LOGISTICS

Chapter 06: Transportation Management

Lecturer: Nguyen Dang Quang Huy (MSc.)

huyndq@uef.edu.vn
 Contents
Transportation Management

 Modes of transportation
 Airfreight
 Motor carriers / Road freight
 Rail freight
 Sea freight
 Inland waterway transport
 Pipeline transport
 Intermodal transport
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 Learning Materials

Paul R. Murphy, Jr., A. Michael

Knemeyer., (2018). Contemporary
Logistics (12th edition).
Global Edition. Pearson

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 Transportation
• Any device used to move a person or item from one location to another.
• The process of shipping or moving an item from point A to point B.

Roles of transportation

Transportation involves the physical movement of

goods between origin and destination points

The transportation system links geographically

separated partners and facilities in a company’s
supply

Transportation facilitates the creation of time utility

and place utility in the supply chain.

Transportation also has a major economic impact on

the financial performance of businesses

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 Modes of transportation
a) Airfreight
2
b) Motor carriers/ Road freight
c) Pipelines
d) Railroads
1
e) Sea freight
7 f) Intermodal transportation
3 4
g) Inland waterway transport
The companies choose the mode of transportation
for their strategy based on what?

 Cost  Network-forming capability

5  Speed  Density of transportation
 Reliability  Safety
 Capability  Environmental impact
 Capacity
6  Flexibility
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 Criterion of transportation
Flexibility Cost
- Ability to deliver the product to Price that a carrier charges
the customer. to transport a shipment.
- The possibility of solving problems 06 01
during transport.
- Flexible schedules & requirements.

Criterion of
Capacity transportation Speed
Volume that can be 05 02 Elapsed transit time
carried at one time. from pickup to delivery

04 03
Capability Reliability
Amount of different Consistency of delivery
types of product that
can be transported.

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 Selection of mode of transportation

Characteristic of goods Cost

Availability Delivery time

Distance Frequency

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 Airfreight
+ Characteristics:

1. Short transport times in the air

2. Especially suited for long distances.

3. High transport costs

4. Small transport capacities compared to other transport modes.

5. Low network density due to dependence on airport locations

6. Dependent on weather conditions, especially during take-off and landing.

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 Products that transport by air
• Auto parts and accessories
• Cut flowers and nursery stock
• Electronic or electrical equipment
• Fruits and vegetables
• Machinery and parts
• Metal products
• Photographic equipment, parts and film
• Printed matter
• Wearing apparel

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 Motor carriers / Road freight
+ Characteristics:

1. Good network-forming possibilities

2. Speediness in conjunction with a relatively low transport risk
3. Utilization of vehicles specific to the volume of goods
4. Cost optimization and environmental-impact optimization by means of the piggy-back
system with railway
5. In long-haul transport abroad, road freight transport is often used for the first and the
last transport stages
6. Relatively short standstill periods and latency
7. High flexibility
8. Complex competitive relationships

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 Different types of motor carriers

Silo truck Dump truck Refrigerated truck Tank truck Luggage truck

High capacity truck

Container truck
Heavy-load truck

Semi-trailer truck

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 FTL versus LTL

Full Truckload (FTL) Less Than Truckload (LTL)

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 FTL versus LTL
Full Truckload (FTL)

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 FTL versus LTL
Less Than Truckload (LTL)

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 Motor carriers / Road freight
- Disadvantages:

1. Weather considerations

2. Cost variations

3. Accidents and Breakdowns

4. Traffic jams

5. Driving regulations can cause delays

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 Rail freight
+ Characteristics:
1. Highly capacity
2. Suitable for almost any kind of goods
3. Speediness
4. Timetables and rail-track allocation greatly ensure timely delivery.
5. Safe transport handling
6. Relatively low network density and thus limited possibilities for door-to-
door transport
7. Strict adherence to timetables and allocated train lengths
8. Weak competition from foreign railroad competitors due to limited
marketability.
9. Border delays due to varying technical requirements of country-specific
railroad systems.
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 Sea freight
+ Characteristics:

1. Transport of large volumes of goods possible or usual

2. Especially suited for long-haul and intercontinental transport
3. Suited for almost any type of goods
4. Relatively cheap relation between transport cost and capacity
5. Rather high safety during transport
6. Relatively low transport speed (high time requirement)
7. Highly dependent on weather conditions

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 Some charges / surcharges / fees collected for a shipment through Sea freight

 OFT (Basic Ocean Freight)

 Feeder Freight (If any)
 BAF (FAF) [Bunker (Fuel) Adjustment Factor]
 PCS (Port Congestion Surcharge)
 CAF (Currency Adjustment Factor)
 PSS or PKS (Peak Season Surcharge)
 AMS (Automated Manifest System): applied for import cargoes to USA, CANADA
 ENS (Entry Summary Declaration): applied for import cargoes to countries in EUROPE.
 AFR (Japan Advance Filing Rules): applied for import cargoes to JAPAN (effective from Mar., 2014).
 THC (Terminal Handling Charge)
……… Besides, we have some further fees such as: B/L fee, D/O fee, Seal fee, etc.

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 Inland waterway transport
+ Characteristics:

1. High mass-transport capacity

2. 24-hour service
3. High reliability and transport safety
4. Environmentally friendly
5. Low network density
6. Low transport speed
7. Dependent on weather conditions

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 Pipeline transport
+ Characteristics:

1. High mass-transport capacity

2. High network-forming capability
3. High reliability
4. Low risk of air or water pollution
5. Environmentally friendly by avoiding
emissions

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 Intermodal transportation

• Involves the transportation of freight in an intermodal container or

vehicle.

• Using multiple modes of transportation (e.g., rail, sea, and road),

without any handling of the freight itself when changing modes.

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 5 ways to improve transport efficiency

1. Measure current transport activity in detail

2. Focus on optimization

3. Increase your number of carriers

4. Review tariffs and invoicing

5. Make your customers profitable

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 End of chapter 06

LOGISTICS
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