This document discusses key concepts in transport management. It defines transport management and explains that transport costs account for a significant portion of logistics costs. The document outlines factors that influence transport decisions for shippers and carriers such as transportation costs, inventory costs, speed of transport, and distance involved. It also discusses criteria for selecting transport modes and factors that determine transportation costs like the value, volume, and density of goods as well as packaging and destination requirements.

1. By Khadka Keshar
Advance Diploma in Logistics & supply chain
STEi Institute -Singapore
Decision Making Criteria in
Transport Management

2. Introduction Of Learning
Transportation management is one of the key
strategic decision in Morden dynamic supply chain
business environments.
The transport cost account for very significant
portion of total logistics cost which greatly impact
the overall all supply chain profitability in view of
both shipper, buyer and carrier.
The transportation management can be seen as
the process f time and place utility positioning
through the offering competative advantages in
the market place.

3. Course Agenda
The key aims of the following learning will be......
 Define the term transport management
 Understand transport management advantages
 Know various mode of transport
 Understand factors influence shipper and carrier
decision
 Know decision criteria for selection of various
mode of transportation.
 Familiar with various factors that determine
transport cost

4. Defining Transport Management
• Transportation is the movement of people and
goods from one place to another
• The term is derived from the Latin trans (across)
and portare {to carry}
• The transportation management can be divided in
to a triad of infrastructure, vehicle and operation.

5. Defining Transport Management
• Infrastructure includes the transport network like roads,
railways, airways, waterways, pipeline that are used as
well as nodes or terminals such as airports railways
stations, bus stands and seaports.
• The vehicle generally rides on the network such as
automobiles, trains, airplanes, ships etc.
• The operation deals with the control of the system such
as traffic movements, controls and routing ,networking
as well policy and compliance to govern whole
transport operations

6. Why is Transport Management So Important ?
Transport
Management
Productivity
Advantages
Value
Advantages
Efficiency
And
Effectiveness
Competitive
Advantages

7. Why is Transport Management So Important?
• Transport cost nearly 5o-6o% of overall
logistic cost.
• It provides the unique position by creating
competitive advantages to the customers.
• It ensure the productivity advantages by
providing lower cost profile.
• It provides the value advantages to the
customer by creating time and place value
utility.
• It ensure efficiency and effectiveness
delivery of goods and services by applying
modern transport technique and system.

8. Mode Of Transportation
Airways
• High Cost, Ideal When Speed Is Needed Or Ship High Value , Low Bulk
Items
Road
• Flexible In Routing & Time Schedules Efficient For Short-hauls Of High
Value Goods
Ocean
• Low Cost For Shipping Bulk Items, Low Value Goods, Slowest Form
Railways
• Largest Carrier, Cost Effective For Shipping Bulky Items
Pipe Line
• Ship Petroleum ,Natural Gas And Chemical From Source To Markets

9. Factor Influencing Transportation Decision
Factor
Affects
Carrier
Decision
Vehicle
Related
Cost
Fixed Cost
Trip
Related
Cost
Quantity
Related
Cost
Overhead
Cost

10. Factors Affecting Shipper Decision
Factor
affecting
shipper
decision
Transporta
tion cost
Inventory
cost
Facility
cost
Processing
cost
Service
cost

11. Factors Affecting Shipper Decision
• Transportation cost: The transportation cost refers
the total cost a shipper involves in transporting the
products to the customers. The transportation cost
depends up on the price that every carrier offers and the
extent to which the shipper makes use of slower and
cheaper or faster and expensive means of transportation.
• Inventory cost: Cost associated with inventory of the
shipper these cost becomes variables when such cost of
inventory affect due to changes in level of service in
transportation.
• Facility cost: The facility cost is the cost of the various
facilities of the shippers supply chain network these cost
also affect the supply chain profitability when supply
chain manger make strategic transportation decision.

12. Factors Affecting Shipper Decision
• Processing cost : These cost are variable cost
associated with the loading and unloading of orders.
• Service cost: Service costs are the costs that comes
due to non fulfilment of orders delivery to the
customers at the right time.

13. Selection Criteria For Various Mode Of
Transport
Value of shipment
Nature of consignment
Speed of transport
Cost of service
Flexibility of servie
Regularity of services
Distance involved

14. Selection Criteria For Various Mode Of
Transport
• Value of shipment : Costly items require
more careful handling and carrying greater
liability on the part of carrier. Usually high
value consignments are transported with
lesser concern for transport cost.
• Nature of consignment : Nature of
consignments may restrict the selection of the
transport.
• Speed of transport : Airways transport is the
fastest modes of transport among all modes
where no other mode of transport can reach.
Railways is next for speed when long
distance is there, followed by road transport.
• Cost of services : Ocean transport is
cheapest mode of transport and air ways is
the expensive than others.

15. Selection Criteria For Various Mode Of Transport
• Flexibility of service : road transport
provides the maximum flexibility
compared to any other mode of
transport . Its route and times can be
adjusted to the needs of customers.
• Regularity of service : railways rank
the first among all modes of
transportation in terms of regularity of
services. It has fixed time schedules
and route.
• Distance involved : road transport is
more economical for transporting goods
within city limits or over short distance
about 5ookm. For longer distance rail
transport is usually economical

16. Factors Influence That Determine Transportation Cost
The value of
the product
Volume of
traffic moved
Density
Space required
Destination
Special service
required
Packaging
requirement
Competition

17. Factors Influence That Determine Transportation Cost
• The value of the product : The higher vale of the product to be
transported will bear the higher transport cost.
• Volume of traffic moved : Transportation cost are lower if the volume
of goods to be transported is more.
• Density : The denser the product , the easier it is to load in to a
carrier and consequently lower are the transportation rate.
• Space required : bulky items cost more to transport as they require
more space and that takes more transportation rate as higher.

18. Factors Influence That Determine
Transportation Cost
• Transportation Destination : If the goods are to be transported to a small
city or remote area from where there is no chance or little chance of getting
return shipments , the rates are higher
• Special Service Required : Special service such as special connection and
stopover privileges increase transportation cost.
• Packaging Requirements : The greater packaging requirements, the
higher are the rates.
• Competition : The rates also depend on demand and supply of carrier.

19. Conclusion Of Learning
• In sum, Transportation is a major contributor to the
country economy and a competitive force in business.
It is the activity that physically connects the business to
its supply chain partners, and is a major Source of value
chain.
• The transport management has great impact on over all
business profitability and productivity. Due to Small
changes in cost of transport NOT only affect the
total logistic cost but also influence the service level
of transportation.
• Thus ,corporate management should consider critical
decision criteria while selecting transport mode ,service
and cost which allow greater cost efficiency ,
productivity reliability, flexibility, service levels, and value
advantages from supplier to end user.