Module 5 TRANSPORTATION SYSTEM

Learning Objective State the meaning of transport Discuss the role of transportation in logistics Identify the transportation selection decision Various modes of transportation Describe the advantages and limitations of different modes of transport

Learning Outcomes Upon completing this module, students will be able to: Evaluate the strength and weaknesses of different modes of transport Explain the meaning, role and modes of transportation Describe the underlying principles in transportation selection decision

INTRODUCTION Transportation is one of the key activities in logistics and its contribution to the industry is continue to gain significant reputation. Transportation will provide the movement of materials and goods from point of origin to the point of destination and perhaps to its ultimate point of disposal as well. Mode of transportation includes air, rail, water, road, or pipeline and the scope of the role will be the routing of the shipment, assuring of compliance with regulations in the region of the country where shipment is occurring, and selection of the carrier. Table 5-1, shows the relative operating characteristics for each type of transportation.

Operating characteristics

Relative Operating Characteristics Rail Road Water Air 3 2 3 2 4 14 2 1 2 3 2 10 4 4 4 1 5 18 1 3 5 4 3 16

Pipe 5 5 1 5 1 17

Speed Availability Dependability Capability Frequency Composite 1 - Best; 5 - Worst

Table 5-1: Relative operating characteristics for each type of transportation Source: http://www.slideshare.net/TheSupplychainniche/transportation-4266206 The growth of transportation has parallel help the growth of industry in a country. In 1996, US transportation expenditure were approximately $455 billion of the nations total logistics cost, which were estimated to be $797 billion (Robert, 1997, p.4). Since 1970, the transportation sector has grown considerably. Figure 5-1 shows that since 1981, national freight transportation cast have been growing more slowly than the Gross Domestic Product - GDP (Douglas, James and Lisa, 1998, p. 216).

Figure 5-1: Freight transportation outlays compared to GDP. Source: Douglas, James and Lisa, 1998, p. 216) Through transportation, physically it moves product from the point of production to where it will consumed. In this product movement process across space or distance, adds value to the materials. This value added is referred to as place utility. Transportation is also playing major factor in time utility which is created by storing and warehousing products until its needed. Transportation determines how fast and how consistently a material moves from one point to another. We call this time-in-transit. Ensuring product availability at a precise time is vital requirement for the transportation. There may be expensive repercussions if a product is not available at a needed time. Issues like lost sales, production down time, and customer dissatisfaction will be needed to face if transportation unable to deliver the products on time. Transportation service providers such as Federal Express (FedEx) and United Parcel Service (UPS) have achieved success because they are able to provide consistent time-in-transit and thus increase the time and place utility of their customers products (Douglas, James and Lisa, 1998, p. 217).

UPS Designs the Right Solution for Raymond Harris & Associates
Based in Dallas, Texas, Raymond Harris and Associates is an architectural firm that designs residential homes,commercial offices and other facilities around the U.S. With 80 employees and more than 25 years of experience,Raymond Harris and Associates offers valuable expertise to its clients. The companys clients represent variousindustries, including retail, education, healthcare and churches. Raymond Harris and Associates is dedicated to providing exceptional client service throughout each step of every project. A key element of effective clientservice is a reliable shipping partner. Imagine anything that goes in, on or around a building and we ship it, says Stephen Freshwater, Logistics Coordinator for Raymond Harris and Associates. From color boards to brick samples, the company has used UPS to ship anything and everything for nearly 20 years. UPS ensures all of its shipments arrive on time, helping RaymondHarris and Associates provide exceptional service. However, samples arent the only thing that Raymond Harris and Associates ships. In fact, approximately 90 percent of the companys shipments are actually paper documents, including blueprints and contracts. Most of these documents are time sensitive and must be delivered to the client the very next day. Take a contractor, for example, explains Freshwater, If he has a wall up, and hes waiting on theshipment so he can change something, he may have to hold up on all other activity until the shipment arrives. For Raymond Harris and Associates, a late shipment could mean lost revenue, time or client trust. Late packages can even cause production delays. So on-time delivery is essential. The two companies team up to ensure that clients receive what they need, when they need it. The firm uses various UPS technology solutions to streamline the shipping process. For instance, the staff at Raymond Harris and Associates uses UPS WorldShip to create shippinglabels at their desktops automatically. WorldShip allows users to store contact information or connect to currentaddress books, so staff can prepare a shipment with just a few mouse clicks. Plus, UPS automatically verifies theaddress. If theres an error in the shipping address, UPS will notify the company before a label can be printed.WorldShip saves time by generating labels automatically and eliminating the need to re-key address information,thus reducing errors. Raymond Harris and Associates uses UPS Quantum View to track packages and automatically e-mail clients about the status of their shipments, so customers stay informed and Freshwater can breathe easy.I use Quantum View daily, says Freshwater. I get on it every morning and afternoon to make sure that everything is on time. I can break down shipments to an individual job or vendor and then e-mail it to a client so they have all the info they need. This saves a lot of phone calls. We would spend 15-to-20 minutes responding to a status request; instead, it takes 10 seconds. The firm also uses UPS Billing Data, which imports shipping information into the firms accounting system, accelerating the billing process. Without the ability to import the bill, the team would have to re-key all of the information. Its very easy for us to use and it cuts down on a lot of time, says Freshwater. Before Billing 4

Data,the process used to take five hours a day, now it takes about three hours a week. With UPSs three key technologysolutions, WorldShip, Quantum View and Billing Data, Raymond Harris and Associates is able to work efficientlyand keep clients informed and happy.

Before Billing Data, the process used to take five hours a day, now it takes about three hours a week.
Figure 5-2: Success story of UPS Source: http://www.ups.com/media/en/RaymondHarrisAssociates.pdf

TRANSPORTATION: MALAYSIAN SCENARIO Malaysia too recognizes the contribution of transportation sector to economic growth. In Figure 5-3 below, is the Transport Minister speech who is echoing the same emphasis:

KONG: TRANSPORT SECTOR CAN CONTRIBUTE FURTHER TO ECONOMIC GROWTH

KUALA LUMPUR, August 20 (Bernama) -- The Transport Ministry is optimistic that the transport sector can contribute further towards Malaysia's economic growth in the third quarter this year based on encouraging developments so far. According to its minister Datuk Seri Kong Cho Ha, the transport sector is an important component of the economy impacting on the development and welfare of the Malaysian population. A good and efficient transportation system is a requirement for economic development in Malaysia, which has an open and highly dependent economy and generates large volume of trade to be transported to global markets, Kong said. "The aspect of more linkages and connectivity by sea, air and land transportation both within Malaysia and other overseas destinations not only promote and facilitate the trade but also the tourism industry," he said in a statement Friday. Given its importance to the national development, the government has placed strong emphasis on the development of transport infrastructure, namely ports, 5

airports, road and rail, under its various development plans, Kong said. A total sum of RM61.2 billion was spent under the Eighth Malaysia Plan and the Ninth Malaysia Plan for the transportation sector comprising of roads, urban transport, rail, ports, airports and rural roads, he said. Kong said the inclusion of the improvement in the public transport system under the National Key Result Areas (NKRAs) is another major step to save journey time of daily commuters and other users. This will eventually increase productivity of workers in terms of punctuality and reliability of the system, he said. The other impact is the cost savings from the modal transfer from using private transport to public transportation mode. As for the maritime sector, Kong said its importance and immense contribution to the economy could not be overemphasized. "Our ports act as gateway for the economy and facilitate much of the nation's trade, 95 per cent of which is carried by seaborne transport," he said. "Together, ports and the shipping sector generate tremendous multiplier effects and create employment opportunities." According to Kong, Malaysia is poised to grab a bigger slice of intra-Asean and intra-Asian trade given its excellent port infrastructure and good maritime institutional and regulatory framework. "With the Asean Free Trade Area set to become a reality by 2015, Malaysia's ports, some of which offer world-class services at a competitive cost, are set to reap the opportunities presented by a huge and integrated regional market," he said. He added that with an efficient maritime sector in place, Malaysia's economy should be on track to register commendable performance despite sluggish global economic recovery, on the back of its ability to handle bigger volumes of trade. Figure 5-4: Malaysia Transport Minister Speech Source: http://www.pmo.gov.my/?menu=newslist&news_id=4521&page=1731&news_cat= 66 In the Trade and Transport Facilitation: The Malaysian Experience and Milestone report by Service Development Division, Ministry of International Trade and Industry, Malaysia, the overview of Malaysias Transport industry as per below:

Transportsector covers maritime, aviationand landmodes; In 2007: 56 projectswere approved; Investmentsamounting to USD5.6 billion, of which: USD4.1 billionare domesticinvestments; and USD1.5 billionare foreigninvestments. Seaand air transport servicesare the two mainexportablecomponentsof the transport sector in Malaysia; In 2007, Malaysias transport sector registered: a deficitof USD4.5 billion; a contractionof 31.1 percentfrom 2006(USD6.53 billion) Transport sector remainsin deficitdue to relianceon foreign freight, particularly in the transport of goods. Sea Transport: Exportsof sea transport services registereda 19.1 percent growth, valued at USD2.8 billion(2007), compared with USD2.4 billion(2006); Importsof sea transport services increasedby 5.4 percentto USD10.9 billion(2007), compared with 10.3 billion(2006). Air Transport: Exportsof air services registereda strong growthof 86.9 percentto USD5.3 billion(2007), compared with USD2.8 billion(2006); Increasedin exportof air services was dueto: Introduction of low cost carriers; Expansion into short routes and destinations; and Large volume of air travelers due to cheaper air travel.

Figure 5-5: Trade and Transport Facilitation: The Malaysian Experience and Milestone report Source: http://www.unescap.org/tid/projects/egmtf-S3Damiri.pdf

THE ROLE OF TRANSPORTATION IN LOGISTICS Transportation system is a key element in a logistics chain which can link the separated activities. The role of transportation is required in the whole production procedures, from production to distribution to the final destination and returns. Only with a good management between each chain would bring the benefits to a maximum. Figure 5-6 provides an overview of the logistics system. Logistics services which include transportation, information system, and infrastructure/ resources are the three components of this system and closely linked.

Figure 5-6: Overview of logistics system. Source: http://www.siam.org/journals/plagiary/1657.pdf

With well-developed transportation system, logistics could bring it advantages into full play. A better logistics efficiency, reduce operation cost and promote service quality can only be achieved thru good transport system. The effort of improvement the transportation systems have to come from both public and private sectors. The role that transportation plays in logistics system is more complex than carrying goods for the proprietors. With a well-handled transport system, product could be sent at right time to the right place in order to fulfill the customers demands. In this movement, it builds a bridge between producers and customers. Journal The Role of Transportation in Logistics Chain (2005, p. 1662), says a good transportation system performing in logistics activities bring benefits not only to service quality but also to company competitiveness.Therefore, transportation is the fundamental of the efficiency and economy in business logistics and expands other functions of logistics system. Figure 5-7 illustrates the value added elements in the transportation concept.

Product/Info Flows

Inbound Supplier Manufacturer

Outbound Customer

Info/Return Goods Flows

Figure 5-7: Value added elements in transportation concept Source: http://www.slideshare.net/TheSupplyChainniche/transportation-4266206

Because transportation creates place utility and contributes to time utility both of which are necessary for successful marketing efforts the availability, adequacy, and cost of transportation impact business decisions seemingly unrelated to 10

managing the transportation function itself; that is, what product should be produced, where should they be sold, where should facilities be located, and where should materials be sourced? (Douglas, James and Lisa, 1998, p. 217) Table 5-2 below shows the transportation related service elements.

Speed Availability Dependability

Time-in-transit Accessible to customers when they want it Pick-up and delivery time variability

Flexibility Adjustment to shipper's needs Table 5-2: Transportation related service elements Faster transportation allows a supply chain to be more responsive but reduces its efficiency (Sunil and Peter, 2009, p. 68). The type of transportation a company uses also affects the inventory and facility locations in the supply chain. Dell, for example, flies some components from Asia because doing so allows the company to lower the level of inventory it holds (Sunil and Peter, 2009, p. 68). Clearly, such a practice also increases responsiveness but decreases transportation efficiency because it is more costly than transporting parts by ship.

TRANSPORTATION-RELATED METRICS For a person who in-charge for logistics or supply chain operation, should monitor closely the following transportation-related metrics that influence supply chain performances. Transportation-Related Metrics 1. Average inbound transportation cost per shipment 2. Average inbound transportation cost Description Measures the average transportation cost of each incoming delivery. Along with the incoming shipment size, this metric identifies opportunities for greater economies of scale in inbound transportation. Typically measures the cost of bringing product into a facility as a percentage of sales or cost of goods sold (COGS). Ideally, this cost should be measured per unit brought in, but this can be difficult. The inbound transportation cost is generally included in COGS. It is useful to separate this cost by supplier.

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3. Average incoming shipment size 4. Average outbound transportation cost per shipment

Measures the average number of units or dollars in each incoming shipment at a facility. Measures the average transportation cost of each outgoing delivery. Along with the outgoing shipment size, this metrics identifies opportunities for greater economies of scale in outbound transportation. 5. Average outbound Measures the cost of sending product out of transportation cost facility to the customer. Ideally, this cost should be measured per unit shipped, but it is also often measured as a percentage of sales. It is useful to separate this metric by customer. 6. Average outbound shipment Measures the average number of units or dollars size on each outbound shipment at a facility. 7. Fraction transported by Measures the fraction of transportation (in units mode or dollars) using each mode of transportation. This metric can be used to estimate if certain modes are overused or underutilized. Table 5-3: Transportation-Related Metrics Source: Sunil Chopra and Peter Meindhl, pg 69

THE TRANSPORTATION SELECTION DECISION A number of factors came into play wheninquiring about what went into the modal and carrier selection decisions. However,it is important to know the structure for how a transportation choicedecision is made. Next, need to see all the relevant factor with theaccompanying industry trends that have been shown to affect the modal and carrierselection process. (a) Structure Generallymost transportation points towards a transportationmanagement structure that is very centralized across the board. Companies are beginning to realize the benefit of leveraging theirsize in rates, volumes, and contractterms negotiation.Acentralized administration gives an enough size and scale to be able to leverage that in themarketplace. This is an important example of the benefit ofcentralizing the transportation management process.Addition to centrally managing the transportation process, a majority of companies have moved towards adopting some form of a TransportationManagement System (TMS). To keepup with the ever expanding level of complexity and competition has driven companies toinvest in these high-tech solutions to manage the execution of their transportationstrategies. 12

(b) Cost Keeping costs at a minimum is still the main priority for many businesssinitiatives. It is an important factor of all areas within a business that will alwaysgain a great deal of attention. To stay competitive in the industry, a business must always remain focused on increasing profitability. Writersof the Supply Chain Digest Letter suggest that Companies in this current slump will belooking for every avenue to cut costs, and as always transportation will be one of the firstfunctional areas where companies look for dollars (Supply Chain Digest, 2009 pp.6).Thisshows how important it has become to some companies to look for avenues by whichthey can shave costs away and improve their bottom line. However, there are a multitudeof other factors that have been challenging the importance of cutting costs in the realm oftransportation selection. (c) Product Another factor that is important for transportation selection islooking at the actual product characteristics. It would be very uneconomical toship twenty tons of a chemical via truck when the origin and destination both have railsidings. In terms of carrier selection, product characteristics also play an important part ifthe product has a special trait, such as temperature, hazardous materials or special handling requirements. (d) Service Many companiesbeforethey give significant thought to cost turn an eye towards the servicelevels that modes and carriers are capable of delivering. According to a supply chainexpert, The Internet, just-in-time operating procedures, and continuous replenishment ofinventories have all contributed to customers expecting rapid processing of their requests,quick delivery, and a high degree of product availability (Ballou, 2004 p. 14). Balloufirmly believes that measures of service such as transit time and transit time variabilityshould rank ahead of cost in the battle of mode and carrier selection. Servicelevels also seem to create somewhat of a threshold for modal selection. If the mode doesnot meet a given level of service required by the company for a particular product, thismode simply will not be considered as an option. THE BASIC MODES OF TRANSPORTATION Transportation modes are an essential component of transport systems since they are the means by which mobility is supported. A wide range of modes that can be grouped into three broad categories: land, water and air. Every single mode has its 13

own features and requirements, and is adapted to serve the specific demands of freight and passenger traffic. This gives rise to marked differences in the ways the modes are deployed and utilized in different parts of the world. Recently, there is a trend towards integrating the modes through intermodal and linking the modes ever more closely into production and distribution activities. At the same time, however, passenger and freight activity is becoming increasingly separated across most modes.Let us discuss about various modes of transport.
Percent Percent Freight Percent Freight Tons Modes Change Change Ton-Miles Change (billions) Since 1993 Since 1993 (millions) Since 1993 Air (includes truck and air) 777 96.7 10 45.9 15 63.2 Truck 6,660 42.2 9,197 26.4 1,449 55.5 Rail 388 39.2 1,895 19.9 1,254 29.9 Water 867 39.9 2,345 10.2 733 -16.9 Pipeline 285 -8.7 1,656 3.8 753 27 Multimodal 1,111 67 213 -7.5 226 36.7 Table 5-4: Commercial freight activity in U.S. by mode in 2002 Source: Sunil Chopra and Peter Meindhl, pp382 Freight Value ($ billions)

(I) Land Transport: Land transport refers to activities of physical movement of goods and passengers on land.This land transport movement takes place on motor (truck) or rail. (a) Motor(Truck) Roads are the means that connect one place to another on the surface of the land. Motor carriers transport over 75 percent of the tonnage of agricultural products such as fresh and frozen meats, dairy products, bakery products, confectionery items, beverages, and consumer tobacco products (Douglas, Peter and Lisa, 1998, p.219) A lot of manufactured products are transported mainly by motor carriers, including athletic goods, amusement, and sporting; toys; radios and television sets; watches and clocks; carpet an rugs; office equipment and furniture; farm machinery; drugs; and clothing. Motor carriage offers fast, reliable service with little loss in transit and damage. Motor carriers are very versatile and flexible, thus, enabling them to offer point-topoint service between almost any origin-destination combinations. It also has the advantage of requiring no transfer between pickup and delivery. These provide the motor carriers the widest market coverage of any mode. All type of products can be delivered using motor carriers, including some require modifications of transport equipment. Their capabilities in adapting for all type of products have made them to become the dominant form of transport in many other parts of the world. The amount of freight transported by motor carriers has steadily increased over the years. Motor carriage has become an important part of the logistics networks of most firms because the characteristics of the motor carrier industry are more 14

compatible than other transport modes with the service requirements of the firms customers (Douglas, Peter and Lisa, 1998, p. 221). Advantages of motor transport (i) It is a relatively cheaper mode of transport as compared to other modes. (ii) Perishable goods can be transported at a faster speed by road carriers over a shortdistance. (iii) It is a flexible mode of transport as loading and unloading is possible at anydestination. It provides door-to-door service. (iv)It helps people to travel and carry goods from one place to another, in placeswhich are not connected by other means of transport like hilly areas. Limitations of motor transport (i) Due to limited carrying capacity road transport is not economical for long distancetransportation of goods. (ii) Transportation of heavy goods or goods in bulk by road involves high cost. (iii) It is affected by adverse weather conditions. Floods, rain, landslide, etc., sometimescreate obstructions to road transport. (b) Rail transport Transportation of goods and passengers on rail lines through trains is called rail transport. Itis a dominant mode of transport in India, the Peoples Republic of China, Austria, and the former republics of the Soviet Union. Rail is the most dependablemode of transport to carry goods and passengers over a long distance. There are two types of trains are found. One is carrying passenger and other is carrying goods. While passenger trains carry both human beings and a limited quantity of goods, thegoods trains are exclusively used for carrying goods from one place to another. While rail road is available in almost every city in the world and in many smaller communities, the rail is not nearly as extensive as the highway network (Douglas,, Peter and Lisa, 1998, p. 221). Rail transport lacks the versatility and flexibility of motor carriers because it is limited to fixed track facilities. Thus, rail transport only able to provide terminal-to-terminal service rather than point-to-point service. Transportation time by rail, however, can be long. Rail is thus ideal for very heavy, low-value shipments that are not very time sensitive.

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Advantages of Rail transport (i) It is a convenient mode of transport for travelling long distances. (ii) It is relatively faster than road transport. (iii) It is suitable for carrying heavy goods in large quantities over long distances. (iv) Its operation is less affected by adverse weathers conditions like rain, floods, fog, etc. Limitations of Rail transport (i) It is relatively expensive for carrying goods and passengers over short distances. (ii) It is not available in remote parts of the country. (iii) It provides service according to fixed time schedule and is not flexible for loading orunloading of goods at any place. (iv) It involves heavy losses of life as well as goods in case of accident. (II) Pipelines transport In modern times, pipelines are used for various purposes. Water supply to residential andcommercial areas is carried on with the help of pipeline. Crude petroleum, refined petroleum products, and natural gas are alsotransported primarily through pipelines. This is the most convenient as wellas economical mode of transport for petroleum as well as natural gas in comparison to roadand rail transport. Given the nature of the cost, pipelines are best suited when relatively stable and large flows are required. But the cost of installationand maintenance requires large capital investment. In the United States, pipeline accounted for about 17 percent of total ton-miles in 2002 (Sunil and Peter, 2009, p. 385). In Europe and Japan, pipeline movements are relatively insignificant, although in the Commonwealth of Independent States (CIS), large amount of product are moved using this form of transport (Douglas, James and Lisa, 1998, p. 226). Advantages of pipeline transport (i) Losses and damages due to pipeline leaks or breaks are extremely rare. (ii) Climatic conditions have minimal effects on products moving in pipeline. (iii) The flow of products within the pipeline are monitored and controlled by computer. (iv) Pipelines are not labor-intensive; therefore, strikes or employee absences have little effect on their operations. Limitations of pipeline transport (i) Significant initial cost is incurred in setting up the pipeline and related infrastructure

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(III) Water transport Water transport refers to movement of goods and passengers on waterways by using variousmeans like boats, steamers, launches, ships, etc. With the help of these means goods andpassengers are carried to different places, both within as well as outside the country. Water transport, by its nature, is limited to certain areas. Water transportation can be broken down into several distinct categories (Douglas, James and Lisa, 1998, p. 224): (i) Inland waterway, such as river and canals (ii) Lakes (iii) Coastal and inter-coastal ocean (iv) International deep sea Withinthe country, rivers and canals facilitate the movement of boats, launches, etc. Since thegoods and passengers move inside the country, this type of transport is called inland watertransport. When the different means of transport are used to carry goods and passengers onthe sea route it is termed as ocean transport. Water transport is ideally suited for carrying very large loads at low cost. Within the Unites States, water transport is used primarily for the movement of large bulk commodity shipments and is the cheapest mode for carrying such loads (Sunil and Peter, 2009, p. 385). In global trade, water transport is the dominant mode for shipping all kind of products. In 2001, merchandise trade valued at over $718 billion moved between the United States and foreign seaports (Sunil and Peter, 2009, p. 385). For the quantities shipped and the distances involved in the international trade, water transport is by far the cheapest mode of transport. (a) Inland water transport Inland water transport use boats, launches, barges, streamers, etc., to carry goods andpassengers on river and canal routes. These routes are called inland waterways andare used in domestic or home trade to carry bulky goods. (b) Ocean transport Ocean transport refers to movement of goods and passengers with the help of shipsthrough sea or ocean waterways. It plays an important role in the development ofinternational trade. It is also used for transporting goods and passengers in the coastalareas. Ocean transport has its fixed route, which links almost all the countries of the world.Sea transport may be of the following two types: i. Coastal Shipping - In this transport, ships ply between the main ports of acountry. This helps in home trade, and also in carrying passengers within thecountry.

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ii. Overseas shipping - In this transport, ships ply between different countriesseparated by sea or ocean. It is mainly used for promotion and development ofinternational trade. It is economical means of transport to carry heavy machines andgoods in bulk. Overseas transport is carried out on fixed routes, which connect almostall the countries. In ocean transport, different types of ships are used to carry passengersand goods. These may be classified as under: a. Liners - A liner is a passenger or cargo vessel, which belongs to a regularshipping company. These ships ply over a fixed route according to aprescribed schedule or timetable. b. Tramps - A tramp is a cargo ship, which does not make regular trips butplies whenever cargo is offered to it. It does not follow a fixed route or aprescribed timetable like that of liners. Advantages of water transport (i) It is a relatively economical mode of transport for bulky and heavy goods. (ii) It is a safe mode of transport with respect to occurrence of accidents. (iii) The cost of maintaining and constructing routes is very low as most of them are naturallymade. (iv) It promotes international trade. Limitations of water transport (i) The depth and navigability of rivers and canals vary and thus, affect operations ofdifferent transport vessels. (ii) It is a slow moving mode of transport and therefore not suitable for transport ofperishable goods. (IV) Air transport Air carrier offers a very fast and fairly expensive mode of transportation. It carries goods and passengers through airways byusing different aircrafts like passenger aircraft, cargo aircraft, helicopters, etc. Air transport provides frequent and reliable service and rapid time-in-transit. Besidespassengers it generally carries goods that are less bulky or of high value. During war, air transport plays animportant role in carrying soldiers as well as supplies to the required areas.Air transport can be grouped as domestic and international air transport. Domesticair transport mainly facilitates movement within the country. International air transport isused for carrying goods and passengers between different countries. Air transport is carriedout in fixed air routes, which connect almost all the countries. In 2002, the goods U.S. businesses moved by air were valued at $75,000 per ton, by far the highest among all modes (Sunil and Peter, 2009, p. 383). Advantages of air transport (i) It is the fastest mode of transport 18

(ii) It is very useful in transporting goods and passengers to the area, which are notaccessible by any other means. (iii) It is the most convenient mode of transport during natural calamities. (iv) It provides vital support to the national security and defense. Limitations of air transport (i) It is relatively more expensive mode of transport. (ii) It is not suitable for transporting heavy and bulky goods. (iii) It is affected by adverse weather conditions. (iv) It is not suitable for short distance travel. (v) In case of accidents, it results in heavy losses of goods, property and life. (V) Intermodal Intermodal transportation is the use of more than one mode of transport to move a shipment to its destination (Sunil and Peter, 2009, p. 386). Though various type of intermodal combinations are possible, the most common being use is truck/rail. The volume of intermodal has grown significantly with the increased use of containers for shipment and the growth of international trade. The rise of global trade has also increase the truck/water/rail intermodal combination. Advantages of intermodal transport (i) For global trade, intermodal is often the only option because the factories and markets may not be next to ports (ii) Intermodal system offers the benefit of lower cost (iii) Shipper able to communicate with one entity representing all carriers Limitations of intermodal transport (i) The exchange of information between different modes often involve considerable delays.

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Module Concept Mapping

Questions and Problems 1. Discuss the all the five basic modes of transport, based on their service and economic characteristic. 2. How does the transportation function contribute to time utility and place utility? 3. What modes of transportation are best suited for large, low value shipment? Why? 4. What are the initiatives taken by Malaysia in improving transportation to attract more foreign investor? 5. Briefly discuss the pipeline transportation in Malaysia. What are the challenges faced?

Reading materials 1. Robert V. Delaney, CLIs State of Logistics Annual Report, press conference at the National Press Club, Washington, DC (June 2, 1997), p: 4 2. Douglas M. Lambert, Chap 7, p:216

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