LSCM Transportation Modes

7/30/2019 LSCM Transportation Modes

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LOGISTICS AND SUPPLY CHAIN

MANGEMENT

TRANSPORTATION MODES AND SELECTION


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Logistics is:

The process of planning, implementing, and controlling the efficient,effective flow and storage of goods, services, and related informationfrom point of origin to point of consumption for the purpose ofconforming to customer requirements.

Logistics is necessary to: Move goods from suppliers to buyers

Move finished goods to the customer

Products have little value to the customer until they are moved to thecustomers point of consumption

Time utility-products are delivered at the right time. Place utility-products are delivered to the desired location.


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Transportation

Means of conveyance or travel (of goods and services) from one place

to another


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Legal Forms of Transportation

Transportation service companies are classified legally as either common,

contract, exempt, or private carriers.

Common carriers- offer transportation services to all shippers atpublished rates between designated locations without

discrimination.

Contract carriers- not bound to serve the general public. Contract

carriers serve specific customers under contractual agreements.


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Exempt carriers-exempt from regulation of services & rates & if

they transport certain exempt products like produce, livestock, coal,

or newspapers.

Private carrier- not subject to economic regulation & typically

transports goods for the company owning the carrier.


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MODES OF TRANSPORTATION

Motor

Air

Rail Water

Pipeline

Intermodal


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Motor (Trucking)

ADVANTAGES:

1970s economic deregulation ofinterstate traffic

Lower costs

Accessibility

Small, frequent shipments

DISADVANTAGES

Speed

Capacity

Range


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Air

ADVANTAGES

Premium transportation

Speed delivery

Range

DISADVANTAGES

Price

Non-direct points

Add-on charges


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Rail

ADVANTAGES

Lowest overall cost per unit weight

Consistent time schedule

Recommended with most commodity types Weather


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DISADVANTAGES

Inflexibility

Potential damage of goods

Ineffective with small shipments


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Water (Ships)

Large volumes

Long distances

Slower than air travel

Limited access


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Pipeline

Transport of homogeneous materials

Lower transportation costs than other modes

Higher initial costs

Unable to transport a variety of materials


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Intermodal

Use of various transportation modes

Containers

More popular due to globalization


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Third-Party Logistics Services- intermediaries facilitate use of thetransportation alternatives.

Freight forwarders- consolidate shipments to fill trucks or rail cars.

Transportation brokers- handle transportation requirements ofshippers. legally authorized to act as agents on shippers behalf.

Shippers Associations- non-profit orgs that move members cargo.Consolidate members shipments to get volume discounts.

Intermodal marketing companies(IMCs) act as intermediarie

s between intermodal rail carriers & shippers.

Integrated logistics service providers provide services for a fee.


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Pricing

Handling characteristics

Distance freight is moved

Weight of freight

Costs inversely related to speed of service


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Cost-of-service pricing- vary based on fixed & variable costs. As volumeincreases, the fixed costs portion goes down.

Value-of-Service Pricing-services priced at market bearing competitivelevels. A profit maximizing pricing approach.

Terms of Sale-price includes transportation FOB destinationfree onboardto the shipments destination.

Pricing Negotiation-Since the deregulation, negotiating prices is morecommon.

Rate Categories-rates can be classified a number of different ways.Classified as class rates, exception rates, commodity rates, &miscellaneous rates.


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United Parcel Service

Small package shipper

Business built around transportation

Effective intermodal transportation


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UPS - Methods

Trucks

Small, frequent shipments

Deliver directly to homes and businesses

Air Time sensitive shipments

Small packages (long distances)


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Rail

Transcontinental distances

Used primarily in intermodal transport

Sea Door to door ocean shipping

Weekly departures between major ports


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Conclusion

Each mode of transportation has its own strengths and weaknesses

The effectiveness of each mode depends on several factors including

distance, price, and timeliness

Services exist to help choose the best modes of transportation

LSCM Transportation Modes

Documents