c its so cheap, transport by water can transport almost any item ♣ paired w/ trucks for door to door delivery ♣ How containers are positioned on ship ♣ Water/Ocean Rates • FCL (full container load) - cost per container • LCL (less than container load) - cost based on whichever is greater, space in cubic meters or weight in metric tons

Packing for Materials Handling and Efficiency

♣ Package design, unitization, communication

Single warehouse

♣ Pros: less complicated, operating/inv costs lower, no duplication of equipment/staff, network centralized ♣ Cons: centralized network may take longer to deliver product

Multiple Warehouses

♣ Pros: potentially faster delivery to customers from decentralized network that is geographically dispersed through market ♣ Cons: more complicated, operating costs & inv will be higher as each warehouse costs money to staff/operate, network will be decentralized & company will have to spread its best people, equipment, & inv systems across larger network.

Transportation Regulation Pros & Cons

♣ Pros: regulation tends to assure adequate transportation service throughout the country. Protects consumers from monopoly pricing, ensures safety, and creates liability ♣ Cons: Regulation discourages competition and doesn't allow prices to adjust based on free market demand or negotiation ♣ Today, US transportation industry remains mostly deregulated

Environmental concerns

♣ environmental impact of warehouse operations and material handling equipment. • Handling and disposal of hazardous materials used or stored in warehouse operations.

Economic drivers

♣Distance, Weight, Density, Stowability, Handling, Liability, Market

Non-Operating Intermediaries

(don't operate their own equipment) ♣ Freight forwarders: businesses that consolidate small shipments from various customers into bulk shipment for common carrier to transport. ♣ Shipper Associations and Agents: groups of shippers who employ an agent to consolidate purchases and shipments for them. ♣ Brokers: intermediaries that coordinate transportation arrangements for shipper , consignees and carriers, operating on commission basis

Flexible Element

(of product movement): inventory can be diverted during shipment to new location

restrictive element

(of product movement): inventory in shipment is "captive" and inaccessible during transportation

Freight-all-kinds (FAK)

: allow a mixture of different products to be transported under a negotiated rating

Steamship Lines

: asset based company operating the ships with whom both cargo owners and NVOCC's contract with for the carriage of goods • Cannot handle LCL (less than container load) booking directly, a freight forwarder would need to be involved.

Fuel

: bunker is the type of fuel burned by vessels. BAF, or Bunker Adjustment Factor is a per container fee charged by carriers for this fuel

Freight forwarders

: businesses that consolidate small shipments from various customers into bulk shipment for common carrier to transport.

Demurrage (rail)

: charge for holding a railcar for more than 48 hours before unloading

Detention (motor)

: charge for holding a truck more than few hours before unloading

Drayage

: commonly used to mean the transportation of containerized cargo by specialized trucking companies between ocean ports or rail ramps and shipping docks in intermodal freight transport.