TRANSPORTATION
Submitted ByMOHD KAMRAN YUSUF

Under the guidance of

Prof Mohd Khalid Azam
Content
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

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

Meaning& definition
Imortance of transportation
Transportation functionality
Principles & metho...
MEANING AND DEFINITION

“The process of moving an item
from point A to point B.”
“Safe, efficient, reliable, and sustainab...
Importance of transportation:
1) Place Utility.
2) Industrial Development.
3) Employment Opportunities.
4) High Standard o...
TRANSPORTATION FUNCTIONALITY

Product Movement
Functions of
Transportation

Product Storage
Product Movement


Temporal:

- Product is locked up during transit, hence inaccessible.
- Positive amount of time is spe...
Product Storage:
It is a temporary storage in stationery vehicle. Product storage
is expensive in transport vehicle. In so...
PRINCIPLES OF TRANSPORTATION

Economy
of Scale
Principles of
Transportation
Economy of
Distance
METHODS OF TRANSPORTATION
North West
Corner Rule

Methods of
Transportation

Intuitive Lowest
Cost

Stepping Stone
Types of Transportation
1.Road Transport.
2. Rail Transport.
3. Water Transport.
4. Air Transport.
5. Pipeline Transport.
...
Road Transport:
* Advantages;
1. Door to Door Service.
2. Economical over short distances.
3. Flexibility.
4.Limited Capit...
Rail Transport:
* Advantages;
1. High Speed.
2. Suitable for Long Distances.
3. Bulky Goods.
4. Protection.
5. Large Carry...
Air Transport:
* Advantages;
1. Flexible.
2. Quick service.
3. Natural Highways.
4. Protection.
5. High Speed.

* Disadvan...
Water Transport:
* Advantages;
1. Cheapest Mode of Transport.
2. Large Carrying Capacity.
3. Safety.
4. Protection to Good...
Pipeline Transport:
 Generally liquids like oils,

crude, petroleum products are
transported.
 More than 6350 KM of Pipe...
Ropeway Transport:

 Ropeway Transport is used for
transporting materials in hilly areas.
 In India 16% of total area is...
CONDITIONS AFFECTING TRANSPORTATION
Condition

Factor

Examples

Geography

Distance, physiography,
accessibility

Shippin...
TRANSPORTATION COSTS

Product related
Market related
 density
 intramode/intermode competition
 location of markets
 s...
TRANSPORTATION COST STRUCTURES









Variable: costs vary with services or volume:
 line-haul costs of fuel, labor...
COST STRUCTURE FOR EACH MODULE:
Mode

Fixed Costs

Variable Costs

Rail

High- Equipments, Terminals
, Tracks ,etc

Low

R...
FACTORS DRIVING COSTS
Distance
 Volume
 Density
 Stowability
 Handling
 Liability


21
FACTORS DRIVING COSTS


Distance
Cost

Distance

22
FACTORS DRIVING COSTS


Volume
Cost per Tonne

Weight of the Shipment (tonnes)

23
FACTORS DRIVING COSTS


Density
Cost per Tonne

Product density

24
FACTORS DRIVING COSTS
Stowability- how product Dimensions can be
positioned.
 Handling- Load & Unload.
 Liability- produ...
PRICING STRUCTURES


Cost-of-service: “cost plus” method



Value-of-service: “market based” method



Combination: a m...
FIXED AND OPERATING TRANSPORT COSTS
Mode

Fixed/Capital Costs

Operating Costs

Rail or
Highway
Pipeline

Land, Constructi...
COST VARIATIONS IN TRANSPORT






Elasticity of Demand- goods of high unit value are
better able to bear costs of tra...
COST VARIATIONS IN TRANSPORT









Differences in Cost of Services:
Loading characteristics- light, bulky goods de...
CONCLUSION:




Transportation and logistics systems have interdependent
relationships that logistics management needs
t...
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Transportationfinal ppt-130903045756-phpapp01

  1. 1. TRANSPORTATION Submitted ByMOHD KAMRAN YUSUF Under the guidance of Prof Mohd Khalid Azam
  2. 2. Content          Meaning& definition Imortance of transportation Transportation functionality Principles & methods of transportation Types of transportation Condition affecting transportation Transportation costs Pricing structure Conclusion
  3. 3. MEANING AND DEFINITION “The process of moving an item from point A to point B.” “Safe, efficient, reliable, and sustainable movement of persons and goods over time and space”
  4. 4. Importance of transportation: 1) Place Utility. 2) Industrial Development. 3) Employment Opportunities. 4) High Standard of Living. 5) Distribution of Perishable Goods. 6)Emergency Transportation.
  5. 5. TRANSPORTATION FUNCTIONALITY Product Movement Functions of Transportation Product Storage
  6. 6. Product Movement  Temporal: - Product is locked up during transit, hence inaccessible. - Positive amount of time is spent in transporting material. - Time is a resource[Temporal Resource] expended in Transportation . - During the time product is locked up costs are incurred in proportion of time.  Financial: - Administration costs, Salaries, Maintenance costs are expended.  Environmental: - Fuel costs are high[Creates air pollution, congestion, Noise pollution.
  7. 7. Product Storage: It is a temporary storage in stationery vehicle. Product storage is expensive in transport vehicle. In some situations Product is done such as: When the cost of unloading and reloading the product in the Warehouse is more expensive. When storage space is limited. Or, At other times, temporary storage is used due to diversion. This occurs when an original delivery destination is changed while the inventory is in transit.
  8. 8. PRINCIPLES OF TRANSPORTATION Economy of Scale Principles of Transportation Economy of Distance
  9. 9. METHODS OF TRANSPORTATION North West Corner Rule Methods of Transportation Intuitive Lowest Cost Stepping Stone
  10. 10. Types of Transportation 1.Road Transport. 2. Rail Transport. 3. Water Transport. 4. Air Transport. 5. Pipeline Transport. 6. Ropeway Transport.
  11. 11. Road Transport: * Advantages; 1. Door to Door Service. 2. Economical over short distances. 3. Flexibility. 4.Limited Capital Expenditure. * Disadvantages; 1. Irregular and Unreliable. 2. Unsuitable for Long Distances 3. No Uniformity in Rates. 4. Limited Speed. 5. Affected by Weather.
  12. 12. Rail Transport: * Advantages; 1. High Speed. 2. Suitable for Long Distances. 3. Bulky Goods. 4. Protection. 5. Large Carrying Capacity. * Disadvantages; 1. Huge Capital Expenditure. 2. High Overheads. 3. No Door to Door Service. 4. No Competition. 5. Inflexible Mode.
  13. 13. Air Transport: * Advantages; 1. Flexible. 2. Quick service. 3. Natural Highways. 4. Protection. 5. High Speed. * Disadvantages; 1. High Cost of Construction and Maintenance. 2. Costliest. 3. Limited Carrying Capacity. 4. International Restrictions. 5. Unsuitable for Bulky Goods.
  14. 14. Water Transport: * Advantages; 1. Cheapest Mode of Transport. 2. Large Carrying Capacity. 3. Safety. 4. Protection to Goods. 5. Flexibility. * Disadvantages; 1. Slow. 2. Huge Capital Expenditure. 3. High Cost of Maintenance. 4. No Door to Door Service. 5. Special Packing.
  15. 15. Pipeline Transport:  Generally liquids like oils, crude, petroleum products are transported.  More than 6350 KM of Pipeline exits in India.  Currently 27% of petroleum products are moved by pipelines in India.
  16. 16. Ropeway Transport:  Ropeway Transport is used for transporting materials in hilly areas.  In India 16% of total area is hilly, Currently in India nearly 178 Km rope ways are used for transportation.
  17. 17. CONDITIONS AFFECTING TRANSPORTATION Condition Factor Examples Geography Distance, physiography, accessibility Shipping between India and banhaldesh vs. shipping between India and US Type of product Packaging, weight, perishable Economies of scale Shipment size Trade imbalance Empty travel Infrastructure Capacity, limitations, operational conditions The Interstate Mode Capacity, limitations, operational conditions A bus compared to a car Competition and regulation Tariffs, restrictions, safety, ownership The European Union, NAFTA Shipping coal Shipping flowers or wine A 747 compared to 737 (passengers) ULCC compared to a VLCC (freight) Trade between China and the United States 17
  18. 18. TRANSPORTATION COSTS Product related Market related  density  intramode/intermode competition  location of markets  stowability  ease or difficulty of  nature and extent of regulation  balance/imbalance of freight traffic handling  seasonality of product movements  liability  domestic vs. international
  19. 19. TRANSPORTATION COST STRUCTURES     Variable: costs vary with services or volume:  line-haul costs of fuel, labor and maintenance  handling  pickup and delivery Fixed: constant regardless of activity  Facilities, equipment and administration Joint: “hand-in-hand” costs -- unavoidable  Example: the backhaul move Common: shared costs (“overhead”)  need for Activity-based costing
  20. 20. COST STRUCTURE FOR EACH MODULE: Mode Fixed Costs Variable Costs Rail High- Equipments, Terminals , Tracks ,etc Low Road Low-Highway provided by government Medium-Fuel , Maintenance, etc Water Medium-Ships and Equipment Low-As capacity is huge Pipeline Highest-Right of the way , construction, Equipment for control station and Pumping capacity Lowest-Insignificant labour costs Air Low-Aircraft and cargo handling systems High- Fuel, labour, Maintenance
  21. 21. FACTORS DRIVING COSTS Distance  Volume  Density  Stowability  Handling  Liability  21
  22. 22. FACTORS DRIVING COSTS  Distance Cost Distance 22
  23. 23. FACTORS DRIVING COSTS  Volume Cost per Tonne Weight of the Shipment (tonnes) 23
  24. 24. FACTORS DRIVING COSTS  Density Cost per Tonne Product density 24
  25. 25. FACTORS DRIVING COSTS Stowability- how product Dimensions can be positioned.  Handling- Load & Unload.  Liability- product characteristics that can result in damage & claims.  25
  26. 26. PRICING STRUCTURES  Cost-of-service: “cost plus” method  Value-of-service: “market based” method  Combination: a middle of the road approach using cost (minimum) and value (maximum)  Net Rate Pricing: All-inclusive prices specific to customers’ needs (not discount-based)
  27. 27. FIXED AND OPERATING TRANSPORT COSTS Mode Fixed/Capital Costs Operating Costs Rail or Highway Pipeline Land, Construction, Rolling Stock Land, Construction Maintenance, Labor, Fuel Maintenance, Energy Air Land, Field & Terminal Construction, Aircraft Land for Port Terminals, Cargo Handling Equipment, Ships Maintenance, Fuel, Labor Maintenance, Labor, Fuel Maritime
  28. 28. COST VARIATIONS IN TRANSPORT     Elasticity of Demand- goods of high unit value are better able to bear costs of transport than low value goods- “charge what traffic will bear” Competition between Transport Modes Example: Rail wishes to compete with trucks on short haul must keep rates down Other examples: Wine ship Angelo Petri
  29. 29. COST VARIATIONS IN TRANSPORT      Differences in Cost of Services: Loading characteristics- light, bulky goods demand higher charges than heavy, compact articles Size of Shipment- large, single consignments permit economies in administration and terminal costs Susceptibility to Loss and Damage and Risk Liability- a. fragile and/or perishable goods- b. refrigerated, insulation and special packaging
  30. 30. CONCLUSION:   Transportation and logistics systems have interdependent relationships that logistics management needs transportation to perform its activities and meanwhile, a successful logistics system could help to improve traffic environment and transportation development. Since transportation contributes the highest cost among the related elements in logistics systems, the improvement of transport efficiency could change the overall performance of a logistics system.
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