Express delivery.

There are three global giants that dominate

the global transportation landscape.
DHL, FedEx, and UPS are powerhouses when it comes to transportation.
The way they make it work is they have local
networks of terminals spread throughout the world.
We're here in front of a UPS terminal.
As you see here, we have small pickup and delivery vehicles.
They not only deliver products to local customers, but
also pick up products from them.
In the back of the building, here we see long haul vehicles right back there,
with 53 foot trailers behind them.
They're used to move freight over long distances,
connecting one terminal to the other.
So what happens in a building like this?
>> What happens in a building like this?
>> Yeah.
>> Well, a lot, a lot, everything.
In the morning, see, when you come in, they do the unloading and then loading.
>> Yeah, okay.
>> So there's really a large volume of packages goes out within a few hours.
>> Awesome, I see all of the trucks on the road around 8 AM.
>> Yeah, they have a lot of them.
I think we have 200 or 250 small trucks going out in the morning.
>> Wow.
What happens at those local terminals is goods come in from all over the world.
They get consolidated and then sent to individual customers.
They also receive items from local customers,
sort them, and then ship them out all over the world.
And the way that works is through different modes of transportation.
We use air most often in these cases because a lot of the goods
they ship are time sensitive.
They also use motor freight because it's a ubiquitous mode,
and we use it all over the world.
And finally, they started using intermodal rail because it is very cheap and
not that much slower.
To connect a whole network, we need different pieces of equipment.
We need our local pickup and delivery vehicles,
which most of you have seen on your streets.
We need the local terminals.
We need a global network of airplanes and
airports that connect the different local terminals.
And we need the ability to use other transportation provider
when we do not have that capacity.
And that is how these global giants make logistics happen all over the world.
Resume

Express Delivery
Lecture Objectives
1. How do express delivery firms integrate different modes?
2. Cost structure is majority fuel and driver wages
3. Infrastructure is made up of vehicles and terminals

Lecture Summary
Express delivery firms use several modes to the best of their advantage:

1. Rail is the cheapest and reasonably fast over long distances

2. Motor is fast for short distances and can pickup and deliver everywhere
3. Air is fastest and cost is justified for certain items.

The general purpose of these terminals is fourfold:

1. To receive shipments from across their network

2. To send individual packages to customer
3. To collect individual packagers from shippers
4. To route packages to their destinations

Speed
Truck: approximately 50 miles (or 80 kilometers) per hour over the highway for up to 500 miles
(800 kilometers)

Train: approximately 30 miles (or 50 kilometers) per hour over almost any distance.

Air: upwards of 200 miles (or 320 kilometers) per hour for distances of more than 500 miles
(800 kilometers), including ground operations.

Distance
Truck: up to 500 miles (800 kilometers) is the ideal distance, but there are still advantages over
the other modes up to 750 miles (1200 kilometers).

Train: for distances of more than 750 miles intermodal has some speed advantages, but the
average distance for intermodal is somewhere around 1,700 miles.
Air: at least 500 miles (800 kilometers) but typically more than 2000 miles.

Cost
Truck: current rates are highly variable, but $1.50 per mile is a reasonable starting value for a TL
shipment

Rail: intermodal freight shipments are typically much cheaper than TL and a common rule of
thumb is about 60-80% of the price of a TL shipment.

Air: typically we consider air freight to be about 6 to 8 times more expensive than truck.

Further reading:
This is a great report about intermodal and how it compares to trucking