Advantages And Disadvantages Of Different

Modes Of Transport.

Transportation is an important link of the logistics system. Transport is a branch

of material production, transporting people and goods.

Vehicles must have a number of necessary properties and satisfy certain

requirements in order to create innovative systems for the collection and
distribution of goods. First of all, transport should be flexible enough to provide
the transportation process that is subject to weekly or even daily adjustments, to
ensure frequent and clock delivery of goods in scattered and remote locations,
reliably serve clients in order to avoid interruption of business or deficit at the
client. Simultaneously, transport must be able to carry small loads over short
intervals, in accordance with changing user demands and conditions of small-
scale production.

Transportation is represented as a system consisting of two subsystems: public

transport and transport non-generic use.

Public transport is a sector of the economy that meets needs of all sectors of the
economy and the population in the transportation of cargo and passengers.
Public transport serves the scope of treatment and population. It is often called
the backbone (backbone is a main line in any system, in this case – the system
of means of communication).

Transport non-generic use – in-plant operations, as well as vehicles of all kinds,

belonging to the non-transport enterprises, is typically an integral part of any
production systems.

Here are the main means of transport: rail, marine, inland, waterways (river),
automobile, air, and pipeline.
Each of the modes of transport has specific characteristics in terms of logistics
management, strengths and weaknesses, determine the possibilities of its use in
the logistics system.

Rail. Advantages: high throughput, and the freight, regardless of climatic

conditions, time of year and day, high frequency of traffic, the ability to effectively
organize the implementation of loading and unloading operations; relatively low
rates and significant discounts for transit shipments, high speed delivery of goods
over long distances. Disadvantages: limited number of carriers, large capital
investments in industrial and technology base, high material and energy intensity
of transport, low accessibility to the final point of sales (consumption), high
enough of the cargo.
Naval. Advantages: possibility of intercontinental transport, low cost of transport
over long distances, the freight and high throughput, low capital intensity of
transport. Disadvantages: limited traffic, low speed of delivery (large transit time),
depending on geographical, navigational and weather conditions, the need for
complex email infrastructure, stringent requirements for packaging and stowage
of cargo, the low frequency of shipments.

Inland waterways (river). Advantages: high carrying capacity in the deep rivers
and reservoirs, low transportation costs, low capital intensity. Disadvantages:
limited traffic, low speed of delivery of goods; dependence on the uneven depth
of rivers and reservoirs, navigation conditions, seasonality, low reliability of
transport and cargo safety.

Road transport. Advantages: high availability, possibility of delivery of cargo from

door to door; high agility, flexibility, agility, ability to use different routes and
delivery schemes, high safety of the cargo, the possibility of sending the goods in
small batches; great opportunity to select the most suitable carrier.
Disadvantages: low productivity, dependence on weather and road conditions,
the relatively high cost of transport over long distances, lack of environmental
cleanliness, punctuality of discharge, a relatively small payload.

Air transport. Advantages: the highest speed of delivery, high reliability, the
highest integrity; the possibility of reaching remote areas. Disadvantages: high
cost of transportation, the highest rates among the other modes of transport, high
capital intensity, material and energy transport, the dependence on weather
conditions.

Pipeline. Advantages: low cost, high capacity, high safety of the cargo, low
capital intensity. Disadvantages: limited types of cargo (gas, oil, emulsions and
raw materials), low availability of small volumes of transported cargo.

For any extra info about automobile transport – please go to this web site with
automobile transportation advice and assistance can be the one that you’ve been
looking for.

And a final piece of advice – today the online technologies give you a truly
unique chance to choose what you require for the best price on the market.
Funny, but most of the people don’t use this chance. In real life it means that you
should use all the tools of today to get the information that you need.

Search Google or other search engines. Visit social networks and have a look on
the accounts that are relevant to your topic. Go to the niche forums and join the
online discussion. All this will help you to create a true vision of this market.
Thus, giving you a real opportunity to make a smart and nicely balanced
decision.
And also sign up to the RSS on this blog, because we will everything possible to
keep this blog tuned up to the day with new publications about vehicle transport
industry

Supply Chain Optimization 101

Tuesday, February 19, 2008
By Norman Saenz, Jr.
Associate Principal
Keogh Consulting

Optimizing the supply chain involves satisfying or exceeding customer demands,

at the lowest operating cost. While this is generally true, there are organizations
that move to a higher cost facility network to provide the best level of customer
service. This is seen in the growing trend to have more, smaller distribution
centers located closer to an organizations end customers.

Wal-Mart is an exception to this trend, with many distribution centers,

strategically located, but many over a million square feet. And, with a growing
number of companies acquiring other businesses with existing distribution
centers, another network trend is consolidation.

The challenge then is which facilities to close, and where to locate the
consolidated facility. With so many factors involved in deciding how many
facilities to operate, where to locate them, what customers to serve from each,
what inventory to store where, and what size to make each facility, there is a
growing need for organizations to understand the basics of supply chain
optimization.

The four main logistics cost drivers are information, inventory, facilities and
transportation. Information costs become more important with shorter delivery
lead-times. If delivery lead-times are short, it is important to monitor shipment
information to allow adjustments to transportation modes and carriers. This can
increase the cost of information system software and hardware.

Most companies hold a minimum safety stock or inventory level for the same
products at each distribution center. As a result, inventory costs increase as
facilities are added to the network. If products are dedicated to specific facilities,
then increases in inventory costs can be minimized. Facility costs increase as the
number of distribution centers or space is increased. The objective is to exploit
economies of scale to keep facility costs low.
However, if your network has only two distribution centers, you may incur higher
transportation costs and longer delivery lead-times. This leads to the
transportation factor, which is often the key to optimizing the supply chain
network. Transportation has many associated costs and options that should be
evaluated to satisfy customer demand and control transportation costs.

Transportation Costs
Transportation costs have two factors: outbound to customers and inbound from
suppliers. Typically, outbound transportation costs drive the total cost of freight
due to a higher number of less-than-truckload (LTL) and small parcel shipments.
The industry average for outbound transportation costs is 70% to 80% of the total
transportation costs. The inbound shipments are typically truckload (TL) and / or
rail shipments at lower rates. As a result, a common strategy is to add distribution
centers to get closer to the customers.
The addition of facilities leads to an initial reduction in total transportation costs.
However, if too many facilities are added to the network, the increase in LTL
shipments from inbound suppliers can increase transportation costs.

Transportation Modes
The five primary modes of transportation include air, water, rail, trucking and
pipeline. In addition, there are inter-modal combinations that are associated with
integrating rail with truck and ocean modes. The two primary modes based on
U.S. tonnage shipped are truck carrier and rail. In terms of revenue, truck
carriers’ jumps to a higher level above rail. Pipeline is used for moving bulk
commodities (i.e. oil), but isn’t part of a typical distribution center network.

Trucking carriers (motor) offer point-to-point service between almost any origin-
destination combination and provide the widest market coverage of any mode.

The most common trucking options used in distribution centers are small parcel,
truckload (TL) and less-than-truckload (LTL). Small parcel is used mainly for
small volume outbound shipments and competes with LTL carriers. TL carriers
compete with rails for larger volume shipments that are transported more than
500 miles. The average length of haul for trucking carriers is approximately 500
miles.

The flexibility and versatility of trucking carriers has enabled them to become the
dominant form of transport in the Americas and in many other parts of the world.
Trucking rates are expected to increase again this year at a rate of 3% to 4%.
The primary reasons for this increase are higher fuel costs and insufficient carrier
capacities.
Rail is mainly used to ship large volumes inbound and has an average length of
haul of approximately 750 miles. The rail network is not nearly as extensive as
the highway network and is limited to fixed track facilities. As a result, rail
provides terminal-to-terminal service rather than point-to-point service unless
companies have a rail siding at their facility.

Rail transport generally costs less (on a weight basis) than air and trucking, but
compared to trucking carriers, has disadvantages in terms of transit time and
frequency of service. Some of this rail disadvantage is overcome through the use
of trailer-on-flatcar (TOFC) or container-on-flatcar (COFC) services. These inter-
modal options offer the economy of rail movements with the flexibility of trucking
routes. TOFC and COFC are referred to as piggyback service and is a growing
trend in the industry for moving goods over 700 miles.

Airfreight offers the quickest time-in-transit of any transport mode. Although

increasing numbers of shippers are using airfreight for regular service, most view
air transport as premium, emergency service because of its high cost.

Shipping competition varies between domestic and international needs.

Domestically, airfreight mainly competes with trucking carriers, whereas the
major competitor for international airfreight is water carriage.

Air carriers usually transport high-value products because it cannot be justified

for low-value items. Air transport provides frequent and rapid time-in-transit
service, but terminal delays and congestion reduces some of the advantages.
Over short distances, trucking transport can often match or out perform the air
total transit time.

As customers demand higher levels of service and international shipments

increase, air may have a greater role in the supply chain plans of many
companies. However, increasing security issues must be considered for the
impact on transit time and costs.

Water transportation includes several distinct categories: inland waterway, lakes,

coastal and inter-coastal ocean, and international deep sea. Water is the
dominant mode in international shipping and is the most inexpensive method of
shipping high-bulk, low-value commodities.

Containers play a big role in domestic and most international water shipments.
The shipper places cargo into a container at its facility. The container is then
transported by rail or trucking carriage to a water port for loading onto a container
ship. After arrival at the port, it is unloaded and loaded onto a rail or trucking
carrier and delivered to the customer.

The use of containers for inter-modal logistics reduces staffing needs, minimizes
in-transit damage and pilferage, and shortens time-in-transit because of reduced
port turn around time. Containers are typically 8 feet high by 8 feet wide and of
various lengths from 20 feet to 53 feet. The container ships are capable of
carrying the equivalent of 6,000 twenty-foot containers.

Today, there are many problems at the ports impacting the timeliness of
unloading containers from ocean liners. The increase in import volumes, aging
port equipment, shortage of rail capacities and limited number of truck drivers
and carriers are contributing to this growing problem.

Determining Strategy
The mode of transportation selected impacts customer delivery times,
transportation costs, inventory levels, and the size and number of distribution
centers. The inventory level and resulting size of the facility is impacted by the
frequency of shipments and timeliness of deliveries.

Once “physically” optimized, the supply chain management technology must

enable the facility network to run efficiently. This technology includes warehouse
and transportation management systems which provide data for performance
measurements and continuous improvement. In addition, your business
processes should support the optimized facility network and ensure that the
ultimate business objectives are satisfied.

Given an understanding of modes, there are remaining decisions to be made

regarding transportation management strategies. An analysis of using private
fleets, carriers, and / or freight forwarders is the next step. The key is to optimize
the strategy based on your specific criteria, which may include higher service
levels, required capacities, flexibility and low logistics costs.

The transportation industry is being challenged today by ocean containers

delayed at the ports, rail and trailer capacity constraints, shortage of drivers, and
rising gas prices. If your customer service levels are decreasing and logistics
costs are rising, it is time to review and optimize your facility network. The
competitive advantage realized can set you apart from the competition.