SUPPLY

CHAIN

2. MEANS OF TRANSPORT

2.1. INTRODUCTION

Nowadays we are facing very competitive markets due to the great number of options
available for the existing demand. Companies are doing their best to be competitive
with delivery times, knowing that the delay of some merchandise can mean losing the
customer.

As we have seen in the previous topic, logistics coordinates all necessary stages with the
final objective of providing the customers with their goods on time. Bearing this in mind,
we will now focus on the different means of transport used for the distribution of goods.

When it comes to getting the goods to our customers, one can choose four different
types of transport: maritime, air, railway and road. The choice of one or the other
depends on the type of product, its weight and dimensions, the point of origin and
destination as well as the costs and delivery time.

Having this in mind, let us now move to the different types of transport available and
their main characteristics.

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2.2. MARITIME TRANSPORT

Maritime transport is the means of transport most commonly used in the international
market due to its larger load capacity and its lower cost. There are two modalities:
"break-bulk cargo" transport, which is carried out by means of regular ship lines, and
"bulk cargo", transported between two points of low maritime traffic.

In this type of transport, good coordination of all operators involved in the process is
necessary. Among them we can identify:

▪ Ship owner: the owner of the vessel.

▪ Carrier: the transporter. In some cases he can be the owner.
▪ Consignee: the agent of the ship owner or carrier that is in charge of the
commercial management of transport in each port.
▪ Shipper: is the importer or exporter responsible for the shipment that signs the
contract of carriage by sea.
▪ Stevedore: is the employee that manages port operations.
This mode of transport has both advantages and disadvantages:

▪ Advantages
✓ Load capacity: current models of vessels make this type of transport increasingly
easier and more effective. For goods of great volume or weight, it is the best
choice.
✓ Cost: prices are increasingly competitive due to the high load capacity offered by
vessels.
✓ Specialization: in order to better adapt to different types of loads and goods, it
has been decided which ships can transport liquids, vehicles or containers.
✓ Automation: nowadays, we already have automated processes for the loading
and unloading of the goods which enable accelerating and reducing costs in this
aspect.

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✓ Integration: it is a type of transport that is integrated with other ones. Due to
this integration, there are transition points required: port areas specialized in
each type of goods with cranes, rails, etc.
▪ Disadvantages:
✓ Time: for those orders where the delivery time is crucial, it is not a good mode
of transport due to long transit times.
✓ Distance: at the intercontinental level, it is of great importance because of the
slow pace of vessels which leads to some routes being unviable.
✓ Transport routes: the place where the production factory is located should be
taken into account, since the points of origin of maritime transport are not very
flexible. Depending on the size of the merchandise, some problems with
reaching the port of departure may occur.

2.3. AIR TRANSPORT

Air transport is the most expensive and the most recent means of transport. It
represents, however, the quickest way to reach poorly accessible markets.

Let us move to its advantages and disadvantages:

▪ Advantages
✓ Time: as we have seen so far, time is one of the key elements in the logistics
process. It can be said that the process of economic globalization would not be
possible without the existence of air freight.
✓ Competitiveness: this type of transport has created an increase in
competitiveness among companies, which has favoured the creation of large
leading international logistics groups.
✓ Integration: this means of transport not only encompasses transport by air, but
also entails the specialized companies’ responsibility for the collection service
and delivery of the product.
✓ Simplicity: The goods are delivered at the cargo terminal of the airline. As a
consequence, we can cut down on the cost of packing.
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✓ Security: there is a lower risk of theft.

▪ Disadvantages
✓ Load capacity: Although much progress has been made in the design of aircraft
specialized in the transfer of goods, we can still find restrictions imposed on
some goods of great weight or volume. In addition to estimating the dimensions
of the hold of the aircraft, we should not forget about the size of the access
doors.
✓ Cost: Although in most airlines the international rates are set in accordance to
the International Air Transport Association (IATA), often, due to the great
competitiveness, airlines offer different prices.
✓ Social cost: this kind of transport entails a few extra social costs such as noise or
pollution which are associated with the movement of the aircraft. Social pressure
groups attach great importance to strict controls over this transport.

2.4. ROAD TRANSPORT

Road transport is the most accessible type of transport for any company. It allows
carrying practically any product from the origin to the destination quickly and
economically. It is the main means of transport today.

When it comes to the advantages and disadvantages of this type of transport, we can
list:

▪ Advantages
✓ Accessibility: it is carried out from the point of origin of the goods to the point
of delivery without the need to rely on other means of transport.
✓ Integration: used as a mode of supplementary transport for other transports.
Air, maritime or even railway means require a transfer by road to move the
goods at some point along the way.
✓ Investment: for small and medium-sized emerging companies, it is the most
suitable transport since it does not need a very high initial investment.
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✓ Schedules: perhaps one of the biggest advantages, in comparison to the other
modes of transport, is the great flexibility of schedules. If the company has
adequate trucks to transport the goods, it is not necessary to depend on a
transport company, a plane or a train, subject to fixed schedules.

▪ Disadvantages
✓ Cost: the cost associated with the fuel is constantly increasing.
✓ Limitations: in this case, the ones implemented by governments with regard to
the circulation of vehicles intended for the transport of goods.
✓ Social cost: as with air transport, vehicles cause pollution, noise and also traffic
jams.
✓ Distance: high difficulty for intercontinental transfers.
In this type of transport we distinguish between different types of goods which means
hiring different vehicles or transfer systems.

We can differentiate between three types of loads: full loads, grouped and urgent
grouped loads.

▪ Full loads: a vehicle is hired for a certain route, regardless of whether the
merchandise occupies all the space available.
▪ Grouped loads: involves several shippers that share the vehicle and as a result
a great economic advantage is obtained.
▪ Urgent grouped loads: as we have seen before, it is becoming increasingly
important to please customers by reducing delivery times. With this type of
transport it is possible to move small packages with different shippers reducing
the delivery times without increasing the shipping costs too much.

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2.5 RAIL TRANSPORT

It is one of the oldest means of transport. However, it has not evolved as much as the
others seen so far. Its use is more common for the movement of travellers than of
merchandise, although, it presents a series of advantages that makes it a suitable means
of transport on certain occasions.

Advantages

✓ Efficiency: in this type of transport you already have a rout which prevents delays
caused by the transit of vehicles, traffic accidents, etc.
✓ Specialization: like most of means of transport, this one has also evolved to
adapt to the needs of the merchandise which is reflected in the adaptation of
engines and wagons.
✓ Integration: as we have mentioned before, road transport helps to complete, in
most cases, the transfer of merchandise. For this reason, the railway is becoming
increasingly adjusted to the needs of interconnection.
✓ Capacity: this transport is very flexible when it comes to different types of cargo
volumes.
✓ Reduction of pollution

▪ Disadvantages

✓ Accessibility: Unlike a vehicle, a railway cannot access all the points, which
implies that most of the time the service has to be complemented with other
means of transport.
✓ Route: railway routes have to be devoid of curves or slopes which means that
the transport time is extended.
✓ Internationally: problems can occur in the interconnection between different
countries due to the width of track, gauge, etc. and this leads to a fragmentation
of the route and, consequently, to stoppages in the process.
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In this transport, we also find different modalities:

▪ Full train: in this case the company has the whole train for the transport of the
goods. This is beneficial for enterprises with a high cargo volume.
▪ Fractional cargo: for companies that do not require large spaces but an urgent
shipment. It is very useful for small and medium-sized enterprises.
▪ Door to door: in this modality the railway transport is completed by means of
the road system so as to provide a delivery from the place of departure to the
end.

2.6. MULTIMODAL TRANSPORT

Multimodal transport is growing in popularity. It is defined as the transport of goods

performed through two or more means of transport. The objective is to achieve a more
efficient transfer as the travel distances are constantly increasing. For this reason, a
transfer of merchandise from one medium to another being carried out without
problems or additional costs is valued so highly.

Advantages

✓ Time: handling times have been reduced in loading and unloading operations.
✓ Cost: transport costs have been reduced thanks to the use of the most optimal
system.
✓ Delivery time: delivery periods have decreased due to the combination of
several means of transport.
✓ Documentation: greater simplicity has been achieved since only a single
document is used.
✓ Security: the number of thefts and damages has dropped. As a result, insurance
costs have dropped.

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Below there is a comparative table with the main advantages of each means of
transport.

Chart 2

Transport Speed Capacity Cost Security Goods

Road High Low Low Average All

Rail Average High Average High Bulk and solid

Maritime Low Very High Low High Containers

Air Very High Low High Very High High Value

Multimodal High Average Average Average All

2.7. FREIGHT FORWARDER

The freight forwarder is the person in charge of choosing and hiring the transport, as
well as preparing and managing all the necessary documentation that a company
requires for the distribution of the merchandise.

A company may choose to deal with these tasks or hire a freight forwarder. The
advantages of the second option are:

✓ Advising on the most suitable means of transport for each shipment, as well
as of all matters related to the packaging.
✓ Handling all transport documentation.
✓ Having more than one client, a freight forwarder manages the different areas
of the means of transport and, as a result, companies get better prices from
shipping companies.

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