Chapter 12 - Transportation

LTL (less than truckload) vs TL (truckload)

LTL: shipments range from about 150 - 10000 lbs; often too big to be handled manually, yet they do not fill an entire truck; TL: shipments greater than 10000 lbs; the weight is close to the amount that would physically fill a truck trailer

**can coal be moved through a pipeline?

YES

availability

ability of a mode to service any given pair of locations

which mode of transportation is best at speed?

air

birdyback transportation

air and truck

which mode of transportation has the highest variable cost?

air cargo transportation

which mode of transportation has the the 2nd lowest fixed cost?

air cargo transportation

why does the cost curve start above zero in the distance vs cost graph

because of fixed costs associated with pickup and delivery regardless of distance

why does the cost decrease in economy of scale

because the fixed cost of the carrier is allocated over a larger weight of shipment

agents role and perspective of participants

brokers and fright forwarders; facilitate carrier and customer matching

how can shippers reduce their risk?

by improved packing and loading (ex: dunnage); by reducing susceptibility to loss or damage

the influence of market factors on transportation costs

carriers must find a backhaul load or vehicle is returned empty; imbalances in volume between shipping points can result in higher transport costs

the influence of potential liability on transportation costs

carriers must pay for liability insurance or accept financial responsibility

the influence of weight on transportation costs

cost per pound decreases as weight increases until the carrier vehicle is full; relationship starts again for the next vehicle load

the influence of density on transportation costs

cost per unit of weight declines as product density increases; higher density products allow fixed transport costs to be spread over more weight

carriers role and perspective of participants

desire to maximize their revenue for movement while minimizing associated costs

government role and perspective of participants

desires a stable and efficient transportation environment to support economic growth

the influence of distance on transportation costs

directly contributes to variable expenses (labor, fuel, and maintenance)

speed

elapsed movement time from origin to destination

pipeline cost

highest fixed cost (right-of-way, construction, requirements for control stations, and pumping capacity); lowest variable cost (no labor cost of any significance)

restrictive element

in-transit inventory is "captive", usually inaccessible during transportation

flexible element

inventory can be diverted during shipment to a new destination

in-transit inventory

is captive in the transport system

public role and perspective of participants

is concerned with transportation accessibility, expense, and standards for security, safety, and the environment

longer distances in economy of distance increases or decreases the per mile charge?

longer distances allow fixed cost of the carrier to be spread over more miles, lowing the per mile charge

air cost

low fixed cost (aircraft and handling and cargo systems); high variable cost (fuel, labor, maintenance, etc)

truck cost

low fixed cost (highways in place and provided by public support); medium variable cost (fuel, maintenance, etc)

water cost

medium fixed cost (ships and equipment); low variable cost (capability to transport large amount of tonnage)

weight of load vs cost per pound slope

negative (decreasing)

freight forwarders

not modes, but from the shipper's viewpoint, they are analogous to other carriers; two types: surface and air

diversion

occurs when a shipment destination is changed after a product is in transit

the influence of stowability on transportation costs

odd package shapes and sizes can waste cubic capacity; items with rectangular shapes are easier to stow

shippers' association

perform basically the same function as surface and airfreight forwarders, except they do not operate as profit-making organizations (membership based)

which mode of transportation is best at dependability?

pipeline

which mode of transportation is best at frequency?

pipeline

which mode of transportation has the highest fixed cost?

pipeline transportation

which mode of transportation has the lowest variable cost?

pipeline transportation

distance vs cost slope

positive (increasing)

internet role and perspective of participants

provides a vital communication link between transactional participants as well as providing and information exchange

which mode of transportation ranks in the middle for characteristics?

rail

piggyback transportation

rail and truck; either truck trailer-on-flatcar or container-on-flatcar; to take advantage of rail's low transportation costs on the line-haul along with truck's ability to provide door-to-door service

transport lane

refers to movements between origin and destination points

economic regulation

seeking to make transportation equally accessible and economical to all without discrimination

the influence of handling on transportation costs

special equipment may be needed to load and unload trucks, railcars, or ships; how products are grouped together in boxes or pallets will also impact handling costs

trucking key benefits

speed of transit; ability to operate door-to-door; more efficient than rail for small shipments over short distances

social regulation

takes measures to protect public safety and environment

capability

the ability to handle any load size or configuration

transportation

the actual, physical movement of goods and people between two points

economy of distance

the cost per unit weight decreases as distance increases; often called the tapering principle

economy of scale

the cost per unit weight decreases as the size of the shipment increases

product movement

the movement of inventory to specified destinations

dependability

the potential variance from expected delivery schedule

frequency

the quantity of scheduled movements a mode can handle

tapering principle

the rate of cost decreases as distance increases (distance vs cost graph)

what is the goal of transportation?

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

biggest cost of logistics is

transportation

which mode of transportation is best at availability?

truck

which mode of transportation is the best overall for characteristics?

truck

intermodal transportation

using a container or other equipment that can be transferred from the vehicle of one mode to the vehicle of another mode without the contents being reloaded or disturbed

which mode of transportation is best at capability ?

water

fishingback transportation

water and truck

which mode of transportation ranks between rail and truck in fixed costs?

water transportation

density

weight and volume

brokers

companies that look to match a shipper's freight with a carrier to transport it

shipper and consignee role and perspective of participants

have a common interest in moving goods from origin to destination within a given time at the lowest cost

rail costs

high fixed cost in equipment, terminals, tracks, etc; low variable cost

mode

identifies basic transportation method or form

product density vs cost per pound slope

negative (decreases)

transportation consumes

time, financial, and environmental resources