Section D: Logistics
Assess capacity constraint factors when evaluating bids from carriers
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Balance transportation costs against the cost of warehousing inventory
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Describe materials handling options at warehouses in terms of space usage, labor, equipment, and automation
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Describe the attributes of customer services and best practices.
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Explain the mechanized and automated systems in warehousing along with their advantages and drawbacks
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Describe value-added warehousing and its role in forward and reverse supply chains
... A warehouse is literally " a house for wares" however, since a house is for long-term residents, not for temporary guest, it might be use to think of the warehouse as more of a ware-motel, a soft of marriott for raw materials, work in process or finished goods. The management wants to check the guests or goods, in and out efficiently , take excellent care of them while they are in residence seeing they dont get damaged or lost and check them out efficiently at the end. For several decades, logistics was largely practiced in the military, and warehousing received litle strategic attention from businesses. Materials handling was largely ignored, as was efficient use of space. As for location numbers in some industries the major concern was to put on ewarehouse in every sales territory. Technology and automation played minor roles in warehouse operations; instead, there was heavy reliance on inexpensive labor. Iver time, however, businesss managers began paying closer attention to warehousing along with other aspects of logistics strategy. Use of space become more efficient, and the need for large amounts of storage lessened as forecasts improved. Kocation also received more scrutiny, and logisticians developed criteria for deciding upton the optimal locations and number of warehouses needed. Meanwhile the pace of actiity on the floor picked up as warehouses took functions other than simple housing of inventory Manufacturers opened up warehouses for parts storage to relieve their plants of that function. Distribution warehouses began to send out more complex mixtures of goods to their growing retail customers. Since mixed product shipments fill up transport vehicles more rapidly, shipping costs began decling as a percentage of the logistics budget, an expample of the soft of synergy thats central to supply chain strategy. As storage needs became more complex, warehouse managers realized they could keep smaller inventories of slow moving goods, freeing up space for other types of products and other activities. And all this increasing activity and complexity led to more effective warehouse design to facilitate mixed product storage, rapid flow of products and the faster paced activities of machines and personnel In the 1960's and 1970's the emphassi was on new technology to improve storage operations and materials handling. Therougt the 1980s there were continued improvements in systsm configurations and materials handling, which was no longer perfromed soley by warehouse workers. In the 1990s, the advent of more powerful information technology allwoed more precise perfromance measurement and faster response to changes in the market. Today value added warehousing plays a vital role in keeping suppply chians competitive. In both the forward and reverse supply chians, attention to packagin plays a role in effective product movement, markeing and recycling. Warehouse may even participate in the later stages of production as workers receive traning enabling them to do fianl assembly of products for mass customization or to perform reassembly of products returned for repair or replacement. These value added activities are increasingly important as supply chains grow longer, reaching into more diverse international markets. Third party logistics provdiers can now compete for warehousing buisness by offering more specialized services and more attractive pricing Warehousing costs money, and logistics managers look for ways to spend that money more effciently without causing problems elsewhere. Logistics is a subsystem within the system of the supply chain, and as noted earlier, any decision that affects one part may also affect other parts. Warehousing strategies, therefore, must be cordianted with decisions about transportation, packaging, manufacturing and all other activites in the network.
Identify key considerations regarding warehousing; ownership, number, location, configuration, and support systems
...A manager needs to cut through such coplexities and make informed choices. We will look at two basic decisions about warehousing that, taken together, can increase the overall value of the supply chain and improve its competitive postion: Number of warehouses Specific warehouse locations We will look saparately at the consdierations affectinvg each of these decisions while keeping an eye out for interacitons between them. At one point in time, it seemed liek it was easy to decide the number of waerehousesL it was one pre market, ofetne due to an organization marketing straegy rathare than logistics decisions. Management was mianly concerned with locating distribution ceners within reasy reach of each market with storing plenty of inventory in each on eto avoid shortages. As logitics management matured however, warhouseing became much more strategic. Once the idea of one wrehouse per market went out of favor, in came a more demanding world of systems thinking. Every decision about the structure of a system requires a series of follow up decisions to deal with the impact of the first one. Decisions about warehousing for instance may affect transportation, lead times coming into and going out of th e warehouse, available labor, packaging, locations, taxes and tariffs ( in global supply chians) Selecting an approaite number of warehouses for the logitics system is all about tradeoffs. As you add warehouses to teh system, some costs will ten to increase[ such as the coss of carrying inventory since each facility will keep safety stock as a bufer against sudden shortages. With more warehouses service levels should go up since products will be located closer to the customer thereby reducitng the time it takes to fill their orders. These advantags uslaly help make the supplier even more trusted and valued over the long term. with more warehouses, transporation costs should go down since each warehouse can be closer to the origin of incoming shipmens or the destiantion of outgoing shipments. Other interacing factors include available locations for the warehouses, local labor markets, and constructiong or renovation costs. As exhibit shows, the overall costs in the system tend to decline as the number of warehouses increases, but only up to a point, after taht point, the total cost of warehoousing rises corresponing to the nubmer of warehouse that happens because increasing inventory costs evetaully overwhelm savings in other areas. the relative rates of the increases and declines will not be the same in all logistic systems; these are only general trends. The following aspects are affected by an increased number: Customer service. The main reason to increase the number of warehouses in a system is to provide more effective service to cusotmers. This is the strenght of the old system of locating a waerhouse close to each market and carrying lots safety stock .Customers were always within relatively easy reach of the distribution point. Nevertheless, the general trend n logistics is toward reduction of the total number of warehouses in relation to the volume of product movement. The saving in other areass, coupled with increased efficiencies in warehouse operations and other logitics areas, makes it possible to maintain acceptable service with fewer warehouses. Transporation cosss. Adding warehouses cn be effective way to reduct ransporation costs by shorenting the distances between warehouse Inventory as you addd warehouses, you ten to incrase the amoutn of floor space in relation because you may add some reducndcies; housing the same amount of inventory will require more tal square feet of space, moreover the amount of storage space,
Describe the value density versus packaging density relationship as it relates to shipping speed and delivery cost options
...CArriers are not always competitive for every logistics managers requirements each one has its own inherent advantages and isadvantages, and these vary depending up on product ytpe, size withgt, value, adelivery speed, and lane volume needed to meet customer requirements. Lame volume is the volume of traffic in a given shipping lane( an orgindestiantion pariing) and is a factor in both land and water carrier pricing. The higher the volume in the lane, the lower the price for that transporation mode ( and therefore the transportation mode needs to be hghly efficient to compete. This is because low volume lanes may not have any available materials for backhaul and so carriers add feeds due to the greater potential for return trips with empty vehicles called (deadheading). A very reliable method for helping determine the best mode of transportation for shipping a specific product type is to compare the products value density (Te value of units being transported per cubic foot or cubic meter ) versus its packaging density ( the amount that can be packed per cubic foot or cubic meter. To help weigh the importance of shipping options with different cost and delivery speeds, keep this in mind. Items with higher value density usually merit shipping by a faster method, and items with lower value density can usually be sent by a slower shipping method and then held in inventory. on the other hand the more units that are handled per cubic foot or cubic meter, the more need for automated materials handling Post offices or organization do not own the letters that they ship, so for them the value density is about zero. They collect letters from letterboxes, and then bring them to a hub, once there they need to be sorted and sent forward to the next hub. At this second hub, the leaterrs are resorted accourdin to street address. The pacagin density is very high ( more than 1000 letters per cubic meter, so the focus is on automatic materials handing. I the Netherlands all letters are sorted on sorting machines. Bricks are example of a product with low value density and low packaging density. The value per brick is very low, and bricks are sent to customers on pallets, so the packaging density ( the amount of units handled per cubic foot or cubic meter is also low. The perffed way to treat this king of low value low density goods is to load the pallets at the manufacturing palnt and directly transport them to the customer site using a low cost transportation mode. When looking at manufactures of compy machines and digital camereas will disvoer that they use different modes of transportation. copy mahchines have a low value density and are shipped in containers form the far east to the US eupre. Cameras have a high value density, so the emphasis is more on how to recover the invested money quickly . These products will be transported by airplane. In the expanding marketplace of lean manufacturing, just in time delivery and global supply chains. however, speed is becoming a competitive necessity instead of a marginal benefit
Distinguish the most appropriate mode of transportation based on preferred cost, speed, realiability, capability, accessibility, and security factors.
...CArriers are not always competitive for every logistics managers requirements each one has its own inherent advantages and isadvantages, and these vary depending up on product ytpe, size withgt, value, adelivery speed, and lane volume needed to meet customer requirements. Lame volume is the volume of traffic in a given shipping lane( an orgindestiantion pariing) and is a factor in both land and water carrier pricing. The higher the volume in the lane, the lower the price for that transporation mode ( and therefore the transportation mode needs to be hghly efficient to compete. This is because low volume lanes may not have any available materials for backhaul and so carriers add feeds due to the greater potential for return trips with empty vehicles called (deadheading). A very reliable method for helping determine the best mode of transportation for shipping a specific product type is to compare the products value density (Te value of units being transported per cubic foot or cubic meter ) versus its packaging density ( the amount that can be packed per cubic foot or cubic meter. To help weigh the importance of shipping options with different cost and delivery speeds, keep this in mind. Items with higher value density usually merit shipping by a faster method, and items with lower value density can usually be sent by a slower shipping method and then held in inventory. on the other hand the more units that are handled per cubic foot or cubic meter, the more need for automated materials handling Post offices or organization do not own the letters that they ship, so for them the value density is about zero. They collect letters from letterboxes, and then bring them to a hub, once there they need to be sorted and sent forward to the next hub. At this second hub, the leaterrs are resorted accourdin to street address. The pacagin density is very high ( more than 1000 letters per cubic meter, so the focus is on automatic materials handing. I the Netherlands all letters are sorted on sorting machines. Bricks are example of a product with low value density and low packaging density. The value per brick is very low, and bricks are sent to customers on pallets, so the packaging density ( the amount of units handled per cubic foot or cubic meter is also low. The perffed way to treat this king of low value low density goods is to load the pallets at the manufacturing palnt and directly transport them to the customer site using a low cost transportation mode. When looking at manufactures of compy machines and digital camereas will disvoer that they use different modes of transportation. copy mahchines have a low value density and are shipped in containers form the far east to the US eupre. Cameras have a high value density, so the emphasis is more on how to recover the invested money quickly . These products will be transported by airplane. In the expanding marketplace of lean manufacturing, just in time delivery and global supply chains. however, speed is becoming a competitive necessity instead of a marginal benefit.
Enumerate hybrid modes of transportation
...Package services, piggy back service, intermodal, Piggy back signifies the placement of a truck trailer or container of cargo on a railroad flatcar, henece the names TOFC( trailer on flatcar or ( container on flat car). Trainship or containership Refers to mixed mode transport that include water carriage. Truck plane services Freight truck on railcar. intermodal cocept seems to be here to stay because of the benefits it offers to logistics managers in terms of flexibility, efficiency and reduced costs. There is transportation management software is available to help determine the best intermodal combinations and can assist logistics team with identifying the optimal mix in order to get materials to where they need to be in a timely manner as well as at the lowest price.
Enumerate the various warehousing objectives
...Rspond rapidly to changes in the market or customer orders Logistics stragties should be designed to faciliate rapdi responses to changes in the market in particular customers orders. To enable such rapid respones , organizations use demand planning data such as forecasts and market analyisss to ancipate changes in the market or customers needs so there will be suffcieint time to make the necessray changes. Changes may include the numvber and placement of warehouses relative to markets, management of inventory levels, efficient product movement through facility and use of advanced technology to track products,. The interface between transportation and warehousing is critical. Minimze variances in logistics service. Even in routine logistics service, efficient tracking and handling of inventoroy in the warehouse is critical to achieving predictable service. Loading, unlaoding, packaging, and order picking should all be managed to aid in achieving the goal of minimum variance in logistics service. Variance is the difference between the expected (budgeted or planned ) value and the actual in statis a measure of disperion of data. Consolidate product movement by grouping shipments. The tatic of aggregating smaller shipments into larger ones for more effective transportation depnds upon the efficient placement of management of warehoues. Expeditious unlaoding, tacking, and repackaing and reloading are all crucial to effective consolidation of movement. Maintain high quality and engage in continous improvement. Every aspect of warehouse operations should be subject to contious improvement, with the goal of reducing errors to the absolute minimum Support the entire product life cycle and reverse logistics supply chain. The number placement and efficient operation of warehouses must take into account the end of the porduct life cycle returns for repair, replacement, or recycling as well as the interodcution and growth phases. Based on these overall goals, the following considerations must be taken into accout regarding warehouses. Determining the optimum number of faciliites necssary to aid in reduction of inventory while reducing and eliminating stocks outs Selecting the right location for each warehouse to ensure cost efficient acces sto markets and transportation Designing each facility to be the right size configuration for its products and processes Developing management systems that employ space, labor, equipment and information technology to minimize delays, product damage, and product loss
Describe the dual objectives of transportation
The bulk of the logistics budget goes towards transportation costs. The revolution in transportation has created the majority of the possiblities and challenges of modern business logistics. And the dergulation of transportation has raised the bar considerably for logistics managers charged with refinement of thier supply chain transportation tactics. In this section we willl look first at some recent history and current rends about the movement of domestic and international freight Beween 2001 and 2008, the us share of world wide GDP declined as the share of emerging and developing economies grew. A variety of factors contributed to this decline, including business cycles, the balance of payments, foreign currency exchange rates and central banks policies. Collectively these factors then affected the value of inernationally traded goods. When major financial markets around the world collapesed in 2008, the global and us economies struggled, world rade declined, and the movemnt of inernational goods by services providers slowed. This had a wide ripple effect around the globe that lasted through 2009 Demand for global and us freight shipments plummeted. All modes and sectors of the freight industry experienced financial liquidity problems and fluctuations in energy prices. The major challenge became the management the managment of exess capacity of shippers, carriers, and facility operators. by the end of septermber 200, approximately 548 vessels with a carrying capacity of 1.3 million 20 foot equivalent units were idled at seaports world wide. These changes or trends in global economic activities have directly affected the volume of merchandise trade and worldwide movement of freight. growing importance of global supply chains, an economic downturn such as the one in 20088 impacted more than exporting and importing nations. other countries that provide freight and port services to transport traded goods were also affected negatively. In order to facilitate the movement of international freight among nations, there is a complex multitude of long distance transportation services around the blobe. This global trade is also reliant on seaport and airport services to carry huge volumes of merchandise thousands of miles via a variety of modes of transportation. According to " freight transportation: Global Highlights 2010", published by the US Bureau of Transportation statistics, in 2008: More than US 16 trillion of exported freight was transported worldwide by maritime vessels, airplanes, trucks, and trains. The world top five economies by gross domestic product the US, JApan, China, Germany, and France- accounted for 35 percent of globl exports. According to estimates based on quarterly statistics gathered by the international transport form (ITF), container shipping dropped off by 26 percent globally in 2009. The ITF reported that two modes of transportion in particular felt the decline: Road transporation declined 21 percent in the European Uion and 17 percent in Russia Rail Transportation declined 14 percent in the US, 23 percent in the EU, and 12 percent in Russia Now that you have a good sense of the recent state of transportation, lets focus on the major factors to consider when determining a transportation strategy for a supply chain, including the following: Transportation objectives and considerations Stakeholdes in transportation decisions Modes of transportatoin (Train, Trucks, etc.) The primary objective of transportation is to carry goods and materials between supply chain partners and customers at an optimal cost in time, money, and environmental degradation. A secondary objective is to provide temporary storage for in transit inventory. In this section well discuss the different considerations that must be taken into account: Product movement, including time and cost factors Temporary storage of inventory in a vehicle Since the movement of materials around the supply network is both necessary and expensive, keepitng down the costs in time, money , and environmental impact is of considerable stratgic importance. Efficient use of time use of time is a factor in developing a successful transportation stratgy because inventory in transit isnt available for use in production or for sale to cusotmers. This puts a remium on moving materials and goods as infrequently and as rapidly as possible. But the premm isnt absolute. There are tradeoffs to consider, since attaining speedy transport may be expensive in terms of both money and risk to the goods and the environment. Transporation costs also trade off against inventory costs. tactics such as just in time delivery emphasize reduction of inventory costs, and one method of keeping down inventory is to ship more frequently- thus possibly raising transportation costs. Efficient use of money Efficient use of money provides a complex set of challenges to the transportation pallner since transportation drains the logistics budget in a variety of ways. As always, it is advisable to consider all the factors that contribute to tatl cost. You want to become more cost efficint in one area without raising costs by a greater amount in another area. Line haul costs, those expenses that vary by distance taveled and not by weight carried:, like fuel, drivers wages, and vehicle wear and tear should be determined. Vehicle costs. A supply chain partner can choose between controlling its own fleet of vehicles, hiring transportation only as its needed, or contracting with a carrier for longer term. With a company fleet, a firm incurs internal cost for financing, leasing, and depreciation;; with commercial or public transportation, the firm incurs external costs. (We will cover other variables affecting transportation selection in the upcoming sections on modes of transportation and types of carriers. Certainly, in a global supply chain, there are additional challenges that can make it extremely difficult ( if not impossible) to control your own fleet worldwide. Driver/operator costs. Unless the mode of transport is a pipeline, transportation includes the cost of labor required to operate the vehicle= drivers for trucks; pilots, copilots, and crew for air transport; engineers for rail; and so forth. Driver shortages can occur and drive up costs due to difficulties with certification, lack of investment capital, and expanded regulation. Vehicle operating costs. Operating and maintaining a fleet of owned or leased vehicles requires expenditures for repairs, cleaning parking etc. As petroleum prices rise, operating expenses increase for road, air rail, and water transportation. One way in which steamship companies are trying to minimize their costs is by running their ships more slowly which consumes less fuel and thereby reduces cost but also incrases the delivery time. OTher compnies have chosen to use semi trucks without sleeping cabs or extra wheels to reduce the overall weight. General and adminsitrative costs. Funds must be allocated to management of transportation function. Insurance and sercurity costs. With a private fleet, a company pays directly for insurance sos to cover a variety of security concerns product may be damaged, llost or stolen in transit. Transporting hazardous materials requires extra expense for insurance coverage, for security, and to comply with regulations. Air, rail, and water transport must provide protection against terrorism as well as vandalism and theft. Minimal harm to the environment Finally , transportation of all types makes demands o the environment, some which show up as costs of doing business,. The use of petroleum based fuel and oil in transportation consittues a large portion of domestic petroleum consumption in the united states and rapidly growing amount in other areas of the worl despecially emerging economies such as China and South Asia As supply chains extend over increasing distances around the globe, the use of fuel for commercial transport and the pollution that goes with it are bound to beomce increasingly problematic. The cost of fuel and associated poluution adds to the reasons for managing transportation and information as efficiently as possible. owever some progress is being made on this issue both in the US and the European Union. For the neighboring ports of Los Angeles and Long beach the clean truck program was signed into law in2008, requiring diesel powered short haul daryage trucks to meet new environmental standards that will reduce pollution by 90 percent. These disel rucks must either be retrofitted or replaced in otder to meet the new emission standards by 2012. Trucks that do not meet these new standards currtly pay a fine but will eventually be bannded from tese ports. Since these ports handle nearly 45 percnet of container goods enering the US. the container volume is expected to triple by 2020 its a sinificant step in reducing harmful pollutants in these areas The european Union has established low emission zones LEZ in which high polluting trucks are porhibited. Specially regulations prohibit higher emission heavy duty diesel trucks form entering certain EU cities. Vehicle emissions are classified into euro standards for the vehicles they apply to . Trucks are rated Euro V, Euro IV, Euro III, etc, with the lower roman numerals having more restrictions due to their higher emissions or lack of particulate fileter or ctalytic converter. Before a truck enters into an LEZ, the driver must know the emissions standard for that particular vehicle. Adopting fuel-efficient vehicles and developing new fuels that arent petroleum based may slow the growth trend, but any decllines resulting fromm fuel efficiency will be balanced against greater consumption of other resources as markets continue to develop around the world In additon to direct consumption of resources, transportation also affect the environment through air, water, and noise pollution,. Not all of these effects are reflected in the costs of doing business. Transportation vehicles are not designed for long-term storage and are generally not used for that purpose. Nevertheless, it can sometimes be more conomical to warhouse inventory in a vehicle than to unload, store, and reload the carrier; however, that necessitates space to park the vehicle, and the fees charged for temporatry parking of a trailer. Carrier charges and fees are also added when land or water vehicles are retained beyond a specified loading or unloading time. Those charges are called demurrage fees if they involve rail freight cars or ships and detention fees if they pertain to truck trailers. If the goods to be stored need to be kept at a certain temperature, refrigerated trailers may be utilized and kept running as long as temporary storage is needed, but this can be quite costly. Three situations provide the most frequent examples of the use of vehicles for temporary storage. Short term storage. Trailers and railcars sometimes park without being unlaoded a facility if the contents need to be stored but are scheduled to move again in a few days. In the global areana, logisitcs parks (designated areas for stage and distribution built ot complement industrial zones) are a growing option for efficient shor term storage. Some trucking comapnies have their trucks set up with two trailers so that the driver can park on temporarily outisde an urban area while another trailer delivers goods. The driver than retrives the secon d trailer and delivers those goods. Logistics warehouses in chinaa are classifed as either bonded or nonboned facilites. In bonded logistics parks, occupiers can transship products duty free, recieve value added tax refunds upon entry ,a nd conduct reimportation under cusomts supervisons where goods are not required to the leave the country. BLP's are often located near ports and serve as cost effective holding areas where shipping orders can be consolidated from various locations before being exported. They also offer a streamlined customes clearance procedure, since goods transported into BLPS are considered off shore and can be immediately loaded onto ships bound for overseas markets. But logistics parks are by no means only a port phenomenon. Nonbonded logistics park, which do not offer VAT rebats and duty free storage but have cheaper rantal rates, are increasingly being developed on the expanding road network. Crowded facility. If a warehouse is too full to accept the contents of an arriving truck or railcar., some of the contentso of the warehouse may be laoded early into another vehicle. The loaded vehicle then takes an indirect rougte to its destination. The tradeoff in extra trasportation time and cost must be balanced against the enhanced storage capacity. Changed destination- With global positioning to track in transit inventory, it is easiier to ust put the invenotyr on the raod and select the final destination during transit. One reason to diver a shipment of goods while in transit is to make the best use of available warehouse space by avoiding a crowded facility and making use of spare room in another. Another reason is to accomodate changes in customer orders, such as last minute cancellations or new orders.
Identify the stakeholders in transportation decisions and their respective objectives
Transportation is not merely one piece of the total logistics function. it is also part of a larget netwoork of transportation stakeholders, and these stakeholders haveobectives that must be acknowledged when making tansportation decisions. We will analyze the obectives of five transportation stakeholders. The shipper who selecs the means of transportation The recipient consignee of the transported goods The carrier of the goods The government that regulates the market in the interst of th emarket partcipants, including espciallyy the public The public Shipper and recipent Ideally shipper and recipient share oectives. Both want the product, parts , raw maerials to leave on time and arive on time at the lowest cost consistent with desired time in transit and without loss, damage, or theft. ( shippers care about the lowest cost to themselves, through recipient may be indiffernt in the short term to the shippers costs. In the longer term, the shipper cost stranslate into higher costs for recipients, who have a sstake in keeping shippers in busiess. Bother shippers and ceipietns want precise and efficint documentation aaccompanying the transaction. Their mutual goals are the same wheter or not they are commonly owned. ( for example, aa wholly ownded parts supplier might be shipping comnents to its parent manfacturing comapny, or indendenly owned mining company might be shipping raw marials o a independently owned manufacturer. Carrier The carrier is looking to receive the highest possible net revenue (difference between rate and costs) consistent with getting or keeping repeat businesses, assuming that the carrier is not owned by one of the other parties. An independent carrier will wan t the pickup and delivery times to conincide with its usual practice and not conflict with other obligations. In other words, the carrier may be less flexible about scheduling than the shipper and the cecipient would like. It will also want to use the infrastructure (roads, rails, etc) most convenient and least troublesome for its vehicles. Even when all participants in a commerical transportation are privately owned companies, the government has a storng interest in promoting a stable, predicatble, efficient trasportation system that distributes desired goodsa around the coutnry and ekuvers tgen ti ci=ystiners at acceotatbke oruces. Governemtns may accomplish their goals by regulating and licentsing carriers, by promoting resach and development,by building infrastructure, or by providin gsubsidies or tax relief, in some countries, such as the UK and germany, governemts actually own carreiers and tightly control their markets, In europe, railroads have not only been nationally owned but have tended to be nationally unique, for example, track gage widths are not uniform eletrical current is supplied by different systems, managment systesm vary, and signaling systems are not uniform ( requiring crew changes at borders. Such impediments are on the EU agend for reform as its eeks to build an efcient EU wide systm of commerical and passenger transport Tranis have largely beeen state run otuside the united states have generally been considered essential to the econonimc and miltary power nations. Even in the untied staes, where private owership is virtually sacred, government has historically supported railraods with lands grants, truchks have been provided with an interstae highway sytem* which they have to share with noncommerical vehicles, and all ofrms of transportation have been subject to regulation around the world highways and bridges are generally financed by governments, airports are generally government run and increasingly are also staffed with fedral security personnel aempting to foil terroirst, and port are almost univeraslly public rather than private Depending upon the ocuntyr the public influences the transportation system both directy thorugh indivual and cultural choices and through the gvernment. The converns of the public run in alighnment with commerical concern sin somes ways and counter them in other as consumers of taranposrtation that is a travelers commuters and shippers the public deisres convenice, sppeed, safety , adn some level of comoft at low or no price. As consumers of commerically transported products hower, they may want t ekkkp the logiscitcs compnonent of retail prices a s lowe as possible tha tmay require tradeogffs such as accpeting more trucks in their neightborhoods, more train whistles blowing nt nearby crossings in the night, and more airplanies flying low over urban homes. It may also mean puttig up with more smog and noies. From ountry to coutnry, public transportation goals differ with differences in culture. In erupoe, and asia public transportaiton palys a grter role in ordinary communiting than it does in the united staes, where the automboile is the builic vehicle of choice, for htis reason, some public modes of transport especailly trains have been allowe dto lanquiesh. the heavy use of automobiles creates traffic problems around cities that slow down truck deliveries. For commerical purposes, airports, should be convenient ot major markets** including cities) should be accessible to the largets lanes and should operate 24 hours a day, seven days a week theese goals bring airports into conflict with urban residents whose homes are under flight paths.
Enumerate the advantages and disvantages of each mode of transportation
When it comes to the metod of transporting goods, a logistics manager first decides which mode of transportation best fits with the overall logistics neds for tha tproduct and marketing channel Rail transport Rail transport is often known for being very fuel efficent based on date provieded by Association of american railroads. in 2009 US railroads averaged 480 ton miles to the gallon to move a ton of frieght ( a railway fuel efficiency measurement that means an average train moved a ton of freight across 480 iles on a gallon of fuel that year, which makes it four times more furel efficinet than truck transport. rail transport is therefore an excellent choice forereducing greenhouse gass emissions. US railroads generated 67 percent more ton mils than in 1980 but used 18 percent less fuel, a 104 perenct increase in fuel efficientcy. At one point railroad transport accounted form more than half of the intercity frieght in the United states. While dergulation stablized rail percentage share of the intercity transport market, it resulted in an ongoing decline in the number of large carriers, miles of track, and total revenues as rail carriers abandoned unproftiable lines and cut rates to be competitive. The us trucking industry was the major beneficiary of the decline in rail. Rail transport has never ben an espcially efficint method o ffmoving goods between countries of the European union because onf national differences in gauge widths, signalilng systems, and other differences in infrastructure and organizaiton, as well as politics, moreover, the reliance on rail for commerical transport entered into serious decline in the latter part of the 20th centry under competitive pressures from other modes of carraige. in 1970 railways carried 1 percent of commerical cargo in the EU countries; by 2000 their share of carriage had droped to 8.1 percent. Meanwhile, trucking increased its share of freight trasport forom aobut 31 percent to almost 44 percent. The international transport forum reports that rail freight transport in the EU had declined by 27 percent early in 2009 as compared to same quarter in 2008. EU railroads were also being impaced by the global economic crisis On the other hand, rail transportation has grown in importance in the national and international movement of goods in Asia. The following are reasons often cited for the increase: Twelve of the 30 landlocked countries of the world are located on the Asian continent with the nearst ports often several thousands of miles away The distance liking the main orgin and destinations justify the cononomics or rail transport There is a reliance on ports to connect national conomies to the worlds markets, especially in the context of growing containerization and the deveolpment of intermodal transport. Several Asian countreis are major exporters of mineral resources, and rail transport is cruical to the logistics There is an ongoing surge in the volume of goods being exchanged on a domestic and global scale Rail is recognized as an environmentally freindly and safe mode of transport Beyond Asia, rail transport is a cruiclalaaspect o fmany other country and reginal transport networks. Growing internaitonal trade and estblishment of free trade areas, and requirements for increased efficienty and imporved quality of transport services are all factos that should sustain and grow rail transport for future decades in locales such as australia, north africa, the middle east and numerous other areas. Capabilities What railroads do especially well is to carry heavy loads of low value goods over long distances at relatively low rates. The rough ride over steel rails and the jarring impact of coupling tends to cause more damage to cargo than occurs with other mods of transporttaion, hence in part the focus on low value, durable freight- rail transport attractive for low value freight. As the value of th ecargo declines, the cost of transportation eats up a greter portion of the selling price. Offer the logistics manager a considerable amount of safety; clear advantage in carrying very heavy loads when compared to motor carriers and airplances; compared to water transport which is also well adapted to heavy loads, rail carriers have the edge in accessbilitiy to diverse destination. Trains have the cpability to carry virtually any product or material ecept bulky items Much of the Us rail business comes form carrying coal, with smaller slices alloted to chemicals and other raw materials or commodities. Market conditions. very few rail carriers are available due to high fixed cost low variable cost are seen- Us railroads have lowered their variable costs even more by renegotiating labor aggreements. Use of computers has also increaseed the efficent of train movent, lowering expenses for fule and labor. There are about 560 companies in the us rail business since deregulation with only seven seeing major proit Union Pacific and Burlington North. This is little room for expansion in the industry because of the expense of: Laying new track and the difficulty of locating avaiable land for right of way (china is the exception). Railroads now pad their revenues using intermodal transport. in 2003, intermodal service overtook coal as the leading source of revenue for the freight industry. Trucking is freight biggest competitior and customer. Limitation Rail is uselesss for direct delivery to a retail location, so both shipper and receiver must have facilites near the tracks; otherwise they will have to arrange with another type of carrier to get their goods. Rail transport is extremely slow due to frequent stops, decoupling, and restriction on speed. in the EU, carriers are hampered by the need to change crews and locomotives at border crossing and by the requirement to give priortiy to passenger services. Delivery times for european rail carriers have actually doubled or tripled from pre 1970 times, ontime service has become far less predicatble for trains tha for trucks. Trains just cannot be trusted for lean production and just in time delivery. Motor Carriers As rail transport has dwindled trucking has expanded. Motor carriers haul produce, raw materials, parts , cars, stage sets, hazardous materials, fish, flowers, and farm animals over the approximately four million miles of highway in the United Sates, not to metion the highways and by ways serving supply chain partners in europe, asia and the rest of the america, from the smallest pickup truck to the lonest semi with two or three trailes hitched to its cab, motor carries have beome absolutely essential to the owrld supply chains. Capabilities The market for truck transport is the relatively small shipment of high value items traveling a short distane. cessibility is the strong suit of the motor carrier. There are virtually no locations that are off limits for trucks. They dont require ports, vast swtiching yards, or large terminals. All trucks need is a road to the shippers, and recipeint docks or door. Most frieght arrives to retail stores via truck. When cargo travels by other, less flexible modes, trucks often carry the freight to and from the port or rail yard. Market Conditions Motor carriers benefit from relatively low fixed costs, associated with the vehicles themselves and terminal facilites. US freight tonnage expected to grow about 24 percent by 2022. There are about 65000 general freight trucking companies in the US ( the 50 largest companies account for 40 percnet of revenue. carriers may be limied to carrying only commodities, only explosives, and only building matrials. There are three segments: TL (truckload), LTL (less than truck load), and specialty. TL- incldues many carries who compete on their rates. A truckload shipment weights over 15,000 pounds. generally travel straight to their destination do not have to stop and take on more pallets to fill up the trailer. LTL- trucks start with loads of less than 10000 punds because they have space in the trailers, these trucks often have to stop intermediate locations to take on more caro, this of course extends their delivery time, uses more fuel, ad raises labor costs for the drivers and dockworkers. The higher costs of doing business in this sector have lead to more consolidation than in the TL sector. Specialty carriers are ups and federal express. Tradeoffs Trucks do contend with high variable costs Trucking companies variable cost include equipment, repairs, and the wages paid to drivers and laborers who load and unload their cargoes. When wages are on the rise all modes of transport may feel the pressure, but trucking is more labor intensive than its competition, so its is impacted more by rising labor. good for high value or less durable goods, trucking may be less hazardous than rail or water transport. Air filled tires provide better cushion for caro than steel wheels on steel rails. Vehicle suspenions, too, are better than they used to be, at least for the cargo, Riding long hours in the cab can still be hard on the operators. Water Water transport includes forms an important part of domestic and international trade. Water transportation includes several categories; inland waterways, lakes, coastal and intercoastal ocean, and international deep sea. In international shipping, water is the dominant mode, and it is the most inexpensive method of shipping high bulk low value commodities. Water carriers can handle huge loads, measured either in weight or size. The barge could hold the weight equivalent of more than 30 fully loaded double trailer trucks. Rather like trains, however, barges and other floating carriers find their most fitting use in conveying low value, high density cargo over long distance, with loading and unloading accomplished mechanically The largest vessels on the water are the oil tankers Product tankers, which carry petrochemicals from refineries to market areas, and the crude tankers, which carry unrefined cruide oil from the field to refineries. Each very large ship can transport wo million barrels of oil. The primary value that water transport provides the logistics manager is low cost. at less than a penny charged per ton mile, shipping by water is even cheaper than using a train Water transport can also relieve congestion on crowded highways. In Asia waterway transportation is growing steadily. Shipping containers play big role in domestic and most international water shipments. In fact, it has been said that containerization has transformed global trade in manufactured goods as dramatically as et planes have changed the way we travel and the internaet has changed the way we communicate In the us water tansport has remained stable, in the range of 15 to 17 percent of ttotal ton mieles over the past five decades. Tradeoffs limited accessibility and lack of speed The use of containers for intermodal logistics can reduce staffing needs, minimize in transit damage and pilferage, and shorten transit time. Pipelines Pipelines move about the same percentage of US freight as water transport largely because of their special adaptation to conveying cruide oil and petroleum products Natural gas is also transported in pipelines They generally only move their cargo in one direction thus eliminating the need to be concerned about backhaul carriage. Also no prepacking is required to move caro through a pipe. the pipe is the package, no crates, pallets, or packing pellets Pipelines are special in that they are available for continus use on all days in all seasons at all hours. Pipelines are expensive to construct and maintain. since piples they have the highest fixed costs of all modes of transport, but the lowest variable costs. A cost structure similar to the rail . cost of operation is very low. They could be susceptible to terrorist attack. Pipelines are natural monopolies, since constructing paraleel pipelines to compete for the same business would be far too costly. In the united states, some pipelines are owned by shippers, but most operate as common carriers. Airplane the clear advantage in speed of delivery goes to the airplane over all other modes of transport. This allows logistics managers to reduce or eliminate safety stock and warehouses. Because air travel is relatively smooth and fast, it is especially well suited to carrying valuable fragile, and perishable cargoes. However, air cargo is no limited to such items any commodity can travel by air, subject only to restricition on weight and size, air lifts heavy equipment to battle zones. Cargo destined for travel in an airliners hold requires significantly less and less expensive, packaging. Air transport benefits from low fixed costs, ranking second in that regard only to over the road motrot carriers. Airports are generally constructed and maninted by taxpayers. With gates leased to carriers. Shippers can afford to purchase or lease their own fleet of airplanes. Variable costs, however, are high due to the rising cost of fuel and expenses accruing to a very labor intensive business. Tradeoff With speed comes a higher pricing point. To justify the cost, air cargo almost always has to be high in value. Acessibility is also sacrificed for speed
