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Introduction Mode of transport Intermodal transport Ownership of transport Routing vehicles Case study – Mount Isa Mines
AIMS OF THE CHAPTERAfter reading this chapter you should be able to: APPRECIATE the importance of transport COMPARE different modes of transport DISCUSS the use of intermodal operations COMPARE alternative forms of transport ownership LIST different organisations who offer services for transport APPRECIATE other operational problems, such as routing of transport
TRANSPORT is responsible for the physical movement of materials between points in the supply chain At the heart of logistics are transport vehicles moving goods between suppliers and customers
Transport Rate If an organisation uses third-party transport, the price of moving a unit of material between locations is the rate or tariff. This is set by the cost of the service provided, value to the customer, the distance moved, weight, size and value of goods, complexity of journey, and so on.
Mode of Transport The mode of transport describes the type of transport used. There are basically five different options; *Rail * Road * Air * Water * Pipeline
Rail Most commonly used for heavy and bulky loads over long land journeys They are almost invariably public carriers rather than private carriers The rail service is not nationalised, it is allowed a monopoly
Advantage of Rail Rail is that once the infrastructure is in place, it has very high capacity and low unit costs. Railway is the safest form of transport Railways perform many public utility services Unit transport cost is low
Disadvantage of Rail Its inflexibility Trains can only travel along specified routes between fixed terminals, and cannot stop at intermediary points Obvious limitation of only being used on land Rail transport cannot provide door to door service
Road The most widely used mode of transport and is used at least somewhere in almost all supply chains. Road transport can normally carry loads up to, say, 20–30 tonnes
Advantage of Road Main benefit is flexibility, being able to visit almost any location Travel speed can be an important consideration Use extensive road networks Large number of carriers working in the same areas Easy to monitor location of goods
Disadvantage of Road These become relatively expensive,so road transport is generally used for shorter distances Used for delivering finished goods than bulky raw materials Lorries are particularly vulnerable to congestion and traffic delays Obvious limitation of only being used on land
Different types of road vehicle Delivery vans Flat-bed lorries
Box-bodied lorries Articulated lorries Lorry and trailer
Water Most supply chains use shipping to cross the oceans,over 90% of world trade is moved by sea (UK, Australia,USA..)
Advantage of Water Ideal for transporting heavy and bulky goods Suitable for products with long lead times Cheapest traffic means Requires cheap motor powers than for airplanes
Disadvantage of Water Longer lead/delivery times and slow Difficult to monitor exact location of goods in transit Its inflexibility in being limited to appropriate ports Transfers to ships take time
Basically three types of watertransport;* Rivers and Canals → ← * Coastal Shipping* Ocean Transport →
Different types of vessel* General cargo ships →→ ← ← ←* Bulk carriers* Tankers →→ →→
Air Passengers account for most airline business, with eight billion passenger kilometres flown a year in the UK.
Avantage of Air Main advantage is speed of delivery Useful for Cargo companies For ex; Yurtiçi,UPS,Aras etc..
Disavantage of Air Transfers to plane take time in the airport It is costly transport Competition can also be fierce Weight limits is prevent carrying amount of materials.
Pipeline The main uses of pipelines are oil and gas together with the utilities of water and sewage. They can also be used for a few other types of product such as pulverised coal in oil.
Advantage of Pipeline Moving large quantities over long distances. Cheapest way of moving liquids For ex; oil and gas Local networks can add flexibility by delivering to a wide range of locations
Disadvantage of Pipeline Being slow Inflexible Only carrying large volumes of certain types of fluid Huge initial investment of building dedicated pipelines
Choice of Mode * Choice of mode depends on a variety of factors.The main ones are the nature of materials to move, the volume and distance.Other factors include: Value of materials Reputation and Importance stability of carrier Security, loss and Transit times, damage Reliability Schedules and Cost and flexibility to frequency of delivery negotiate rates
* Ranking for the cost, speed, flexibility and load limits of different modes of transport
INTERMODAL TRANSPORT refers to journeys that involve two or more different modes of transport.The aim of intermodal transport is to combine the benefits of several separate modes.We can avoid disadvantages with this: combining the low cost of shipping with the flexibility of road getting the speed of air with the cost of road
→→The main problem is that each transfer between modes causes delays and adds costs for extra handling.
At the heart of intermodal transport are the systems for transferring materials between modes. The aim is to give a virtually seamless journey, and the best way of achieving this is to use modular or unitised loads.
Some of the benefits of containerisation include:● Simplified transport and flow of goods● Easier and faster handling● door-to-door service● Faster deliveries● Reduced loss due to damage, misplacement and pilferage
● Reduced packing costs● Lower insurance costs● Separation of incompatible goods● Use of less congested routes● Improved transport encourages trade.
Other types of intermodal transport→A very wide range of materials can be put into containers, but there are inevitably some that cannot, or are cheaper to transport by other means. Oil, for example, might be put into container-sized tanks but tankers or pipelines give cheaper alternatives.
Another types of containers is piggy-back transport, where a lorry – or usually just the trailer – cars and lorries are driven onto a train or ship for this part of their journey
Land bridges: These are used when materials cross land on what is essentially a sea journey. The most widely used in EAST TO WEST transfer of materials.
Is it better for an organisation to run its own transport fleet, to use public transport, or a combination of the two?
With transport the more common terms are in-house or own account transport comparedwith third-party transport.
OWN ACCOUNT TRANSPORT An organisation using its own transport fleet to move its materials. The most common form of private transport has large companies running their own fleets of trucks and this has the advantage of : flexibility greater control closer integration of logistics easier communications
Transport can also be made fit to the organisation’s needs, with the best type of vehicles, fleet size, delivery schedule, customer service, and so on.
Own account transport can be expensive and an organisation should only run its own fleet when it is cheaper than using a specialist third-party carrier. It means that own account transport must be run as efficiently as a specialised transport company.Only larger organisations can afford the capital investment and costs of running their own fleet.
THIRD-PARTY CARRIERS Specialised transport companies offer a range of services to other organisations. The advantage of this arrangement is that specialised companies run the transport, leaving the organisation to concentrate on its core operations. By using their skills and expertise the transport operators can give better services, or lower costs than own account transport.
-Integrated logistics-International transportation-Domestic transport-Clearance and insurance-Storage services--Information Services
Most third-party transport is provided by common carriers. Companies (like TNT) move materials on a one-off basis whenever asked by another organisation. For example; If you want to send a cargo to Poland, you might use a cargo service such as MNG Cargo or Aras Cargo and the company deliver your cargo.
Alternatively, an organisation can form a long-term relationship with a contractcarrier. This contract carrier then takes over a part of the organisation’stransport for some extended period. For example;
CHOICE OF OWNERSHIP Operating cost: In different situations either own account or third-party transport might be cheaper, and the company should determine significiant benefits before choosing. Capital costs: Capital is always scarce, and even if own account transport seems attractive,an organisation might find it difficult to justify the investment in vehicles. so cost analyses should be done carefully before reaching any conclusion. Customer service: Organisations must use transport that provides acceptable customer service in the best possible way. Sometimes, it is impossible to get a third-party carrier that can meets all requirements, and then own account transport is the only option or vice versa. Control: An organisation clearly has greater control over transport if it runs its own transport. However, this control might be bought at a high price, and contract companies might offer equivalent services but without the overheads and inflexibility of a private fleet.
Flexibility: The structure and operations of a private fleet are fairly rigid, as you cannot make quick adjustments to allow for changing conditions. If there is a sudden peak in demand, you cannot increase the size of the fleet for a few days, and then reduce it again when the peak passes. Common carriers can make these adjustments much faster. Management skills: Managing transport needs specialised skills, which are not readily available in even the biggest organisation. This gives a strong argument for third-party carriers. Large transport companies can support the management teams with specialist skills, knowledge and experience of different conditions. Recruitment and training: Road transport is generally the most labour intensive. This gives high employment costs. There is also a shortage of skilled drivers, with many organisations finding it difficult to recruit and train suitable people. Both of these give an incentive to use third-party transport.
OTHER SERVICES An organisation can pass all its transport problems to a third-party carrier, but there are many other people who can offer their own specialised services. These can provide the special skills that are not usually available within a single organisation. Some organisations give fairly general advice, such as management consultants who work in logistics, and software companies that tailor packages for transport. Other experts give more specific services, such as freight forwarders and shipping agents.
Common carriers: move materials between two points for any customer, usually in a one-off delivery using common facilities. Contract carriers: offer transport services, but usually for a longer time. They take over some, or all, aspects of an organisation’s transport for an agreed period. Intermodal carriers: Traditionally carriers have concentrated on one type of transport, such as shipping lines or road haulers. They typically look after all aspects of a journey between two specified points. Terminal services: The terminals do more than just transfer materials, and they might unload delivery vehicles, sort goods, break bulk for local delivery, concentrate goods for onward movement, load outgoing transport, keep track of all movements, and provide any other relevant services.
Freight forwarders: One problem with third-party carriers is the expense of moving smaller loads. Unit transport costs fall with increasing quantity, and transport now focuses on standard loads, such as a full container load. An alternative is to use a freight forwarder. These are people who collect relatively small loads, and consolidate them into bigger loads travelling between the same points. A freight forwarder might, for example, combine six or seven smaller loads to get a full container, giving lower unit costs faster delivery. Brokers: A broker acts as an intermediary between customers and carriers. Effectively, they look at the goods to be moved, find the best routes and carriers and negotiate conditions. Agents: These are usually local people who represent, say, shipping companies. They give a local presence and act as intermediaries between distant carriers and local customers, exchanging information, arrangements, and so on. Parcel services: These are similar to a Post Office, as they deliver small packages to any location. Companies such as PTT Cargo, United Parcel Service (UPS) offer very fast deliveries to almost any location in the world. Their strength is customer service, as they offer guaranteed next day delivery over long distances.
Any organisation involved in transport has toconsider many types of problem.The numberof vehicles needed, type and size, specialfeatures required, routes used, assignment ofloads and customers to vehicles, schedules,maintenance schedules, measures of serviceand quality, and so on.
A basic routing problem looks for the best path for a delivery vehicle around a set of customers. There are many variations on this problem, all of which are notoriously difficult to solve. Real problems are much more complicated. competing aims uncertain costs variable delivery times
varying speeds caused by traffic conditions customers with different importance and conditions for deliveries incompatible products different logistics facilities
There are two general approaches The first uses geographical arguments to look for the best routes,regardless of the actual roads. The second looks at the road network and finds shortest routes through it.
The following list suggests somespecific methods that have beenproposed 1. Negotiations:This may not give the best technical answer, but it has the support of everyone concerned.
2-Adjust previous plans: This has the benefit of being relatively easy and causing little disruption. It also uses a well-understood procedure and experts can give results that are trusted by the organisation.
3-Maps The most popular are simple maps of key features. Then schedulers can draw routes and iteratively improve them.
4-Spreadsheet calculations: is a computer application with tools that increase the users productivity in capturing, analyzing, and sharing tabular data sets and look at the patterns in the numbers.
5-Simulation It gives a dynamic view by imitating real operations over a typical period. Suppose that you want some information about proposed routes. You could sit in cabs and watch the process for some time, and see what was happening. This
6-Expert systems: Expert system are designed to solve complex problems by reasoning about knowledge like an expert. The basic skills, expertise, decisions and rules used by experts are collected in a knowledge base.
7-Mathematical models The most common mathematical approach uses linear programming. These methods are rather complicated, so they are generally limited to small problems.
Mount Isa Mines is one of the world’s greatmetal mines. Its main operations are at Mount Isa,in Queensland, Australia.
Mount Isa has serious transport problems. It produces huge quantities of ore in a remote area of Australia, while the main demand for finished metals is in the industrialised areas of the world, particularly Europe.
The problem is to process the ores and move them to final markets as cheaply as possible.
Underground explosions Crush of copper Grinding Smelter Furnace
Copper is only one of Mount Isa’s products, and it has similar transport problems with lead and zinc. It also mines coal and gold, has organised its transport operations into a separate company, generates electricity and supplies water for the city of Mount Isa, and is involved in a wide range of mining and associated ventures.
Questions● How important do you think transport is for the operations at Mount Isa?● What alternatives are there for transport?● Do other mining companies have similar transport problems?
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