MODULE 2 – CHAPTER 5

TRANSPORTATION
TRANSPORTATION FUNCTIONALITY:

• Transportation is one of the most visible elements of logistics operations.

• Consumers are used to see the trucks and train moving products from one place to another.

Temporal (Time)
Resources

Product Movement Financial Resources

(refer slide #3)

TRANSPORTATION
FUNCTIONALITY
Product Storage Environmental
(refer slide #4) Resources
 PRODUCT MOVEMENT

a) Temporal (Time) Resources:

 Whether the product is in the form of materials, Transportation uses temporal resources because the product is locked up during
components, WIP, assemblies or finished goods, transit, hence inaccessible during the transportation. The product is “in-transit
transportation is necessary to move it to the next stage of inventory”.
the manufacturing process/physically closer to the ultimate b) Financial Resources:
customer. Expenses incurred within the company for private vehicles or externally for
commercial or public transportation.
 Primary transportation function of product movement is Expenses resulting from product loss or damage in transit.
moving the product up and down the value chain. c) Environmental Resources:
Transportation uses environmental resources both directly and indirectly.
Direct term – largest consumer of energy (fuel & oil) 68%.
Indirect – it creates environmental problems through congestion, air pollution,
noise pollution.
PRODUCT STORAGE

Involves temporary storage in stationary vehicle

Product storage is expensive:
 The cost of unloading and reloading the product in
warehouse is more expensive.
 The destination warehouse has limited storage capacity,
therefore the transportation vehicle is used as a temporary
storage option.
 Transportation storage is used due to diversion.
1) SHIPPER/ORIGINATING PARTY/CONSIGNER: 3) CARRIER:
 Shipper is the party who transports the product to the  Service provider or transporter who carries the shipment from the shipper
market and ultimately to the final customer. to receiver.
 Businessmen who produce goods as per demand.
Role & Perspective of Carrier:
Role & Perspective of Shipper:  Maximize revenue and minimize cost.
 Moving the goods from origin to destination in shortest  Charge highest rate that the shipper will accept.
possible time and lowest cost.  Minimize labor, fuel and vehicle costs required to move the goods.
 Delivering goods without any damage/loss.
 Proper invoicing. 4) GOVERNMENT:
 Accurate & timely exchange of information relating to  Government desires a stable & efficient transportation environment for
the status of goods. economic growth.

Role & Perspective of Government:

2) RECEIVER/DESTINATION PARTY/CONSIGNEE:  Provide good infrastructure to support transportation.
 Consignee is the person to whom the goods are sent.  Provide right-of-way infrastructures.
 Wholesaler, retailer or final customer.  Provide government owned transport modes.

Role & Perspective of Receiver:

 Receiving the goods from origin to destination in shortest 5) PUBLIC:
possible time & lowest cost.  Public creates the need for transportation by demanding goods from all
 Receiving the goods without any loss/damage. over the world.
 Accurate & timely exchange of information relating to the
status of goods. Role & Perspective of Public:
 Public is concerned with the transportation expenses and effectiveness
& environmental and safety standards.
 Air pollution & oil spills remain significant transportation issues.
 ADVANTAGES
RAILWAYS High Speed
Large carrying capacity
Suitable for long distance
Protection to goods
Suitable for heavy & bulky products
Economical
Less pollution

DISADVANTAGES
Huge capital expenditure
Huge overhead costs
Indian railways operate through: No competition
 6896 railway stations.
No door-to-door service
 Route length of 62800 kms.
Lack of flexibility
ROADWAYS ADVANTAGES
Limited capital infrastructure
Door-to-door service
Flexibility
Suitable for shorter distance
Feeder to other modes of transport

DISADVANTAGES
Irregular & unreliable
Not suitable for long distances
 Major domestic cargo is moved on National & Bad & unsafe road conditions
State Highway.
Lack of uniformity in rates
 Less capital cost but higher operating cost.
Low speed
 ADVANTAGES
AIRWAYS Brings world closer
High Speed
Quick Service
Easy Access
No physical barrier
Natural highways

DISADVANTAGES
Costliest mode
Huge investments
No heavy & bulky products
 Preferred for highly perishable commodities. Limited carrying cost
 Fixed cost + Variable cost. Affected by weather
 Fixed – construction of aircraft, airports etc. Restricted products
 Variable – fuel, maintenance, crew costs Narrow Coverage
 Growing at a rate of 15-16%.
 ADVANTAGES
WATERWAYS Largest carrying capacity
Long distance
Protection to goods
Cheapest mode of transport
Flexible mode
Natural highways

DISADVANTAGES
Huge capital expenditure
Huge overhead costs
 Oldest modes of transport. Slow speed
 Move extremely large shipments at a very low cost.
Alliance needed
 Capital cost & operating costs are high.
Specialized packaging
ROPEWAYS ADVANTAGES
Bulk material over short distances
Lower capital costs
Ideal for Hilly areas
Least damage to the environment
because it does not pollute the
environment

DISADVANTAGES
Limited scope of Operations as it
 16% India is hilly. 178 kms ropeways are used for can only function in the hilly areas
transportation. Slow mode of transport
 Suitable when gradients (slope) are steep.
 Connect supply & demand point by shortest route.
 ADVANTAGES
PIPELINE Continuous
Unaffected by weather
Cheap
Eco Friendly
No empty wagons
Suitability

DISADVANTAGES
Cannot carry solids
Inflexibility
 Liquids like oil, crude, petroleum are transported. Continuous caution is required
 >6350 kms of pipeline exists in India for crude & regarding any leakage
petroleum.
 27% of petroleum products are moved in India by
pipelines.
 FACTORS INFLUENCING
TRANSPORTATION DECISION
1. NATURE OF GOODS

Nature of goods that are to be transported is an important factor that

affects the selection of mode of transportation.
 For expensive products like gold, diamond etc. fastest mode of
transport i.e., airways may be selected so that products are delivered
quickly and safely.
 For large & bulky, waterways & railways may be selected.
 For liquids & gases, pipeline is most preferred.

2. AVAILABILITY/ACCESSIBILITY

In order to satisfy the customer, goods should be made available

when they are required and when they are desired.
Hence, mode of transportation should be such that it is easily
accessible.
3. DISTANCE
Depending on the distance, the mode can be chosen.
For example, if goods are to be transported to short distance, road transport
is convenient, whereas for long distances, rail/water/air may be chosen.

4. COST
Before selecting a mode of transport, cost factor is of utmost
importance. For example, water transport is cheapest but it
should not be forgotten that it is the slowest mode. Air transport
is the fastest but at the same time it is the costliest.

5. DELIVERY TIME
Transporter should check out details of the delivery such as
scheduled delivery time, date of delivery etc.
If goods are to be transported urgently, air transport can be
selected.
6. FREQUENCY
Frequency has to be analyzed as to the number of times the
carriers go to and fro towards the source & destination. A good
frequency is always desirable as we can rely upon that mode.

7. CAPABILITIES OF MODE
Ability of a given mode to accommodate goods.
 Railways and waterways are the best means in terms of carrying
capacity. They can transport huge & heavy loads.
 Road has medium carrying capacity.
 Airways has lowest carrying capacity.
8. SPEED
High speed takes shorter time to transport goods/people to the
destination. Thus, speed of various modes should be taken into
consideration before finalizing the mode.

9. RELIABILITY
Carrying the goods to destination at right time regularly is called reliability.
Pipeline is the most reliable means of transport.

10. SAFETY & SECURITY

Ensures arrival of goods at destination in same condition as they
were perceived to arrive. Arrival of goods without any damage,
deterioration, loss during transit etc.
 INTERMODAL
TRANSPORTATION
 Also known as Multimodal
Transportation as it involves using
more than one mode of
transportation at the same time.

 Main aim is to take advantage of

various modes of transportation
and avoid their disadvantages.

 Intermodal takes advantage of the

economies of each mode and thus
provides the best service at the
lowest possible cost.
 INTERMODAL
COMBINATIONS

PIGGY BACK FISHY BACK BIRDY BACK LAND BRIDGE

(refer slide #20) (refer slide #21) (refer slide #22) (refer slide #23)

Mini Land
TOFC COFC Micro Bridge
Bridge
Piggy back is a combination of rail and PIGGY BACK
road.
Consignment is placed on the rail car at
the railway station of origin and the
transported by railways up to railway
station of destination.
After reaching there, the consignments
are placed on a truck and transported to
exact destination by roadways.

a) TOFC (Trailer On Flat Car)

In this technique the trailer is placed on a rail flat car and is transported from
station of origin to station of destination through railways. Then after reaching
the station of destination, the trailer is placed on the truck and transported to the
actual destination.

b) COFC (Container On Flat Car)

In this technique the container is placed on a rail flat car and is transported
from station of origin to station of destination through railways. Then after
reaching the station of destination, the container is placed on the truck and
transported to the actual destination.
 FISHY BACK

 Fishy Back is a combination of water and road transport. The consignment is place on the ship/vessel at the
port of origin and then transported by waterways up to port of destination.

 After reaching the destination, the consignment is placed on a truck and transported to the exact destination.
 BIRDY BACK

 Birdy Back is a combination of air and road transport. The consignment is placed on the Airbus/Air truck/Air cargo
at the airport.

 After reaching the airport of destination, the consignment is placed on a truck and transported by roadways to the
exact destination.
 LAND BRIDGE Land bridge is a part of Intermodal logistics distribution system.
Transportation happens over water-land-water route.
Involves:
 Beginning by shipping a product across water.
 Transferring the shipment to surface transportation.
 Finishing the move across water.
Land bridge is provided between 2 water movements.
It is a service in which a foreign cargo crosses a country enroute another country.

Mini Land Bridge Micro Bridge

Port-to-port transportation. Involves transportation between port city and a non-port city.
For example: if cargo from Europe has to be delivered to For example: if cargo from Europe is to be delivered at New
Chennai port, the cargo might be received at the Mumbai Delhi (non-port city) then the cargo might be received at the
airport and the transported through rail to Chennai. Mumbai port (a port city) and then transported through rail to
It is termed as mini land bridge as the foreign cargo New Delhi.
originates and terminates at the point within the same
country.
 FACTORS INFLUENCING
TRANSPORTATION COST

Product related Market related

Location of
Density markets

Nature & extent

Stowability of Government
Regulations

Seasonality of
Handling product
movement

Domestic/Intern
Liability ational
Transportation

Degree of
Competition
1. DENSITY
Refers to the weight & space aspects.
It influences the transportation costs & pricing.
Some products may be light weight but occupy more space, thus it is not possible to
load more products as vehicle’s space capacity is utilized.
For example; cushion.
Some products may be heavy weight but occupy less space, then too it is not possible
to load more products as vehicle’s weight capacity is utilized.
For example; Hitachi importing oil reservoir from Australia that AFL cargo division in
Pune delivered.

2. STOWABILITY
It refers to the product dimensions i.e., size and shape of the product and
how dimensions affect vehicle space utilization.
Odd size and shapes do not stow well and typically waste space. Thus, cost
of transportation increases.
On the other hand, items with standard regular shapes are much easier to
stow and make optimum use of vehicle space.
3. HANDLING
Also depends on shape and size of the products.
Odd shape & size – difficulty in handling.
Regular shape & size – easier to handle.

4. LIABILITY
Theft or damage during transportation.
Carrier must either have insurance to protect against possible
claims or accept the responsibility of any damage.
5. LOCATION OF MARKETS
If goods are to be transported to a longer distance, transportation cost
will be higher.

6. NATURE & EXTENT OF GOVERNMENT REGULATIONS

Depends upon the extent of government regulation imposed on the transport carriers.

7. SEASONALITY OF PRODUCT MOVEMENT

For some routes, movement is seasonal in nature. For example; for
agricultural products, the transportation cost will be very high during
peak season and very low during off season.
4. DOMESTIC/INTERNATIONAL TRANSPORTATION
Has an impact on transportation cost.

5. DEGREE OF COMPETITION
If there are many transport carriers, transportation cost would be
low and vice versa.
 Terminal is any place where the goods are
assembled/dispersed.
 Location where goods originates, terminates or is
handled in the transportation process. TERMINAL
FACILITIES
 Must have well maintained loading and unloading
facilities, platforms, special equipment to handle
goods.  All vehicles involved in the
transportation of goods
from one place to another.
Includes trucks, ships, trains
Transportation service  Selection of vehicles
providers in business. CARRIER
VEHICLES depends on various factors
Example; Gati, DHL, ORGANIZATION
such as cost, speed, carrying
Agarwal Packers & Movers. capacity.
TRANSPORTATION
INFRASTRUCTURE

 An engine that converts fuel to

useful work. An easement to pass
PRIME OWNERS RIGHT OF WAY over the land for
 Powerhouses moving the vehicle
of transportation. transportation purpose.