 Introduction: -

As far back as history records, the goods that people wanted

were not always produced where they wanted to consume them,
or these goods were not accessible when people wanted to con-
sume them. Food and other commodities were widely dispersed
and were only available in abundance at certain times of the year.
Early peoples had the choice of consuming goods at their imme-
diate location or moving the goods to a preferred site and storing
them for later use. However, because no well developed transpor-
tation and storage systems yet existed, the movement of goods
was limited to what an individual could personally move, and sto-
rage of perishable commodities was possible for only a short time.
This limited movement-storage system generally constrained
people to live close to the sources of production and to consume
a rather narrow range of goods. Even today, in some areas of the
world consumption and production take place only within a very
limited geographic region. Striking examples can still be observed
in the developing nations of Asia, South America, Australia, and
Africa, where some of the population live in small, self-sufficient
villages, and most of the goods needed by the residents are pro-
duced or acquired in the immediate vicinity.
Few goods are imported from other areas. Therefore, production
efficiency and the economic standard of living are generally low.
In this type of economy, a well-developed and inexpensive logis-
tics system would encourage an exchange of goods with other
producing areas of the country, or even the world. As logistics
systems improved, consumption and production began to sepa-
rate geographically. Regions would specialize in those commodi-
ties that could be produced most efficiently. Excess production
could be shipped economically to other producing (or consuming)
areas, and needed goods not produced locally were imported.
This exchange process follows the principle of comparative ad-
vantage.
This same principle, when applied to world markets, helps to ex-
plain the high level of international trade that takes place today.
Efficient logistics systems allow world businesses to take advan-
tage of the fact that lands, and the people who occupy them, are
not equally productive. Logistics is the very essence of trade. It
contributes to a higher economic standard of living for us all. To
the individual firm operating in a high-level economy, good man-
agement of logistics activities is vital. Markets are often national
or international in scope, whereas production may be concen-
trated at relatively few points. Logistics activities provide the
bridge between production and market locations that are sepa-
rated by time and distance. Effective management of these activi-
ties is the major concern of this Program.

 Logistics is the management of the flow of goods be-

tween the point of origin and the point of use in order to
meet the requirements of customers or corporations. Lo-
gistics involves the integration of informa-
tion, transportation, inventory, warehousing, material han-
dling, and packaging, and often security. Logistics is a
channel of the chain which adds the value of time and
place utility. Today the complexity of production logistics
can be modeled, analyzed, visualized and optimized by
plant simulation software, but is constantly changing. This
can involve anything from consumer goods such as food,
to IT materials, to aerospace and defense equipment.
 Military Logistics

In military science, maintaining one's supply lines while disrupting

those of the enemy is a crucial—some would say the most cru-
cial—element of military strategy, since an armed force without
resources and transportation is defenseless. The defeat of the
British in the American War of Independence and the defeat of
the Axis in the African theatre of World War II are attributed to lo-
gistical failure. The historical leaders Hannibal Barca, Alexander
the Great, and the Duke of Wellington are considered to have
been logistical geniuses.
Militaries have a significant need for logistics solutions, and so
have developed advanced implementations. Integrated Logistics
Support (ILS) is a discipline used in military industries to ensure
an easily supportable system with a robust customer service (lo-
gistic) concept at the lowest cost and in line with (often high) re-
liability, availability, maintainability and other requirements as de-
fined for the project.
In military logistics, logistics officers manage how and when to
move resources to the places they are needed.
Supply chain management in military logistics often deals with a
number of variables in predicting cost, deterioration, consumption,
and future demand. The US Military's categorical supply classifi-
cation was developed in such a way that categories of supply with
similar consumption variables are grouped together for planning
purposes. For instance, peacetime consumption of ammunition
and fuel will be considerably less than wartime consumption of
these items, whereas other classes of supply such as subsistence
and clothing have a relatively consistent consumption rate regard-
less of war or peace. Troops will always require uniform and food.
More troops will require equally more uniforms and food. Some
classes of supply have a linear demand relationship—as more
troops are added more supply items are needed—as more
equipment is used more fuel and ammunition is consumed. Other
classes of supply must consider a third variable besides usage
and quantity: time. As equipment ages more and more repair
parts are needed over time, even when usage and quantity stays
consistent. By recording and analyzing these trends over time and
applying to future scenarios, the US Military can accurately supply
troops with the items necessary at the precise moment they are
needed. History has shown that good logistical planning creates a
lean and efficient fighting force. Lack thereof can lead to a clunky,
slow, and ill-equipped force with too much or too little supply.
 Business logistics

Logistics as a business concept evolved in the 1950s due to the

increasing complexity of supplying businesses with materials and
shipping out products in an increasingly globalized supply chain,
leading to a call for experts called supply chain logisticians. Busi-
ness logistics can be defined as "having the right item in the right
quantity at the right time at the right place for the right price in the
right condition to the right customer", and is the science of
process and incorporates all industry sectors. The goal of logistics
work is to manage the fruition of project life cycles, supply
chains and resultant efficiencies.
In business, logistics may have either internal focus (inbound lo-
gistics), or external focus (outbound logistics) covering the flow
and storage of materials from point of origin to point of consump-
tion (see supply chain management). The main functions of a
qualified logistician include inventory manage-
ment, purchasing, transportation, warehousing, consultation and
the organizing and planning of these activities. Logisticians com-
bine a professional knowledge of each of these functions to coor-
dinate resources in an organization. There are two fundamentally
different forms of logistics: one optimizes a steady flow of material
through a network of transport links and storage nodes; the other
coordinates a sequence of resources to carry out some project.
 Production logistics
The term production logistics is used to describe logistic
processes within an industry. The purpose of production logistics
is to ensure that each machine and workstation is being fed with
the right product in the right quantity and quality at the right time.
The concern is not the transportation itself, but to streamline and
control the flow through value-adding processes and eliminate
non–value-adding ones. Production logistics can be applied to ex-
isting as well as new plants. Manufacturing in an existing plant is
a constantly changing process. Machines are exchanged and new
ones added, which gives the opportunity to improve the produc-
tion logistics system accordingly. Production logistics provides the
means to achieve customer response and capital efficiency.
Production logistics is becoming more important with decreasing
batch sizes. In many industries (e.g. mobile phones), a batch size
of one is the short-term aim, allowing even a single customer's
demand to be fulfilled efficiently. Track and tracing, which is an
essential part of production logistics—due to product safety and
product reliability issues—is also gaining importance, especially in
the automotive and medical industries.
 Warehouse management systems
and warehouse control systems

Although there is some functionality overlap, the differences

between warehouse management systems (WMS) and ware-
house control systems (WCS) can be significant. Simply put, a
WMS plans a weekly activity forecast based on such factors as
statistics and trends, whereas a WCS acts like a floor supervi-
sor, working in real time to get the job done by the most effec-
tive means. For instance, a WMS can tell the system it is going
to need five of stock-keeping unit (SKU) A and five of SKU B
hours in advance, but by the time it acts, other considerations
may have come into play or there could be a logjam on a con-
veyor. A WCS can prevent that problem by working in real time
and adapting to the situation by making a last-minute decision
based on current activity and operational status. Work-
ing synergistically, WMS and WCS can resolve these issues
and maximize efficiency for companies that rely on the effective
operation of their warehouse or distribution center.

 Logistics outsourcing
Logistics outsourcing involves a relationship between a
company and an LSP which, compared with basic logistics
services, has more customized offerings, encompasses a
broad number of service activities, is characterized by a
long-term orientation, and, thus, has a rather strategic na-
ture.
Third-party logistics
Third-party logistics (3PL) involves using external organiza-
tions to execute logistics activities that have traditionally
been performed within an organization itself.[4] According to
this definition, third-party logistics includes any form of out-
sourcing of logistics activities previously performed in-house.
If, for example, a company with its own warehousing facili-
ties decides to employ external transportation, this would be
an example of third-party logistics. Logistics is an emerging
business area in many countries.

Fourth-party logistics
The concept of Fourth-Party Logistics (4PL) provider was
first defined by Andersen Consulting (Now Accenture) as an
integrator that assembles the resources, capabilities and
technology of its own organization and other organizations to
design, build, and run comprehensive supply chain solutions.
Whereas a third party logistics (3PL) service provider targets
a function, a 4PL targets management of the entire process.
Some have described a 4PL as a general contractor who
manages other 3PLs, truckers, forwarders, custom house
agents, and others, essentially taking responsibility of a
complete process for the customer.
 Business Logistic Defined: -
Business logistics is a relatively new field of integrated
management study in comparison with the traditional
fields of finance, marketing, and production. As previously
noted, logistics activities have been carried out by individ-
uals for many years. Businesses also have continually
engaged in movestore (transportation-inventory) activities.
The newness of the field results from the concept of coor-
dinated management of the related activities, rather than
the historical practice of managing them separately, and
the concept that logistics adds value to products or ser-
vices that are essential to customer satisfaction and sales.
Although co-ordinated logistics management has not been
generally practiced until recently, the idea of co-ordinated
management can be traced back to at least 1844. In the
writings of Jules Dupuit, a French engineer, the idea of
trading one cost for another (transportation costs for in-
ventory costs) was evident in the selection between road
and water transport: ―The fact is that carriage by road be-
ing quicker, more reliable and less subject to loss or dam-
age, it possesses advantage to which businessmen often
attach a considerable value. However, it may well be that
a saving induces the merchant to use a canal; he can buy
warehouses and increase his floating capital in order to
have a sufficient supply of goods on hand to protect him-
self against slowness and irregularity of the canal, and if
all told the saving in transport gives him a cost advantage,
he will decide in favour of the new route.‖
The first textbook to suggest the benefits of co-ordinated
logistics management appeared around 1961, in part ex-
plaining why a generally accepted definition of business
logistics is still emerging. Therefore, it is worthwhile to ex-
plore several definitions for the scope and content of the
subject. A dictionary definition of the term logistics is: ―The
branch of military science having to do with procuring,
maintaining, and transporting material, personnel, and fa-
cilities.‖ This definition puts logistics into a military context.
To the extent that business objectives and activities differ
from those of the military, this definition does not capture
the essence of business logistics management. A better
representation of the field may be reflected in the defini-
tion promulgated by the Council of Logistics Management
(CLM), a professional organization of logistics managers,
educators, and practitioners formed in 1962 for the pur-
poses of continuing education and fostering the inter-
change of ideas.
Its definition: - ―Logistics is that part of the supply chain
process that plans, implements, and controls the efficient,
effective flow and storage of goods, services, and related
information from the point of origin to the point of con-
sumption in order to meet customers‘ requirements.‖ This
is an excellent definition, conveying the idea that product
flows are to be managed from the point where they exist
as raw materials to the point where they are finally dis-
carded. Logistics is also concerned with the flow of ser-
vices as well as physical goods, an area of growing oppor-
tunity for improvement. It also suggests that logistics is a
process, meaning that it includes all the activities that
have an impact on making goods and services available
to customers when and where they wish to acquire them.
However, the definition implies that logistics is part of the
supply chain process, not the entire process. So, what is
the supply chain process or, more popularly, supply chain
management?
Supply chain management (SCM) is a term that has
emerged in recent years that captures the essence of in-
tegrated logistics and even goes beyond it. Supply chain
management emphasizes the logistics interactions that
take place among the functions of marketing, logistics,
and production within a firm and those interactions that
take place between the legally separate firms within the
product-flow channel. Opportunities for cost or customer
service improvement are achieved through co-ordination
and collaboration among the channel members where
some essential supply chain activities may not be under
the direct control of the logistician. Although early defini-
tions such as physical distribution, materials management,
industrial logistics and channel management - all terms
used to describe logistics - have promoted this broad
scope for logistics, there was little attempt to implement
logistics beyond a company‘s own enterprise boundaries,
or even beyond its own internal logistics function. Now, re-
tail firms are showing success in sharing information with
suppliers, who in turn agree to maintain and manage in-
ventories on retailers‘ shelves. Channel inventories and
product stock outs are lower. Manufacturing firms operat-
ing under just-in-time production scheduling build relation-
ships with suppliers for the benefit of both companies by
reducing inventories. Definitions of the supply chain and
supply chain management reflecting this broader scope
are: ―The supply chain (SC) encompasses all activities
associated with the flow and transformation of goods from
the raw materials stage (extraction), through to the end
user, as well as the associated information flows. Mate-
rials and information flow both up and down the Supply
Chain.‖ Supply chain management (SCM) is the integra-
tion of these activities, through improved supply chain re-
lationships, to achieve a sustainable competitive advan-
tage.‖ After careful study of the various definitions being
offered, Mentzer and other writers propose the broad and
rather general definition as follows: ―Supply chain man-
agement is defined as the systematic, strategic coordina-
tion of the traditional business functions and the tactics
across these business functions within a particular com-
pany and across businesses within the supply chain, for
the purposes of improving the long-term performance of
the individual companies and the supply chain as a
whole.‖ The supply chain management model in Figure 1-
1 viewed as a pipeline shows the scope of this definition.
It is important to note that supply chain management is
about the co-ordination of product flows across functions
and across companies to achieve competitive advantage
and profitability for the individual companies in the supply
chain and the supply chain members collectively. It is diffi-
cult, in a practical way, to separate business logistics
management from supply chain management. In so many
respects, they promote the same mission: ―To get the right
goods or services to the right place, at the right time, and
in the desired condition, while making the greatest contri-
bution to the firm.‖ Some claim that supply chain man-
agement is just another name for integrated business lo-
gistics management (IBLM) and that the broad scope of
supply chain management has been promoted over the
years. Conversely, others say that logistics is a subset of
SCM, where SCM considers additional issues beyond
those of product flow. For example, SCM may be con-
cerned with product pricing and manufacturing quality. Al-
though SCM promotes viewing the supply channel with
the broadest scope, the reality is that firms do not ractise
this ideal. Fawcett and Magan found that companies that
do practise supply chain integration limit their scope to
one tier upstream and one tier downstream. The focus
seems to be concerned with creating seamless processes
within their own companies and applying new information
technologies to improve the quality of information and
speed of its exchange among channel members. The
boundary between the logistics and supply chain man-
agement terms is fuzzy. For the purposes of this Program,
integrated business logistics management and SCM will
be referred to interchangeably. The focus will be on man-
aging the product and service flows in the most efficient
and effective manner, regardless of descriptive title. This
includes integrating and co-ordination with. For the pur-
poses of this program, integrated business logistics man-
agement and SCM will be referred to interchangeably.
The focus will be on managing the product and service
flows in the most efficient and effective manner, regard-
less of descriptive title. This includes integrating and co-
ordination with
 The supply chain management model in Figure 1-1
viewed as a pipeline shows the scope of this definition. It is
important to note that supply chain management is about the
co-ordination of product flows across functions and across
companies to achieve competitive advantage and profitability
for the individual companies in the supply chain and the
supply chain members collectively. It is difficult, in a practical
way, to separate business logistics management from supply
chain management. In so many respects, they promote the
same mission: ―To get the right goods or services to the right
place, at the right time, and in the desired condition, while
making the greatest contribution to the firm.‖ Some claim
that supply chain management is just another name for inte-
grated business logistics management (IBLM) and that the
broad scope of supply chain management has been pro-
moted over the years. Conversely, others say that logistics is
a subset of SCM, where SCM considers additional issues
beyond those of product flow. For example, SCM may be
concerned with product pricing and manufacturing quality.
Although SCM promotes viewing the supply channel with the
broadest scope, the reality is that firms do not practise this
ideal. Fawcett and Magan found that companies that do
practise supply chain integration limit their scope to one tier
upstream and one tier downstream. The focus seems to be
concerned with creating seamless processes within their
own companies and applying new information technologies
to improve the quality of information and speed of its ex-
change among channel members. The boundary between
the logistics and supply chain management terms is fuzzy.
For the purposes of thisProgram, integrated business logis-
tics management and SCM will be referred to interchangea-
bly. The focus will be on managing the product and service
flows in the most efficient and effective manner, regardless
of descriptive title. This includes integrating and co-
ordinating with other channel members and service provid-
 ers to improve supply chain performance when practical to
do so.

 The Supply Chain

Logistics/SC is a collection of functional activities (trans-
portation, inventory control, etc) which
are repeated many times throughout the channel through which
raw materials are converted into finished products and con-
sumer value is added. Because raw material sources, plants,
and selling points are not typically located at the same places
and the channel represents a sequence of manufacturing
steps, logistics activities recur many times before a product ar-
rives in the marketplace. Even then, logistics activities are re-
peated once again as used products are recycled upstream in
the logistics channel.

A single firm generally is not able to control its entire

prouct flow channel from raw material source to points of the
final consumption, although this is an emerging opportunity.
For practical purposes, the business logistics for the individ-
ual firm has a narrower scope. Usually, the maximum mana-
gerial control that can be expected is over the immediate
physical supply and physical distribution channels, as shown
in Figure 1-2. The physical supply channel refers to the time
and space gap between a firm‘s immediate material sources
and its processing points. Similarly, the physical distribution
channel refers to the time and space gap between the firm‘s
processing points and its customers. Due to the similarities
in the activities between the two channels, physical supply
(more commonly referred to as materials management) and
physical distribution comprise those activities that are inte-
grated into business logistics. Business logistics manage-
ment is now popularly referred to as supply chain manage-
ment. Others have used terms such as value nets, value
stream, and lean logistics to describe a similar scope and
 purpose. The evolution of the management of product flows
toward SCM is captured in Figure 1-3. Although it is easy to
think of logistics as managing the flow of products from the
points of raw material acquisition to end customers, for many
firms there is a reverse logistics channel that must be ma-
naged as well. The life of a product, from a logistics view-
point, does not end with delivery to the customer. Products
become obsolete, damaged, or nonfunctioning and are re-
turned to their source points for repair or disposition. Pack-
aging materials may be returned to the shipper due to envi-
ronmental regulations or because it makes good economic
sense to reuse them. The reverse logistics channel may util-
ize all or a portion of the forward logistics channel or it may
require a separate design. The supply chain terminates with
the final disposition of a product. The reverse channel must
be considered to be within the scope of logistics planning
and control.

 The Activity Mix

The activities to be managed that make up business logistics
(supply chain process) vary from firm to firm, depending on a
firm‘s particular organizational structure, management‘s honest
differences of opinion about what constitutes the supply chain
for its business, and the importance of individual activities to its
operations. Follow along the supply chain as shown in Figure
1-2 and note the important activities that take place. Again, ac-
cording to the CLM: ―The components of a typical logistics sys-
tem are: customer service, demand forecasting, distribution
communications, inventory control, material handling, order
processing, parts and service support, plant and warehouse
site selection (location analysis), purchasing, packaging, return
goods handling, salvage and scrap disposal, traffic and trans-
portation, and warehousing and storage.‖ Figure 1-4 organizes
these components, or activities, according to where they are
most likely to take place in the supply channel. The list is fur-
ther divided into key and support activities, along with some of
the decisions associated with each activity.
 INTERRELATIONSHIPS BETWEEN
TRANSPORTATION AND LOGISTICS
Without well developed transportation systems, logistics
could not bring its advantages into full play. Besides, a good
transport system in logistics activities could provide better logis-
tics
Efficiency, reduce operation cost, and promote service quality.
The improvement of transportation systems needs the effort
from both public and private sectors. A well-operated logistics
system could increase both the competitiveness of the gov-
ernment and enterprises.
Transport Costs and Goods Characters in Logistics Transport
system is the most important economic activity among the
components of business logistics systems. Around one third to
two thirds of the expenses of enterprises‘ logistics costs are
spent on transportation. According to the investigation of Na-
tional Council of Physical Distribution Management (NCPDM)
in 1982 (Chang, 1988), the cost of transportation, on average,
accounted for 6.5% of market revenue and 44% of logistics
costs. BTRE (2001) indicated that Australian gross value add-
ed of the transport and storage sector was $34,496 million in
1999-2000, or 5.6% of GDP. Figure 3 shows the components
of logistics costs based on the estimation from Air Transporta-
tion Association (Chang, 1988).
This analysis shows transportation is the highest cost, which
occupies 29.4% of logistics costs, and then in order by invento-
ry, warehousing cost, packing cost, management cost, move-
ment
cost and ordering cost. The ratio is almost one-third of the total
logistics costs. The transportation cost here includes the means
of transportation, corridors, containers, pallets, terminals, la-
bours, and time. This figure signifies not only the cost structure
of logistics systems but also the importance order in improve-
ment processing. It occupies an important ratio in logistics ac-
tivities. The improvement of the item of higher operation costs
can get
better effects. Hence, logistics managers must comprehend
transport system operation thoroughly. Transport system
makes goods and products movable and provides timely and
regional efficacy to promote value-added under the least cost
principle. Transport affects the results of logistics activities and,
of course, it influences production and sale. In the logistics sys-
tem, transportation cost could be regarded as a restriction of
the objective market. Value of transportation varies with differ-
ent industries. For those products with small volume, low
weight and high value, transportation cost simply occupies a
very small part of sale and is less regarded; for those big,
heavy and low-valued products, transportation occupies a very
big part of sale and affects profits more, and therefore it is more
regarded. 3.2 The Effects of Transportation on Logistics Activi-
ties Transportation plays a connective role among the several
steps that result in the conversion of resources into useful
goods in the name of the ultimate consumer. It is the planning
of all these functions and sub-functions into a system of goods
movement in order to minimize cost maximize service to the
customers that constitutes the concept of business logistics.
The system, once put in place, must be effectively managed.
(Fair et al., 1981) Traditionally these steps involved separate
companies for production, storage, transportation, wholesaling,
and retail sale, however basically, production/manufacturing
plants, warehousing services, merchandising establishments
are all about doing transportation. Production or manufacturing
plants required the assembly of materials, components, and
supplies, with or without storage, processing and material han-
dling within the plant and plant inventory. Warehousing servic-
es between plants and marketing outlets involved separate
transport. Merchandising establishments completed the chain
with delivery to the consumers. The manufacturers limited
themselves to the production of goods, leaving marketing and
distribution to other firms. Warehousing and storage can be
considered in terms of services for the production process and
for product distribution. There have been major changes in the
number and location of facilities with the closure of many sin-
gle-user warehouses and an expansion of consolidation facili-
ties and distribution centres. These developments reflect fac-
tors such as better transport services and pressures to improve
logistics performance.

 The Role of Transportation in Service

Quality
The role that transportation plays in logistics system is more
complex than carrying goods for
the proprietors. Its complexity can take effect only through
highly quality management. By means of well-handled trans-
port system, goods could be sent to the right place at right time
in
order to satisfy customers‘ demands. It brings efficacy, and al-
so it builds a bridge between producers and consumers. There-
fore, transportation is the base of efficiency and economy in
business logistics and expands other functions of logistics
system. In addition, a good transport system performing in lo-
gistics activities brings benefits not only to service quality but
also to company competitiveness.
 FORMS OF LOGISTICS OPERATION
Supply Chain Management
Supply Chain Management (SCM) is the concept for han-
dling the production procedures in broad sense. An effective
SCM application could promote the industry to satisfy the de-
mand of new business environment. Ross (1998) defined SCM
as ‗a continuously evolving management philosophy that seeks
to unify the collective roductive competencies and resources of
the business functions found both within the enterprise and
outside in the firm‘s allied business partners located along in-
tersecting supply channels into a highly competitive, customer-
enriching supply system focused on developing innovative so-
lutions and synchronizing the flow of marketplace products,
services, and information to create unique, individualized
sources of customer value.‘ SCM can be divided into three
main activities – purchase, manufacture and transport (Thomas
et al., 1996). Cooper et al. (1997) analyzed the three elements
of SCM – supply chain business processes, supply chain man-
agement components, and supply chain network structure.
Figure 4 shows the entire elements in SCM frame. It displays
the details of the whole processes from purchasing, manage-
ment, production, and distribution to customers. The informa-
tion flow is like an individual system to link the whole supply
chain from supplier and manufacturer to consumer. Unimpeded
information flow could increase the operation accuracy for
costs saving and promote the competitiveness of firms. The
product flow proceeds through the whole production processes
from material supply via manufactories till providing the finished
products to consumers. The items in vertical direction show the
various management tasks within the supply chain. Particularly,
the return flow, or reverse logistic, is one of the elements in the
system but with converse direction from the others. Reverse
Logistics The concept of reverse logistics has been applied in
promoting costumer service and resources recycling. Concern-
ing quality control, the defective components and finished
products will be returned to their producers through reverse
logistics systems. Nowadays, reverse logistics has been devel-
oped rapidly for increasing industries‘ competitiveness, promot-
ing customer service level, and recycling the reusable material.
Meanwhile, the demand of reverse logistics brings out a new
market for the third-party logistics industries. Rogers et al.
(1998) defined reverse logistics as ‗the process of planning,
implementing, and controlling the efficient, cost effective flow
of raw materials, in-process inventory, finished goods and re-
lated information from the point of consumption to the point of
origin for the purpose of recapturing value or proper disposal‘.
Figure 5 shows the structure of logistics systems, which in-
cludes forward logistics, backward logistics and information
flow. The flow in black arrows presents the direction of reverse
logistics, whose direction is counter to the ordinary logistics
represented in hollow arrows. The information flow interlaces
between different stakeholders within the system. Each stake-
holder can communicate with the others directly to maximum
their profitability. Reverse logistics will be adopted in various
modes and applications in the future due to its efficiency and
benefits in environment protection. The two main reasons be-
hind the rise of reverse logistics are the globalisation of mar-
kets and policies for environment protection. A successful re-
verse logistics could help to increase the service level of com-
panies and reduce the costs of producing processes. More and
more companies want to build their reverse logistics system,
however the system needs professional knowledge in logistics
management and particular facilities. Thus the third-party lo-
gistics service provides another option for small to middle size
companies to have their reverse logistics system. Figure 6
shows a system of reverse logistics service on how FedEx, a
thirdparty logistics provider, serves Acer computer, the cus-
tomer company. At the first step of the system, the customer
applies a request for returning the product through the Internet,
and then FedEx builds the data of the products; meanwhile the
system organizes the route of the delivery trips of the product.
The customer can check the processing condition and wait for
sending back at the right time.

Maritime Logistics
Maritime industry plays an important role in international
freight. It can provide a cheap and high carrying capacity
conveyance for consumers. Therefore, it has a vital position
in the transportation of particular goods, such as crude oil
and grains. Its disadvantage is that it needs longer transport
time and its schedule is strongly affected by the weather fac-
tors. To save costs and enhance competitiveness, current
maritime logistics firms tend to use largescaled ships and co-
operative operation techniques. Moreover, current maritime
customers care about service quality more than the delivery
price. Thus, it is necessary to build new logistics concepts in
order to increase service satisfaction, e.g. real-time informa-
tion, accurate time windows and goods tracking systems. The
operation of maritime transport industry can be divided into
three main types:
(1) Liner Shipping: The business is based on the same
ships, routes, price, and regular voyages.
(2) Tramp Shipping: The characters of this kind of
shipping are irregular transport price, unsteady transport
routes, and schedule. It usually delivers particular goods,
such as Dry Bulk Cargo and crude oil.
(3) Industry Shipping: The main purpose of industry ship-
ping is to ensure the supply of raw materials. This sometimes
needs specialized containers, such as the high-pressure con-
tainers for natural gas.

Air Freight Logistics

Air freight logistics is necessary for many industries and ser-
vices to complete their supply chain and functions. It provides
the delivery with speed, lower risk of damage, security, flex-
ibility, accessibility and good frequency for regular destina-
tions, yet the disadvantage is high delivery fee. Reynolds-
Feighan (2001) said air freight logistics is selected ‗when the
value per unit weight of shipments is relatively high and the
speed of delivery is an important factor‘. The characteristics
of air freight logistics are that:
(1) Airplanes and airports are separated. Therefore, the in-
dustries only need to prepare planes for operation;
(2) It allows to speed delivery at far destinations;
(3) Air freight transport is not affected by landforms.

Research data show that the freight transport market keeps

growing. Given the trend of global markets, air freight logis-
tics also has to change their services. The future tendencies
of air freight development are integration with other transport
modes and internationalization and alliance and merger be-
tween air transport companies The future pattern of air freight
logistics is cooperative with other transport modes, such as
maritime and land transport, to provide a service base on
Just-In-Time, and door-to-door.
Land Logistics
Land logistics is a very important link in logistics activities. It
extends the delivery services for air and maritime transport
from airports and seaports. The most positive characteristic
of land logistics is the high accessibility level in land areas.
The main transport modes of land logistics are railway trans-
port, road freight transport and pipeline transport. Railway
transport has advantages like high carrying capacity, lower
influence by weather conditions, and lower energy consump-
tion while disadvantages as high cost of essential facilities,
difficult and expensive maintenance, lack of elasticity of ur-
gent demands, and time consumption in organizing railway
carriages. Road freight transport has advantages as cheaper
investment funds, high accessibility, mobility and availability.
Its disadvantages are low capacity, lower safety, and slow
speed. The advantages of pipeline transport are high capaci-
ty, less effect by weather conditions, cheaper operation fee,
and continuous conveyance; the disadvantages are expen-
sive infrastructures, harder supervision, goods specialization,
and regular maintenance needs. The excessive usage of
land transport also brings many problems, such as traffic
jams, pollution and traffic crashes. In the future, to improve
the land transport in transport efficiency and reliability, a
revolution of transport policies and management is required,
e.g. pricing.
Express Delivery
As the increasing demand of time accuracy and decentrali-
zation of production, the need to reduce stock costs has led
to the Just-In-Time (JIT) delivery rinciple, which involves
more frequent delivery of materials at the right time and at
the right place in the production process.
The characteristics of express delivery are:
(1) door-to-door service;
(2) efficiency;
(3) traceability;
(4) Just-In-Time (JIT);
(5) growing various delivery demands.

The trend toward increasingly compact products is expected

to improve the cost-benefit ratio of express delivery by de-
creasing the transportation cost share. Smaller products will
enlarge the market for express delivery services. Also, the in-
creasing value of products requires rapid transportation, be-
cause companies want to reduce the interest costs bound up
in stock and inventories. For future development, the indus-
tries should consider integrating the services with 24-hour
stores so that customers could choose a certain shop as the
pick-up station. Meanwhile, the services would become more
efficient and controlled due to more regular routes to those
shops instead of personal houses. E-commerce E-commerce
is the future trend of business style. It brings many benefits
for both companies and consumers:
(1) E-commerce expands the market area from regional to
global;
(2) Ecommerce uses electronic techniques instead of tradi-
tional paper works, which promotes the industries‘ efficiency
and competitiveness;
(3) The number of trips is increased. On the other hand the
average load of single trip is reduced, which means it needs
higher carriage if using the same means of transportation;
(4) E-commerce will impact on transport system due to the
increased trips;
(5) E-commerce might reduce the number of warehouses
and the stock cost.

Therefore the prices could be lowered. Figure 7 and Figure 8

express the differences between the transport patterns of
traditional trade and e-commerce. However other new top-
ics, of course, accompany with the system and need to be
concerned, such as Internet security, transport impacts and
door-to-door services. A healthy and successful e-commerce
environment is determined by the optimal logistics operation.
  CITY LOGISTICS
City Logistics is a concept trying to integrate the exist-
ing resources to solve the difficulties caused by the impacts
of increasing population and vehicle ownerships in the urban
area. Many cities, such as Bangkok, London, and Tokyo,
have suffered from these problems due to traffic conges-
tions, environment impact, low transport efficiency, and con-
sequently the competitiveness of business decreased. This
kind of condition not only reduces the quality of life in urban
areas but also the future city development. City Logistics
provides an opportunity for innovative solutions to be devel-
oped for improving the quality of life in urban areas.It con-
tains several advanced techniques, such as Geographic In-
formation System (GIS), Global Positioning System (GPS),
logistics knowledge, Intelligent Transport System (ITS) and
modelling, to optimise the city environment. Moreover, it
helps to reduce both transport cost and negative environ-
ment impact.
 Definitions of City Logistics

City Logistics is the process for totally optimising the lo-

gistics and transport activities by private companies with the
support of advanced information systems in urban areas
considering the traffic environment, its congestion, safety
and energy savings within the framework of a market econ-
omy. (Taniguchi et al., 2001b) Cities are the main locations
of business activities. Hence they play an important role in
economic development. However given the high concen-
trated development in urban areas, many cities have serious
traffic problems and negative environmental impacts, such
as noise and air pollution, this is the cost in both developing
and developed countries. These negative factors reduce the
economic ompetitiveness of a city and make its life quality
declined. The residents become the victims in the highly de-
veloped cities. The way to solve and balance the condition
became a demanding issue in the recent years. City Logis-
tics is a new and innovative concept which aims to solve this
complex problem. Urban freight logistics can be broken
down in many elements, such as storage, transport and
handling. Conventional improvement of the logistics process
is usually only focused on single element. However, from a
macro-viewpoint, the improvement can help bring the best
profit to the society. Figure 9 shows the principle of the cost
matters with different transport modes. Airfreight might be
more expensive than land transport but the storage cost
might be less. Thus in terms of total cost, airfreight might be
the most reasonable transport mode for a particular trans-
port purpose, for example, transport of fresh seafood.
 FUTURE PROSPECTS OF LOGISTICS

Facing the worldwide competition, the improvement of logis-

tics system should be advanced by both private companies and
government. Weeld and Roszemeijer (Ho, 1997) discerned
three revolutions in business that have substantial impacts on
the purchasing and supply strategies of the manufacturing
sectors. These three revolutions are:
(1) The globalization of trade;
(2) The coming of the information era;
(3) More demanding consumers and continuously changing
consumer preferences.
The main characteristics of future logistics devel-
opment are:

Government role: To keep competitiveness of industries,

the government has to lead the way to assist the logistics in-
dustries. For instance, the idea of freight village of city logis-
tics provides the environment to promote logistics efficiency
and to reduce operation costs. However it involves large of
investments and some problems relating laws and national
policies. Without the lead and support of government,
achieving the plan is difficult.
Growth of international goods transport: The up-growth
of international freight transport is contributed by several fac-
tors. Firstly, the blossoming of E-commerce pushes ahead
the international business activities. Secondly, the change
of production strategy needs international cooperation, e.g.
importing the semi-finished products from countries with
cheaper human resources to those with higher technology to
assemble the final goods. Thirdly, the pressure of globalised
market, such as World Trade Organization (WTO), pushes
local industries to promote themselves to reach an interna-
tional standard and face the worldwide competition.

Improvement of services: Providing a good customer ser-

vice becomes a necessary requirement of business opera-
tion with the intense competition of global market. The quali-
ty of services is the main factor to affect consuming behavior
among the enterprises with high similarity. The service sys-
tems involve several developed techniques now, such as Ef-
ficient Consumer Response (ECR) and Quick Response
(QR). In the near future, more new techniques would be ap-
plied in providing better services for customers.

Revolution of logistics operation: IT techniques and its

products bring efficiency and fluency to the logistics sys-
tems. Radio Frequency ID (RFID) is one of these tech-
niques. The main difference between the bar-code system
and RFID is that RFID does not need the action of scanning
the barcode on goods. RFID could save manual operation
time dramatically. RFID systems could sense the amount of
goods input in the tags automatically and immediately when
the costumers push their trolley through the exit (Carroll,
2004).

Shorter product life cycle: With the current trend, the mer-
chandise design is changing day by day, and therefore, the
product life cycle is shorter and shorter, especially in com-
puter science. To confront the impacts, logistics system must
improve its efficiency and reliability of goods delivery. Oth-
erwise an inappropriate logistics system would hinder the
competitiveness of new products and the business profits.

Improvement of logistics facilities: The advancement and

development of logistics are based on several techniques
and complete theories. High-tech facilities and systems, e.g.
ITS, could bring more possibilities and advantages to logis-
tics. For example, the improvement of related facilities, e.g.
Forklift Trucks, is necessary for transport efficiency. In the
future, factory automation is the main target for the whole
supply-chain procedures. It could help to improve efficiency
and also reduce the operation costs.

Channel cooperation between companies: In order to

save the logistics costs, a key concept is to maximize the
usage of available transport capacity. Integrating the logis-
tics demands between numerous departments helps achieve
this purpose. In practice, a conglomerate could develop its
own logistics service for the branches. For some medium
size companies, they could co-operate transport channels
with others.
Specialized logistics delivery: One of the notable trends of
logistics industries is specialized delivery service. For in-
stance, delivering fresh food from the place of origin needs
low-temperature containers. Compute chips, gases and pe-
troleum need particular conveyances to carry. These de-
mands are rising since the products became more and more
delicate.

Logistics centers: The development of logistics centers is

good for industry promotion and the development of national
economic system. Logistics centre‘s could successfully
shorten the distance between production and marketing ver-
tically and also integrate various industries horizontally, and
thus decrease the costs. Governments can propose special
areas for storehouses and logistics to reduce land acquisi-
tion. The future logistics will co-operate e-commerce, the In-
ternet and the newly door-to-door service to create new
business prospects.

Freight transport: The alliance between middle-small size

delivery companies is an important trend in the future. The
strategy could help to expand service areas and increase
service quality, and meanwhile raise the loads of single trips
to reduce delivery costs.