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Role of transport as an element in logistics

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  • 1. ROLE OF TRANSPORTATION IN THE MOVEMENT OF GOODS AND SERVICES EBO HAMMOND, CMILT International Diploma in Logistics & Transport (GIM PA)
  • 2. TOPIC OBJECTIVES 1
    • It is to help
      • Appreciate the role and importance of transport in the logistics chain
      • Understand the general principles underpinning transport in logistics
      • Identify the various carriers/modes and characteristics
      • Apply principles and theories in designing own distribution system
    18/08/10 EBO HAMMOND-CMILT
  • 3. TOPIC OBJECTIVES 2
    • It is to help
      • Appreciate the role and importance of packaging as it relates to transportation
      • Understand the role of unitization and containerization and its importance in transportation
      • Appreciate the risks in transportation of hazardous goods
    18/08/10 EBO HAMMOND-CMILT
  • 4. INTRODUCTION 1
    • Transportation plays a critical role in the entire logistics chain
    • The chain is set in motion with orders from suppliers for raw materials, semi-finished products, finished products, etc, which are transported from supply sources to production sites
    • These raw materials are stored or sent directly to the plant to aid production
    • Finished goods are then sent or transported through distribution centres to intermediaries for redistribution and sale to consumers
    18/08/10 EBO HAMMOND-CMILT
  • 5. INTRODUCTION 2
    • The management of transport services is an important element in logistics
    • The interface between transportation and logistics systems could be described as consisting of Nodes and Modes
    • The Node portion involves activities such as warehousing, goods handling, sorting, processing, etc. The Mode portion deals with transportation services in the movement of goods and services
    • Transport is the link between nodes
    18/08/10 EBO HAMMOND-CMILT
  • 6. CONCEPT OF NODES AND MODES 1 18/08/10 EBO HAMMOND-CMILT MODE- For movement or transportation of products/services NODE- For general processing and all handling apart from movement Node Node Node Node Mode Mode Mode
  • 7. CONCEPT OF NODES AND MODES 2 18/08/10 EBO HAMMOND-CMILT SOURCE MODE MODE MODE MODE NODE NODE NODE NODE NODE CONSUMPTION
  • 8. CONCEPT OF NODES AND MODES 3 18/08/10 EBO HAMMOND-CMILT CASE STUDY- SUPPLY CHAIN OF ELECTRICITY PRODUCTION – MODES AND NODES (INTERFACE BETWEEN TRANSPORT AND OTHER LOGISTICS ELEMENTS Raw materials Generation Transportation Storage Node Node Users Mode Mode Mode Mode Source Poin t Consumption Point
  • 9. DEFINITION OF TRANSPORTATION 1
    • The following synonyms could best provide a clue to what transportation means- Convey, Move, Carry, Bring, Transfer, Ship
    • Transportation simply comprises all the various devices, equipment and related activities such as driving, maintenance, vehicles, etc harnessed in physically moving goods and services from point A to B which represents the nodes.
    • Transport provides spatial mobility which helps to reposition goods and services for consumer accessibility and possession.
    18/08/10 EBO HAMMOND-CMILT
  • 10. DEFINITION OF TRANSPORTATION 2
    • It adds value to the logistics function by way of providing time and place utilities. An efficiently managed transport system could reduce the overall cost of products to end-users.
    • Transport organisations provide the following extra functions/services:
      • Packaging
      • Freight forwarding services
      • Distributors (wholesalers)
      • Corporate branding on vehicles
      • Warehousing/Depots
      • Reverse logistics management
      • Others
    18/08/10 EBO HAMMOND-CMILT
  • 11. DEFINITION OF FREIGHT 1
    • The following synonyms could best provide a clue to what Freight means- Goods, Cargo, Shipment, Contents, Stowage, luggage, etc
    • Freight is anything, other than passengers, carried by a transport mode from point a source point to an end point
    • It is usually carried for a fee; and from a consignor to a consignee
    18/08/10 EBO HAMMOND-CMILT
  • 12. DEFINITION OF FREIGHT 2
    • Freight transportation is sometimes also referred to as-
      • Cargo transportation
      • Physical distribution
    • Freight transportation serves as the threaded needle (mode) that weaves the logistics elements (Nodes) together into a seamless logistics dress
    18/08/10 EBO HAMMOND-CMILT
  • 13. STRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS I
    • Some of the factors are as follows:
      • Globalisation ; which has lengthened the physical distance covered and also cost
      • Information, Communication and Technology ; which has facilitated the flow of information along the chain; helped shortened the chain
      • Socio-economic; which has increased demand and the need for convenience thereby affecting choice of mode and speed of flow
    18/08/10 EBO HAMMOND-CMILT Product Design Raw Material Sub-assembly Final-assembly Consumption A C B D GLOBAL ISATION OF PRODUCTION
  • 14. STRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS I
    • Some of the factors are as follows:
      • Political; which has at a point integrated markets but on the other hand created physical barriers to transportation through varying legislations
      • Environmental- use of green materials, degradation
      • Competition; driving down margins, promoting innovation
    18/08/10 EBO HAMMOND-CMILT
  • 15. STRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS II
    • Some of the factors are as follows:
      • Dwindling Natural Resource ; which has resulted in seeking alternative sources of supply such as water, fossil fuel
      • Rise of New Economic Powers blocs ; which has switched and realigned economic resources flow and changing the balance of economic power and even impacting on political dynamics. Such economic powers are Asia Tigers, China, Brazil, India, South Africa, others
    18/08/10 EBO HAMMOND-CMILT
  • 16. STRATEGIC FACTORS IMPACTING ON TRANSPORTATION IN LOGISTICS II
    • Some of the factors are as follows:
      • Natural Disasters; such as earth quakes, tsunamis, typhoons, floods , drought,. Etc further worsening depletion and destruction of resources
      • Population Boom; coupled with economic development driving trade boom and cheap labour
      • F inancial Crisis (Credit Crunch)- dwindling investible funds for logistics and transport activities
    18/08/10 EBO HAMMOND-CMILT
  • 17. ROLE AND IMPORTANCE OF TRANSPORT IN THE SUPPLY CHAIN
    • The various roles played by transportation services in freight movement include the following:
      • Movement of goods and services physically along the logistics chain
      • helps achieve the following logistics utilities such as Time (When) and Place (Where) and supporting Form Utility
      • Help build strong brand image through vehicle branding and marketing
      • Facilitates customer satisfaction through timely delivery of goods and services
    18/08/10 EBO HAMMOND-CMILT
  • 18. TRANSPORT PHASES IN THE SUPPLY CHAIN
    • Transport movement along the supply chain can be segmented into THREE PHASES such as:
      • Inbound Phase- which moves mostly raw materials, semi-finished, sub-assemblies, etc to be added to production. This is the input stage.
      • Internal/Operations Phase- which moves goods and services within the confines of production or operations site
      • Outbound Phase- which moves finished goods for packaging, storage or distribution to consumption points
    18/08/10 EBO HAMMOND-CMILT Inbound Freight Internal Freight Outboard Freight
  • 19. AVAILABLE MODES AND XTICS 1
    • There are different types of transport systems available for logistics organisations to choose for the movement of goods and services. The following are the key existing transport modes:
      • Sea transport (Maritime)
      • Road Transport
      • Rail Transport
      • Air Transport
      • Inland Water Transport
      • Pipeline
    18/08/10 EBO HAMMOND-CMILT
  • 20. General Objectives for Mode Selection
    • It ensures that the goods are delivered safely and on time to the customer. General qualities guiding choice of carrier include:
    • Speed of delivery
    • Certainty of timing
    • Freedom from interruption
    • Avoidance of damage
    • Avoidance of loss through pilferage
    • Quality and/or impact of ancillary services
    18/08/10 EBO HAMMOND-CMILT
  • 21. AVAILABLE MODES AND XTICS 2
    • Sea/Maritime Transport
    • This refers to movement of goods and services by the sea/ocean. The following are the main characteristics of this mode:
    • Can move great volume of goods due to the availability of big ocean liners
    • Generally less expensive in relation to some other modes
    • Generally less faster in relation to some other modes due to slow turnaround time and actual voyage time
    • Has high fixed cost but low variable cost
    • It has high availability but for those countries which are not land-locked
    • There is generally flexibility in choice due to existence of many ports around the world and number of alternative ships
    • Mostly used for cargo consolidation, high volume, heavy weight and relatively low cost freight.
    18/08/10 EBO HAMMOND-CMILT
  • 22.
    • Sea transport has the following advantages and weaknesses:
    18/08/10 EBO HAMMOND-CMILT Advantages Disadvantages Large volumes of cargo can be transported in one ship on one voyage Ships are relatively slow May be cheapest method of transport Ports suffer from congestions Flexible particularly following containerisation Not all ports are well equipped and some have draught restrictions Similarity in infrastructure and superstructure Port practices need improving
  • 23. AVAILABLE MODES AND XTICS 3
    • Road Transport
    • This refers to movement of goods and services by the road. It is the most dominant mode of transportation in the logistics chain. The following are the main characteristics of this mode:
      • Can move small to medium volume of goods due to capacity constraints
      • Widely available. It is very ubiquitous
      • Widely accessible
      • Has low fixed cost but high variable cost
      • Moderate to high speed due to fast turnaround time and actual trip time
      • Faster transit time
      • High flexibility in choice due to high availability
      • High throughput and modal integration with other modes
    • Mostly used for break-bulk cargo, small to medium volume, variable weight and cost freight.
    18/08/10 EBO HAMMOND-CMILT
  • 24.
    • Road transport has the following advantages and weaknesses:
    18/08/10 EBO HAMMOND-CMILT Advantages Disadvantages Any dwelling or work place can be serviced by road. Size of the load is restricted by vehicle size and legislation Routes can be changed at short notice Distance travelled determined by driver’s working hours and legislation Terminals are less expensive Speed circumscribed by law Costs less than competing transport means Roads may be congested during peak periods Restrictions on heavy vehicles in certain localities Land severance and emissions
  • 25. AVAILABLE MODES AND XTICS 4
    • Rail Transport
    • This refers to movement of goods and services by the rail (tracks). The following are the main characteristics of this mode:
      • Can move great volumes of freight
      • Generally less expensive in relation to some other modes such as road
      • Generally less faster in relation to some other modes due to slow turnaround time and actual journey time
      • It is dependent on other modes for completion of delivery, especially road
      • High fixed costs, relatively less variable costs
      • Allows for easy unitization of freight
      • Low accessibility
    • Mostly used for cargo consolidation, high volume, heavy weight and low cost freight.
    18/08/10 EBO HAMMOND-CMILT
  • 26.
    • Rail transport has the following advantages and weaknesses:
    18/08/10 EBO HAMMOND-CMILT Advantages Disadvantages Large volumes of cargo can be transported on one voyage Investment in infrastructure and maintenance is expensive May be cheaper than other modes (except sea) Is limited in volumes it can transport Can carry different loads Network construction has major impact on the environment Can link with other transport modes Operating practices need improving
  • 27. AVAILABLE MODES AND XTICS 5
    • Air Transport
      • This refers to movement of goods and services by air. The following are the main characteristics of this mode:
      • Limited in volume and weight it can carry
      • Highly expensive carrying cost in relation to some other modes such as road
      • fastest mode in actual journey time
      • It is dependent on other modes for completion of delivery, especially road
      • High fixed costs, relatively high variable costs
      • Medium to high accessibility
    • Mostly used for cargo consolidation, low volume, low weight, high cost freight.
    18/08/10 EBO HAMMOND-CMILT
  • 28.
    • Air transport has the following advantages and weaknesses:
    18/08/10 EBO HAMMOND-CMILT Advantages Disadvantages Speed of travel Inflexible as aeroplanes have to land and take off in an airport which may be away from final destinations. Has a good safety record Aeroplanes are noisy Employs highly trained professionals Expensive when compared to other transport types. More effective where the goods are high value and time sensitive Terminals very expensive to construct and maintain
  • 29.
    • Inland Water Transport
      • This refers to movement of goods and services by inland water bodies. The following are the main characteristics of this mode:
      • Can move medium to high volume of goods
      • Low cost alternative to road transport
      • Low accessibility
      • No right of way
      • Long transit times
      • Allows for roll-on-roll-off (RORO)
      • Low speed
    • Mostly used for cargo consolidation, high volume, heavy weight and relatively low cost freight.
    18/08/10 EBO HAMMOND-CMILT
  • 30.
    • Pipeline Transport
      • This refers to movement of freight by the pipeline. This mode is primarily used for liquid or gaseous ‘freight’. The following are the main characteristics of this mode:
      • Can move great volumes of liquid freight
      • Own right of way
      • Not suitable for general transport
      • Less expensive in relation to other modal options
      • Low fixed costs, relatively less variable costs
      • Security and safety problems
      • Low accessibility
    • Mostly used for cargo consolidation, variable volume and variable cost freight
    18/08/10 EBO HAMMOND-CMILT
  • 31. OPERATIONAL FACTORS CONSIDERED IN ASSESSING MODE CHOICE
    • Logisticians need to take into considerations the following factors when selecting the mode(s) to be used for freight haulage. The key factors are as follows:
      • Type of Product to be transported; solid, liquid, gaseous, living, etc
      • Value of product to be transported
      • Weight and volume
      • Customer expectation and demand
      • Mode capability; is there enough space to carry product
      • Distance to be covered
      • Cost of mode
      • Terminal and ancillary infrastructure of particular mode
      • Transit time and reliability
      • Accessibility
      • Security and safety
      • priority
    18/08/10 EBO HAMMOND-CMILT
  • 32. Modal Choice Matrix 18/08/10 EBO HAMMOND-CMILT Size of order/load 100T Road Road/rail Rail/sea Sea 20T Road Road Road/rail Rail/sea Pallet Road Road Road/rail Air/sea Parcel Post/road Post/road/air Post/road/air Post/air Short Medium Long Very long Delivery distance
  • 33. KEY FREIGHT TRANSPORT CONCEPTS 1
    • Inter-modal Transport (Modal Split)
    • This simply refers to where more than one mode or different modes of transport are used to move freight from point A to point B.
    • ‘ The movement of goods in one and the same loading unit or vehicle, which uses successively several modes of transport without handling of the goods themselves in changing modes’- The European Conference of Transport Ministers.
    • Inter-modal (modal split) transport helps facilitate freight movement globally and over different terrains and environmental conditions.
    18/08/10 EBO HAMMOND-CMILT
  • 34. 18/08/10 EBO HAMMOND-CMILT
    • Inter-modal Transport (Modal Split)
    • Intermodal or combined transport has increased because of:
      • Globalisation
      • The extension of market areas
      • Concerns on the impact of transport on the environment
      • New improved systems of modal interchange
      • Increasing road congestion
      • Restrictions on vehicle size, weight limits and operating times
      • containerization
    KEY FREIGHT TRANSPORT CONCEPTS 1 cont…
  • 35. 18/08/10 EBO HAMMOND-CMILT
    • Inter-modal Transport (Modal Split)
    • The following modes are possible:
      • Containerisation using road, rail, sea and inland waterway
      • Sea transport combined with road transport eg. Roll-On Roll-Off
      • Sea transport combined with rail transport
      • Road and rail combinations eg. Trailer on truck or truck/trailer on train (piggyback)
      • Swap body systems for road/rail use
    KEY FREIGHT TRANSPORT CONCEPTS 1 cont…
  • 36. KEY FREIGHT TRANSPORT CONCEPTS 2
    • Modal Shift
    • This is a current concept being pursued by Japan. This simply refers to a conscious effort to offload freight from one dominant mode (especially road) to other modes (rail/sea). The main factors driving the pursuit of modal shift are:
    • Environmental; global warming
    • Cost savings
    • Energy
    • Labour shortages and savings
    • Traffic
    • Sustainability
    • Prevention of deterioration of infrastructure of a mode
    18/08/10 EBO HAMMOND-CMILT
  • 37. KEY TRANSPORT CONCEPTS
    • Cargo Consolidation
    • This simply refers to the aggregation of small amounts of cargo (mostly from different points into bulk cargo for movement into mostly a single point or destination). Cargo consolidation facilitates inter-modal transportation and modal shift.
    • Light trucks move small disaggregated cargo to small depots; a heavy cargo truck moves aggregated cargo (consolidated goods) collected from these depots to a central distribution centre
    18/08/10 EBO HAMMOND-CMILT
  • 38. KEY TRANSPORT CONCEPTS
    • Break-Bulk Cargo
      • This simply is the reverse of cargo consolidation. It is the disagregation of bulk amounts of cargo (mostly from one point, into small different cargo for movement into mostly multiple points or destinations.
      • A heavy cargo truck moves consolidated goods to distribution centre; light trucks then move in to pick disaggregated goods to different destinations (depots).
    18/08/10 EBO HAMMOND-CMILT
  • 39. CASE STUDY FORMER CARGO TRANSPORT SYSTEM OF GHS 18/08/10 EBO HAMMOND-CMILT National Store Regional Districts 700km 300km 500km 250km GHS GHS GHS GHS GHS GHS GHS GHS GHS
  • 40. NEW CONSOLIDATED CARGO PHYSICAL DELIVERY MODEL National Store Regional Store Hospitals CONSOLIDATED CARGO BREAK-BULK CARGO 18/08/10 EBO HAMMOND-CMILT GHS GHS GHS GHS
  • 41. PACKAGING AND TRANSPORTATION
    • This refers to the packaging of goods to facilitate transportation. It is the art, science, and technology of preparing goods for transport and sale and also a means of ensuring safe delivery of a product to the end-user at overall competitive price. Packaging impacts greatly on transportation efficiency and ensures Time, Place and the maintenance of Form Utility .
    18/08/10 EBO HAMMOND-CMILT
  • 42. PACKAGING AND TRANSPORTATION
    • Some of the roles packaging plays in facilitating transportation are as follows:
      • Protection and preservation from physical, chemical and mechanical damage
      • Easy transportation
      • Easy stowability (able to fully utilize truck space)
      • Facilitates ease of handling (loading and unloading)
      • Facilitates unitization of goods
      • others
    18/08/10 EBO HAMMOND-CMILT
  • 43. PACKAGING AND TRANSPORTATION
    • It must be noted that during transportation of goods through the supply chain, there is the likelihood of breakage, pilferage, deformation, evaporation, which sometimes reduces the quality and quantity of the products. Good packaging helps to prevent and reduce some of the problems mentioned.
    18/08/10 EBO HAMMOND-CMILT
  • 44.
    • Unitization refers to where goods are packaged or grouped together, in mostly equal quantities, form/shape, weight, height, length, etc to aid handling (loading and unloading) and facilitate transportation.
    • Unitization of goods helps achieve the following:
      • facilitates inventory management (warehousing, stock taking, loading and unloading)
      • Achieve full stowability of transport space
      • Facilitates smooth transportation
    UNITIZATION AND TRANSPORTATION 18/08/10 EBO HAMMOND-CMILT
  • 45.
    • Basic device(s)/technology that support and revolutionized unitization are palletization (e.g. wooden pallets) and containerization (e.g. large shipping containers). These in effect have impacted greatly on logistics systems.
    • Pallets are load carrying devices which facilitates goods handling. They serve a dual purpose in that they enable goods of similar nature and size to be made up into unit loads and palletized loads can be more easily handled mechanically which reduces the effort required to handle and transport them. The most widely used types are wooden pallets.
    UNITIZATION AND TRANSPORTATION 18/08/10 EBO HAMMOND-CMILT
  • 46. CONTAINERIZATION AND TRANSPORTATION
    • Containerization is at the heart of international multi-modal freight transportation
    • However other modes such as Air use a slightly different type of containers; pipelines transportation are not usually amenable to containerization. Products are moved virtually nakede
    • Containerisation or the movement of goods in specially designed units commenced in the 1950s.
    • Containers are usually rectilinear/rectangular boxes constructed of steal. Most common sizes of container available are 20ft, 30ft, 40ft and 45ft in length.
    • They are produced under International Standards Organisation (ISO) defined specifications.
    18/08/10 EBO HAMMOND-CMILT
  • 47. CONTAINERIZATION AND TRANSPORTATION- FUNCTIONS
    • It simplifies the movement of bulk goods across different transport modes. In addition, containers help achieve the following:
      • Enables goods consolidation
      • Reduction in goods handling
      • Reduction in individual packaging requirements depending on the load within the container
      • Protection of goods from damage
      • Provides goods security
      • Ensures safety of goods
      • Faster throughput during transit due to no or limited handling at terminal points
      • Door-to-door service possible from factory
    18/08/10 EBO HAMMOND-CMILT
  • 48. CONTAINERIZATION ADVANTAGES
    • The advantages of containerisation include:
    • Less packing is needed for shipments, producing substantial cost savings
    • The cargo is able to arrive in a better condition
    • As a capital-intensive transport system, rates are more competitive
    • Much quicker, more reliable transits are possible
    • Faster payments of export invoices is possible
    • Faster transits, usually coupled with more reliable schedules, and ultimately increased service frequency, tend to encourage importers to hold reduce stocks. This results in savings in warehouse costs, lessens risks of obsolescent stocks and reduces importers’ working capital.
    18/08/10 EBO HAMMOND-CMILT
  • 49. CONTAINER CLASSIFICATION
    • Containers are classified as:
    • General cargo containers:
        • General purpose containers
        • Specific purpose containers:
          • Closed ventilated containers
          • Open top containers
          • Platform based containers (open sided)
          • Platform
    • Specific cargo containers:
        • Thermal containers
        • Tank containers for liquid and gases
        • Dry bulk containers
        • Named cargo types
    18/08/10 EBO HAMMOND-CMILT
  • 50. CONTAINER CLASSIFICATION
      • General cargo containers are so called because most types of dry cargo can be carried in these containers.
      • Open top containers have a solid removable top or a canvas top and are suitable for cargo that is too large or too awkward to be packed in via the doors of the container. Also used for “overheight” cargo.
      • Refrigerated containers are insulated units with refrigeration as well as heating equipment. These are units used for the transport of perishables and any goods that are sensitive to fluctuations in temperatures.
    18/08/10 EBO HAMMOND-CMILT
  • 51. LECTURE REVIEW
    • Definition of Transportation
    • Definition of Freight
    • Factors impacting on Transportation
    • Containerization, Unitization and Packaging as relating to Transportation
    • Freight Transportation and Distribution Concepts
    • Others
    18/08/10 EBO HAMMOND-CMILT
  • 52. CONCLUSION
    • Transportation plays a critical role in facilitating the movement of goods and services from point of origin to point of consumption.
    • It is also a value-added activity. Its efficient management will greatly increase the competitive advantage of the organisation over competitors
    18/08/10 EBO HAMMOND-CMILT
  • 53. 18/08/10 EBO HAMMOND-CMILT NICE BEING WITH U