ADDIS ABABA UNIVERSITY

SCHOOL OF COMMERCE

MARKETING CHANNEL AND LOGISTICS

Prepared by: Bethelhem Tilaye BER/2755/09

Submitted to: Abdulshikur Nuru

Feb 5, 2019
 Modes of transportation

Mode of transportation is a term used to distinguish different ways to perform transport. There
are five major modes of transportation which will be briefly discussed below with respect to
advantage and disadvantage of each mode and also different types of carriers in each mode.

1. Railway transport

Rail transport is a means of transport on which vehicles run on tracks. It is one of the oldest and
dominant modes of transportation in some countries.

The major advantage of railway transport includes capability to efficiently transport large
tonnage over long distances, low variable cost, ability to transport heavy and bulky goods, and
it’s also very cheap.

However it has some disadvantages in terms of transit time, limitation to fixed track facilities,
and has high fixed cost. There are three different types of carriers which refer to as common,
contract, or private carriers but in the case of railway transportation one cannot own a private
train so they have to hire outside carriers like common carriers whose routes are defined in
advance and requires approval of regulators to transport.

2. Motor transport

Motor transport involves the use of motor vehicles like cars, buses, trucks. Motor transport
when compared to other modes of transportation is more flexible, cheaper, faster, wide market
coverage, wide range of goods can be carried and high capacity of carrying goods over short
distance those can be the advantages gained from choosing this particular mode. However it
comes with its own disadvantages like constant maintenance, not suitable for conveying heavy
and bulky goods, not operating on schedule and high number of accidents. Motor transport can
take form of all the three types of carriers (common carrier, contract carrier or private carrier)
they can be provided by the government or privately owned.

3. Air transport

Air transport is the newest means of transport and it has grown rapidly in recent years.
Advantages of air transport include rapid transit times over longer distance, markets can be
reached quickly and easily, and low fixed cost while the disadvantages include high variable
cost, is very expensive, depends on weather conditions and some airports are far from urban
centers. Like motor transport air transport can also take form of all three types of carriers there
are commercial airplanes that provide the service of air transport for a price or some may own
private planes.

4. Water transport

In the world, there are two major types of water transport namely: inland water transport
(river, lake, sea) and ocean water transport. Availability, flexibility, reliability, low running cost,
little environmental pollution, and cost economies are advantages of water transport while
speed, damage and delays are the disadvantage. All types of carriers can be used when
transporting goods by means of water.

5. Pipeline transport

This mode of transportation involves the use of hollow pipes in the transportation of water,
crude oil and gas. It is safer and cheaper than using tankers in transportation of liquids, loss and
damage are rare and they are not labor-intensive but pipelines are able to transport only
limited number of products and the cost of construction is very high. In most countries
common carrier that is regulated by government is the type of carriers used in pipeline
transportation.

Intermodal transportation
Intermodal transport means the movement of goods involving two or more means of transport
without handling of the goods themselves in changing modes. It utilizes special standardized
containers to transport cargos. Intermodal transportation is needed to take advantage of the
inherent economies of each mode and thus provide an integrated service at lower total cost.
There are different types of intermodal transportation such as

Piggyback (TOFC/COFC) means a trailer or container is placed on a rail flatcar and transported
from one terminal to another. Thus combines the low cost advantage of rail movement with
the flexibility and convenience of truck movement.

Containerships are used to transport containers by sea. The major advantages of using
containerships are reduced ship time in port, less physical handling of cargos, less damage,
improved security and protection against weather.

Air-truck combines air and truck. Air-truck movements usually provide service and flexibility
comparable to straight motor freight. Using this form of intermodal transportation helps to
provide service to extended geographical areas.

Third party transportation service providers

Third party carriers or non-operating carriers are business types that do not own or operate
equipments rather they specialize in integrated operation, warehousing and transportation
services which can be customized to customers‘needs based on market conditions.

A company might choose to use third party service providers because they offer shippers lower
rates for movement between two locations than would be possible by direct shipment via
common carrier. There are different types of third party transportation service providers which
will be discussed below

Freight forwarders are businesses that combine small shipments from various customers into
bulk shipment and then utilize a common surface or air carrier for transport finally at the
destination the freight forwarder splits the bulk shipment into the original smaller shipments.
The strength of the freight forwarder are the value added services they provide like manual
customs clearance, art of consolidating shipments and warehousing management. The
weakness is that certain aspects of freight forwarder cannot be digitized easily.

Shipper associations are voluntary nonprofit entities where members operating in a specific
industry collaborate to gain cost economies related to small-shipment purchases. Speed of
delivery can be the strength of shipper association while lack of choice is the weakness.

Brokers are intermediaries who coordinate transportation arrangements for shippers,

Consignees and carriers. They operate on commission basis. The strength of brokers is that they
are cost effective and their operation is highly adaptable to internet based transactions which
makes it easily accessible. The weakness of brokers is that they are not liable for loss, damage r
delays.

Materials handling

Materials handling means the movement, protection, storage and control of materials and
products throughout the process of manufacturing, warehousing, distribution, consumption
and disposal. Material handling equipment is mechanical equipment used to perform the above
mentioned functions. There are different types of materials handling systems available for a
firm such as

Mechanized system in which a combination of labor and handling equipment is utilized to

facilitate receiving, processing, and shipping generally labor constitutes a high percentage of
overall cost in mechanized handling. The types of equipment used are lift trucks, towlines,
tractor trailer devices, conveyors, and carousels. The strength of this system is its flexibility and
the fact that it combines both labor and equipment which helps to benefit from both of them
while the weakness is speed since it mainly depends on manual labor on things that can be
done automatically takes longer time.
Semi automated system refers to a combination of mechanical and automated systems used to
handle material it includes robots and computerized sorters. The strength of this alternative is
flexibility and the weakness is that there are technology limits and economic limits.

Automated system attempts to minimize labor as much as possible by substituting it with

equipment capital investment. The strength of automated system is that it operates faster and
more accurately. Its weakness is the high capital investment, development complexity,
inflexibility and dependency on computer.

Information directed system applies computerization to sequence mechanized handling

equipment and direct work effort. The strength of this alternative is improved speed and
flexibility while the weakness is that information directed handling has yet to achieve its full
potential.

The major types of material handling equipment that can be utilized by a company are the
following

Transport equipment is used to move material from one location to another. It includes
equipments like conveyors, cranes, and industrial trucks. Materials can also be transported
manually using no equipment.

Positioning equipment is used to handle material at a single location. It manipulates materials

so that they are in the correct position for subsequent handling, transport, or storage. It
includes equipments like lift/turn tables, balancers and industrial robots.

Unit load formation equipment is used to restrict materials so that they maintain their integrity
when handled. It includes equipments like pallets, skids, baskets, cartons, and crates.

Storage equipment is used for holding materials over a period of time. This particular
equipment includes storage rack that can be used to allow multiple stacks of different items to
occupy the same floor space.
The important issues that need to be considered when choosing a materials handling system
and buying a specific materials handling equipment are

Environmental concerns regarding the impact of materials handling equipment such as lift
trucks on pollution controls also in the handling and disposal of hazardous materials used or
stored in warehouse operations.

Regulation includes rules that are set to decrease the number of injuries that occur in
warehouses which has an impact in choosing a system or equipment that is less likely to cause
injuries.

Properties of the material refers to whether the material is solid, liquid or gas and in what size,
shape and weight are important in deciding which equipments to choose.

Returns processing sometimes merchandise may be recalled by or returned to the

manufacturer and that calls for choosing a system design and equipment that has the ability to
handle two-way movement efficiently.