CHAPTER THREE

Transportation Management

By Gedisha.K
Outline : Transportation Management
• Introduction
• Transport or transportation
• Transportation Modes: An Overview
• Containerization
• Intermodal Transport Costs
• The Role of Transportation in Logistics Management
• The Role of Transportation in Service Quality
• Interrelationship between Transportation and Logistics
• Transport Costs and Goods Characters in Logistics
• Distribution Management System
• The Transportation Terminals
• Impacts of transportation
• Gender and transportation
 Introduction

Dear learner, what do you think is transportation and its

basic components in agribusiness?
The Transportation

Transportation
also includes the
This includes movement of
shipment of raw parts to assembly
Transportation
materials to the areas as they are
involves the
manufacturer and assembled.
movement of
movement of
goods and raw
finished product
materials.
to the customer.

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The Transportation

Key element of Logistics Services

because it links all other activities

The
It is required throughout the entire
Transportation
production process
System
It’s efficiency and effectiveness
influences the performance of the
entire Logistics System

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The Transportation

Fast
Delivery Quality
Service

Low Cost Objectives of

Transportation
System

Low
Energy
Usage
Maximize
Resources

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 There are different modes of transport which includes:
air, rail, road, water, cable, pipeline, and space.
 Infrastructure has also a great role to play in
transportation systems.
 Infrastructure is the fixed installations that allow vehicles
(E.g., automobiles motorcycles, aircrafts etc) to become
fully operational.
 It consists of both terminal and facilities for parking and
maintenance.
 For the road, rail, pipeline, and cable transport, the entire
way the vehicle travels must be built up.
 Air and water craft, which are the ‘airway’ and ‘seaway’ do
not need to be built up but they require fixed
infrastructure at terminals.
 The financing of infrastructure can either
be public or private.
 Transport is often a natural monopoly and a necessity for
the public roads, and in some countries railways and
airports are funded through taxation.
 New infrastructure projects can involve large spending, and
are often financed through debt.
 Many infrastructure owners therefore impose usage fees,
such as landing fees at airports, or toll plazas on roads.
 Independent of this, authorities may impose taxes on the
purchase or use of vehicles.
 Transportation Modes: An Overview
 Transport modes are the means by which people and freight
achieve mobility.
 They fall into one of three basic types depending on over what
surface they travel such as:
 Land (road, rail and pipelines),
 Water (shipping), and
 Air (aircraft).

 Each mode is characterized by a set of technical, operational and

commercial characteristics.
 These modes have their own advantages and disadvantages,
chosen for mobility on the basis of cost, capability, route,
safety, comfort and speed.
Marine Transport

Cheap
Pros High carrying capacity conveyance for consumers
Ideal for transporting crude oil, grains and cars

Need longer transportation time

Cons Schedule is strongly affected by weather factors
Lacks flexibility

Crude oil
Motor vehicles
Uses
Wheat
Cement

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Marine Transport cont.

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Maritime Enclaves and Accessibility

Less than 700 km

More than 700 km
Maritime Enclave
Cruise Ship
World’s Largest Dry-Bulk Carrier, the Berge
Stalh
The Regina Maersk
Channel Ferry Ship Entering the Port of Le
Havre, France
Land Transportation

Road Modes
Pipeline

Railway

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Railway

High carrying capacity

Pros Lower influence by weather conditions
Lower energy consumption

High cost of essential facilities

Cons Difficult and expensive maintenance
Lack of elasticity of urgent demands
Time consumption in organizing railway carriages

Currently used only by Bauxite companies

Uses

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Railway cont.

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Road

Cheaper investment funds

Pros High accessibility, mobility and availability

Low capacity
Cons Lower safety
Slow speed

Most dominant means of land transportation

Large number of trucking companies
Uses
 Free market pricing

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Roman Road (Appian Way)
Macadam Road Construction, Maryland
1823
Pipeline

No need for vehicles and vehicle operators

Pros Reliability
Capacity

One-way transportation
Cons Limited capability
High Initial Cost
Flexibility

Petrojam Limited to JPS

Uses

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Trans-Alaska Pipeline
Airfreight

Delivery speed & Flexibility

Pros Security - lower risk of damage
Accessibility and good frequency for regular
destinations

High delivery fee.

Cons Air freight logistics is selected ‘when the value per
unit weight of shipments is relatively high and the
speed of delivery is an important factor.

Fast delivery of important machine and motor

vehicle parts.
Uses

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Airfreight cont.

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Transportation modes selection

Cost Speed

Mode
Reliability Capability
Selection

Capacity Flexibility

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An Invaluable Insight
What methods of transportation are being used?
 Land - Trucks for Domestic
 Sea - Ships for Containerized Shipment
 Air - Plane for sensitive goods

How is the right method selected for a particular product?

The right method is selected based on:
 Cost effectiveness
 Distance
 Products parameters
 Time
 Location
 Customer’s request.

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An Invaluable Insight cont.
Which industries mostly require the service of Transport
Logistics in Jamaica?
 Distribution (Commerce) and Passenger.

What types of products/goods are mostly transported?

 Mainly convenience goods - food Items

How effective is Transport Logistics in Jamaica.

 The Transport Logistics in Jamaica is effective as it have
been achieving the desired outcome.

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An Invaluable Insight cont.
Is there room for improvement?
 Yes

Where?
 While the Transport is effective it is not efficient:
 There are very few freight forwarders.
 Little or no alternatives for road transport (domestic).
 Congestion in cities and towns.
 More containerized ports needed in strategic locations.

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An Invaluable Insight cont.
The distribution process.
 The distribution process is very mundane.
 Orders place by customer.
 Based on satisfying the above stated pre-requisite the
correct mode of transportation is chosen.

How are the locations for distribution centers chosen?

 Cost,
 Proximity to majority of your customer.
 Proximity to competent labor, suppliers and ports.

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An Invaluable Insight cont.
What are some of the disadvantages of poor transport logistic?
 Increased Distribution Cost,
 Increase in Price of Goods and Services offered,
 Dissatisfied Customers etc.

What are the main challenges with providing an efficient

Transport Logistics service?
 Cost
 Proper infrastructure
 Discipline within the system
 Incompetence

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Conclusion
 Logistics system has a more and more important position in our society
activities.

 Transportation and logistics systems have interdependent relationships.

That is, logistics management needs transportation to perform its
activities while a successful logistics system could help to improve traffic
environment and transportation development.

 Since transportation contributes a significant cost, the improvement of

transport efficiency could change the overall performance of a logistics
system.

 Without the linking of transportation, a powerful logistics strategy

cannot bring its capacity into full play.
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• Containerization
 Containerization

 A container is a large standard size metal box into which

cargo is packed for shipment abroad, especially
configured transport modes.

 It is designed to be moved with common handling

equipment enabling high-speed intermodal transfers in
economically large units between ships, railcars, truck
chassis, and barges using a minimum of labor.

 The container, therefore, serves as the load unit rather

than the cargo contained therein, making it the foremost
expression of intermodal transportation.
 Containerization
 The usage of containers shows the complementarities between
freight transportation modes by offering a higher fluidity to
movements and a standardization of loads.

 Thus, the relevance of containers is not what they are - simple boxes
- but what they perform, intermodalism.

 The reference size is the 20 foot box, 20 feet long, 8'6" feet high and
8 feet wide, or 1 Twenty-foot Equivalent Unit (TEU).

 Since the great majority of containers are now forty foot long, the
term Forty-foot Equivalent Unit (FEU) is also used, but less
commonly.
 Intermodalism originated in maritime transportation, with the
development of the container in the late 1960's and has since
spread to integrate other modes.
 It is not surprising that the maritime sector should have been
the first mode to pursue containerization.
 It was the mode most constrained by the time taken to load
and unload the vessels.
 A conventional break bulk cargo ship could spend as much
time in a port as it did at sea.
 Containerization permits the mechanized handling of cargoes
of diverse types and dimensions that are placed into boxes of
standard sizes.
 In this way goods that might have taken days to be loaded or
unloaded from a ship can now be handled in a matter of
minutes.
 Advantages and Challenges
 Even if containerization conveys numerous advantages
to freight distribution, it does not come without
challenges.
The main advantages of containerization are:
 Standardization- Standard transport product that can be
handled anywhere in the world (ISO standard) through
specialized modes (ships, trucks, barges and wagons) and
equipment. Each container has an unique identification number
and a size type code.
 Flexibility- Can be used to carry a wide variety of goods such
as commodities (coal, wheat), manufactured goods, cars,
refrigerated (perishable) goods. Adapted containers for dry
cargo, liquids (oil and chemical products) and refrigerate cargo.
Reuse of discarded containers.
 Advantages and Challenges
 Costs- Lower transport costs due to the advantages of
standardization. Low transport costs; 20 times less than bulk
transport. Economies of scale at modes and terminals.
 Velocity- Transshipment operations are minimal and rapid.
Port turnaround times reduced from 3 weeks to about 24
hours. Containerships are faster than regular freighter ships,
but this advantage is undermined by slow steaming.
 Warehousing- The container is its own warehouse; Simpler
and less expensive packaging. Stacking capacity on ships, train
(doubles tacking) and on the ground (container yards).
 Security and safety- Contents of the container is unknown
to carriers. Can only be opened at the origin (seller), at
customs and at the destination (buyer). Reduced spoilage and
losses (theft).
 The main drawbacks of containerization
 In spite of numerous advantages in the usage of containers,
some challenges are also evident:
 Site constraints.
 Infrastructure costs.
 Stacking.
 Ports or terminals with container facility may not be
available in certain parts of the world.
 Even where such facilities are available, delays may
occur due to overburden of loads.
 Large capital expenditure may be essential to handle
„container based‟ networks.
 Intermodal Transport Costs

 Intermodalism involves using at least two different modes in a

trip from an origin to a destination through an intermodal
transport chain, which permits the integration of several
transportation networks.
Major Steps in Intermodal Integration
Integrated Transport Systems: From
Fragmentation to Coordination
 Four major functions define an intermodal transport chain:

 Composition: the process of assembling and consolidating freight

at a terminal that offers an intermodal interface between a
local/regional distribution system and a national/international
distribution system.
 Connection (transfer): Involves a consolidated modal flow, such
as a freight train or a containership (or even fleets of trucks),
between at least two terminals, which takes place over national
or international freight distribution systems.
 Interchange: takes place at terminals whose purpose is to
provide an efficient continuity within a transport chain.
 Decomposition: Once a load of freight has reached a terminal
close to its destination, it must be fragmented and transferred to
the local/regional freight distribution system. Commonly
referred to as the “last mile” and often represents one of the
most difficult segments of distribution.
Intermodal Transport Chain
Conditions and Outcomes of Intermodal Transport
 The Role of Transportation in Logistics Management
 There is a relationship between transport costs, distance and
modal choice that has for long been observed.
 It enables to understand why road transport is usually used for
short distances (from 500 to 750 km), railway transport for
average distances and maritime transport for long distances
(about 750 km).
 Variations of modal choice according to the geographical setting
are observed but these figures tend to show a growth of the
range of trucking.
 However, intermodalism offers the opportunity to combine
modes and find a less costly alternative than a uni-modal solution.
 It is also linked with a higher average value of the cargo being
carried since intermodal transportation is linked with more
complex and sophisticated commodity chains.
 The Role of Transportation in Service Quality

 By means of well-handled transport system, goods could be sent

to the right place at right time in order to satisfy customers’
demands.

 It brings efficacy, and also it builds a bridge between producers

and consumers. Therefore, transportation is the base of
efficiency and economy in business logistics and expands other
functions of logistics system.

 In addition, a good transport system performing in logistics

activities brings benefits not only to service quality but also to
company competitiveness.

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Transport Costs and Goods Characters in Logistics.

 Transport system makes goods and products movable and

provides timely and regional efficacy to promote value-
added under the least cost principle.

 For those products with small volume, low weight and high
value, transportation cost simply occupies a very small part
of sale and is less regarded.

 For those big, heavy and low-valued products,

transportation occupies a very big part of sale and affects
profits more, and therefore it is more regarded.

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The Transportation.
The Effects of Transportation on Logistics Activities
Basically, production/manufacturing plants, warehousing services,
merchandising establishments are all about doing transportation.

 Production or manufacturing plants required the assembly of

materials, components, and supplies, with or without storage,
processing and material handling within the plant and plant
inventory.

 Warehousing services between plants and marketing outlets

involved separate transport.

 Merchandising establishments completed the chain with delivery

to the consumers.
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 The expenses involved in moving products or assets
to a different place, which are often passed on to
consumers.

 For example, a business would generally incur a

transportation cost if it needs to bring its products
to retailers in order to have them offered for sale to
consumers.
Factors affecting Transportation Costs
 Standards
 Standards have risen - Society now demands safety,
features, environmental protection, access for the
disabled, and quality that drive up the cost.

 Change of scope
 Projects are scoped wrong - We have investments that
don't match actual demands. And this is not just for
megaprojects. We have big buses serving few
passengers. We have overgrown highways. We have a
fear of building too small and having congestion or
crowding so we build too big.
Factors affecting Transportation Costs
 Scale economies

 Others
 Materials are scarcer (and thus more expensive)
 Experience and Competence - The US has no experience
with high-speed rail, so there is no domestic expertise.
 Government & legal system (including liability, insurance,
etc)
Reducing Transportation Costs
 Fewer Carriers
 Consolidating Shipments
 Single Sourcing
 Distribution Management System

■ A distribution management system helps to achieve maximum results in

managing the supply chain of your business using innovative technologies.
■ Having a proper system in place for managing the distribution of your
products in the market can allow you to move way ahead of your competitors
who may be engaged in the same line of business.
■ The amount of profits that you are able to earn depends majorly on the way
your operations are managed.
■ If you are correctly able to assess the demands for your products along with
the amount of production required for each category of products, you can
gain a lot of success in optimizing your company’s sales process.
 The Transportation Terminals

1. Transport Terminals
 Concept
 Any location where freight and passengers either originates,
terminates, or is handled in the transportation process.
 All spatial flows involve movements between terminals:
 Except personal vehicular and pedestrian trips.
 Cannot travel individually, but in batches.
 People have to go to bus terminals and airports first to reach their
final destinations.
 Freight has to reach a port, a rail yard or a distribution center before
onward shipment.
 Terminals are essential links in transportation chains:
 Consolidation.
 Deconsolidation.
 Transshipment.
Major Features of Transport Terminals
Location Serve a large concentration of population and/or
industrial activities.
Specific terminals have specific locational constraints.
New transport terminals: outside central areas to avoid
high land costs and congestion.
Accessibility Accessibility to other terminals (at the local, regional and
global scale).
How well the terminal is linked to the regional transport
system.
Infrastructur Handle and transship freight or passengers.
e Must accommodate current traffic and anticipate future
needs.
Modern terminal infrastructures require massive
investments.
Centrality and Intermediacy

Centrality

Intermediacy

Range Gateway

Hub (Interception) Hub (Transcalar)

2. Passengers Terminals
 Overview
 Passenger terminals require relatively little specific equipment.
 Simple structures.
 Basic amenities (waiting areas, ticket counters, food services).
 Airports
 The most complex terminals.
 Passengers may spend several hours in the terminal.
 Transiting, check-in and security checks, baggage pick up and
customs and immigration on international arrivals.
 Wide range of services.
 Provide the very specific needs of the aircraft.
Main Concourse, Madrid Airport, Spain
3. Freight Terminals
 Specialized entities
 Specific loading and unloading equipment.
 Wide range of handling gear is required.
 Differentiated functionally:
 Mode (maritime, rail).
 Commodities (oil, grain, coal).
 Bulk, general cargo and container terminals.
 Warehousing
 Assembling bundles of goods:
 Time-consuming and storage may be required.
 Specialized infrastructures:
 Grain silos, storage tanks, and refrigerated warehouses, or simply
space to stockpile.
Hong Kong International Distribution
Center
Main Types of Freight Terminals
Bulk Large quantities, unpackaged and of uniform dimensions.
Liquid bulk (crude oil and refined products); handled using pumps;
significant storage facilities required.
Dry bulk (ores, coal and cereals); More equipment is required;
specialized grabs and cranes and conveyer-belt systems.
General Many shapes, dimensions and weights.
cargo Machinery, processed materials and parts.
Because the goods are so uneven and irregular, handling is difficult to
mechanize.
Usually requires a lot of labor.
Containers Minimal labor requirements; significant amount of storage space.
Simple paved areas where containers can be stacked and retrieved
with a set of cranes, straddlers and holsters.
Specialized cranes.
 Impacts of transportation

Transport planning allows for high utilization and less impact

regarding new infrastructure. Using models of transport
forecasting, planners are able to predict future transport
Planning patterns. On the operative level, logistics allows owners of
cargo to plan transport as part of the supply chain.

Transportation has throughout Environ

history been an important tool mental
to expansion; better transport
allows more trade and a
Economic
greater mobility of people. Transport uses energy and burns most of the
world's petroleum. This creates air pollution,
including nitrous oxides and particulates, and is
a significant contributor to global
Economic
warming through emission of carbon
dioxide, for which transport is the fastest-
growing emission sector.
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 • Gender and transportation

 What are the gender differences in demand for

transport?
 Why are gender issues important in the transport
sector?

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