Transport mode and Intermodal transport Transportation and Distribution

Transport mode and Intermodal transport Transportation and Distribution Management UTCC

Contents • • • Introduction Operational factors Transport mode characteristics Method of selection Aspects of international trade Intermodal transport Intermodal equipment Intermodal vehicles References Transportation and Distribution Management UTCC

Introduction • Companies move toward global operations had impact on different modes of transport. • In global context, more products are moved far greater distances with concepts of focus factories. • Single global manufacturing point for certain products and concentration of production facilities on low-cost manufacturing locations. Transportation and Distribution Management UTCC

Introduction (Cont. ) • • • In Europe, road freight transport is the dominant mode of transport. The upward trend of road transport have continued for many years but its trend may have reached a plateau. Rail freight has declined for many years but its trend is stable. Inland waterways are also important. Pipeline has continued for certain specialized movements. Transportation and Distribution Management UTCC

Transportation and Distribution Management UTCC

Introduction (Cont. ) • To select the most appropriate transport mode, both costs and customer service must be balanced. • Hence, characteristics of different modes and method of selection are important. Transportation and Distribution Management UTCC

Operational factors • 1. 2. 3. 4. 5. These factors vary from country to country: Basic infrastructure. Trade barriers (custom duty, import quotas, etc. ). Export controls and licenses. Law and taxation. Financial institutions and services, and economic conditions (exchange rate stability, inflation, etc. ). 6. Communication systems. 7. Cultures 8. Climate. Transportation and Distribution Management UTCC

Operational factors (Cont. ) • 1. 2. 3. 4. 5. 6. 7. 8. • • Customer characteristics: Service level/ type of service location. Delivery point constraints (access, equipments, etc). After-sales service needs. Credit rating Terms of sale preference (CIF/FOB) Order size preference Customer importance Product knowledge Customer service (speed, reliability, etc) Physical attributes (order or drop size, location, etc) Transportation and Distribution Management UTCC

Operational factors (Cont. ) • Physical product characteristics: 1. Volume to weight ratio : the relative amount of cubic capacity taken up by a given weight of product. • For example, one tone of paper tissues takes up far more space than one ton of brocks. • Charging structures: by weight or by cubic volume. 2. Value to weight ratio : the value of the product to be transported. • The relative transport cost of a high-value, low-weight product is likely to be so insignificant to the overall value of product that the choice of mode from a cost perspective is irrelevant (jewelry or computer chips). Transportation and Distribution Management UTCC

Operational factors (Cont. ) 3. Substitutability : Product alternative. • If a product can be substituted by an alternative from another source, fast but expensive transport mode may be used to ensure the order is accepted by customer. • If no substitute product is available, a slower and less expensive can be used. 4. Special characteristics : hazard, fragility, perishability, time constraints, security. • Chemicals may be restricted in how it is allowed to be transported. • A time-constrained product may have to be moved on a fast and expensive mode of transport (newspapers) Transportation and Distribution Management UTCC

Operational factors (Cont. ) • 1. 2. 3. 4. 5. 6. 7. Fixed factors impose on any newly devised system: Product locations. Supply points. Warehouse and storage facilities. Own transport. Marketing plans and policies. Financial situation. Existing delivery system. Transportation and Distribution Management UTCC

Transport mode characteristics Sea freight • For conventional sea freight, main points are: 1. Cost economies. • Bulk goods, large packaged consignments that are going long distances and speed of service is unimportant. 2. Flexibility • Many liners and tramp ships, many ports (large and small). • Sailings are frequent. • Number of alternatives are open. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) 3. Availability • Liners services are widely advertised, extensively categorized, and can be accommodated. 4. Speed. • The actual voyage time is slow. • The turnaround time in port. 5. Need for double-handling. • Inefficient handling methods 6. Delay. • Pre-shipment delays, delay at discharge port, and unexpected delays due to bad weather, missed tides. 7. Damage. Double handling cargo. Transportation and Distribution Management UTCC

Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) Road freight • Road freight is the most important mode within Europe and UK. • It consists of the through transport of goods from factory or warehouse direct to customers abroad. • International distribution from UK is in terms of the use of roll-on, roll-off (RORO) ferry services and the Channel Tunnel route. • Quick service if ferry/tunnel schedules are carefully times into the route plans. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) • • It is cost competitive in a case of complete unit loads with single origin and destination points. Reduce need to double handle and tranship goods and packages. Completely eliminate direct, full load deliveries which saves time and minimizes the likelihood of damage. A great flexibility for through movement as unit load in cross-Channel routes. Transportation and Distribution Management UTCC

• Transport mode characteristics (Cont. ) It is Packaging cost is kept at minimum since loads are less susceptible to the extreme transit ‘shock’ that other modes can cause. • They system provides regular, scheduled services due to frequent ferry/tunnel ‘sailings’ and due to the flexibility of road vehicle scheduling. • The RORO/tunnel system loses many of its advantages when used for less than lorry-sized loads. These entail group and involve doublehandling (at both ends of the journey), additional packaging and time delay. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) Rail freight • The development of containerized systems using ISO containers as the basic unit load. • Conventional rail freight system is a relatively cheap form of transport, especially, bulky and heavy consignments that require movement over medium to long distances and where speed is not vital. • Shunting shocks can cause damage. • Need to double-handle loads because the first and last led of a ‘through’ journey often needs to be by road transport. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) • Limited number of railheads available-many companies with railway sidings on their premises have closed them down. • Rail transport is very slow mean of carriage. • Rail freight transport is very unreliable. Batches of wagons may arrive at irregular intervals. • Further delays for international traffic if a complete shipment is on a single customs document. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) Air freight • Air freight is competitive over longer international movements. It has rapid transit times over these longer distances. • Fast transport but it can be delayed at airports. • Lead-time economy. It is unnecessary to hold stocks in the counties. The short lead time required between the ordering and receiving of goods results in savings of inventory holding costs. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) • Market flexibility. Number of counties and markets can be reached quickly and easily. A company need not to set up stock holding network. • Suitable for commodities with high value to weight ratios, perishable, s, fashion foods, emergency supplies, and spare parts (class A). • Delivery time lost due to airport congestion, and handling and paperwork delays. • Severe lapses in security of good moved. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) Container systems • Container system is a fundamental feature of all the major national and international transport modesroad, rail, sea, and air. • Containerization supports the development of the “intermodal’ system of freight transport. • Enable the uncomplicated movement of goods in bulk from one transport mode to another. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) • • Enable a number of small packages to be consolidated into large single unit loads. Reduction in handling of goods. Reduction in individual packaging requirements, depending on load within the container. Reduction in damaged products caused by other cargo. Insurance charges are lower due to the reduced damage potential. Handling costs at the docks and the at the other model interfaces are reduced. Quicker turnaround for all the types of transport used. Port utilization improves. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) • • The all- around delivery time is speedier and raises service levels. Simpler documentation. Through transit becomes feasible and allow for a truly integrated transport system to be developed. A need for special facilities and handling equipments. The initial cost of the containers is very high. The return of empty containers are expensive. Containers may leak, causing damage due to rain. Loads may be affected by their position of stow, e. g. above or below deck. Transportation and Distribution Management UTCC

Transport mode characteristics (Cont. ) Transportation and Distribution Management UTCC

Method of selection 1. • • 2. • • • Identify operational factors External Customer Product Other logistical Identify transport mode characteristics Sea Inland waterway Road Rail Air container Transportation and Distribution Management UTCC

Method of selection (Cont. ) 3. • • Determine major consignment factors Routing responsibility Distance Cargo type Priority 4. Make trade off • Service • Costs Transportation and Distribution Management UTCC

Method of selection (Cont. ) 1. • • 2. • 3. • Routing and through transit responsibility Is a direct route stipulated? Who is concerned with the through transit? Distance What is the distance to be moved? Type of cargo If bulk or general cargo, will a certain specific route be best? 4. Quantity • Full load or part load? Transportation and Distribution Management UTCC

Method of selection (Cont. ) 5. • • • 6. • • 7. • • 8. • Unit size Small or large? Will unitization help? Is group an alternative? Priority How soon must the goods reach their destination? Does “urgent” really mean “urgent”? Commodity value How important is the transport cost element? If import/export, how is the commodity rated? Regular shipments size How often will these shipments be made? Transportation and Distribution Management UTCC

Method of selection (Cont. ) • • The final decision is made based on trade off between cost and service. It must be undertaken with relevant operational factors, transport mode characteristics and consignment factors. The volume of freight to be moved and the distance to be traveled dictate the choice of mode. Other elements e. g. speed of delivery required or reliability of service may override these purely economic factors. Transportation and Distribution Management UTCC

Method of selection (Cont. ) Transportation and Distribution Management UTCC

Aspects of international trade • The introduction of a number of international trade agreements and economic unions e. g. EU, NAFTA, ASEAN, etc. , has had a major impact on the globalization of trade. • In Europe, major barriers are being overcome includes: • Physical barriers-removal of customs control, single administrative document and immigration and passport control. Transportation and Distribution Management UTCC

Aspects of international trade (Cont. ) • Technical barriers- removal of all barriers to trade between member states, free movement of goods, capital, services, and workers, harmonization of technical standards, common protection of intellectual and industrial property. • Fiscal barriers – approximation of indirect taxation (VAT and excise duties), and consequent removal of fiscal frontier checks. • • Access to Central and Eastern European countries. Introduction of the euro currency. Transportation and Distribution Management UTCC

Aspects of international trade (Cont. ) • • • Goods and services can be bought anywhere in the community. Customs barriers have been virtually abolished. Documentation has been simplified and standardized. Operating (transport) permit restrictions have been removed. Testing standard are acceptable in all community states. Free movement of capital. Transportation and Distribution Management UTCC

Aspects of international trade (Cont. ) • • • More competition between TPL companies because of increased market. Transport and TPL distribution companies can give a more European-wide service. Easier and faster movement of goods across borders. Distribution and transport can be bought in any countries. Increased opportunities for joint ventures with other European or international operators. New depot locations and consequent transport flows can be determined to suit both sources and markets. Transportation and Distribution Management UTCC

Aspects of international trade (Cont. ) Crucial elements to be considered: • Type of payment: an open account, a draft, a letter of credit, and cash in advance. • Taxes and duties: Import tariffs, value added tax or quota payment. • Transport costs: costs related to different modes. An allowance for inland carriage from point of origin, plus international carriage, plus final delivery from the destination port. • Associated transport charges: port fees, bunker adjustment fees or fuel charges. • Other charges: insurance, break bulk, storage and handling. Transportation and Distribution Management UTCC

Transportation and Distribution Management UTCC

Aspects of international trade (Cont. ) Document requirements: • The shipper’s export declaration • Bill of lading • Consular documentation • Single administration document (SAD) • Certificate of origin • Packing note • Insurance certificate • Export clearance • Customers requirements for import and export. Transportation and Distribution Management UTCC

Aspects of international trade (Cont. ) Freight forwarders’ services: • Preparation and checking of shipping documents. • Booking space with carriers. • The order collection from the point of origin to the shipping port. • Customs clearance and final delivery at the destination country. Transportation and Distribution Management UTCC

Aspects of international trade (Cont. ) Freight forwarders’ services: • Provision of advice in export regulations, documentation requirements, etc. • Detailed knowledge of carriers, ports, etc. • Knowledge of the international transport. different modes • Knowledge of the modes/destinations. different costs Transportation and Distribution Management of with UTCC

Intermodal transport • Intermodal transport is the movement of goods in one and the same loading unit or vehicle, which uses successively several modes of transport without handling of the goods themselves in changing modes • Freight containers have ability to move freight swiftly and safely aids the logistics process, as the elimination of wasted time. • They can also be traced through the transport system and their progress monitored. Transportation and Distribution Management UTCC

Intermodal equipment Intermodal container ISO containers • International Standards Organization have defined the important features of the container e. g. dimensions, to allow for the widest possible use of this equipment around the world. • Containers are rectilinear steel boxes. • Their common sizes are 20, 30, 45 feet in length. • The height and width dimensions are the same for all lengths at 8 fee wide by 8 feet 6 inches high. Transportation and Distribution Management UTCC

Intermodal equipment (Cont. ) • • steel boxes. Their common sizes are 20, 30, 45 feet in length. The height and width dimensions are the same for all lengths at 8 fee wide by 8 feet 6 inches high. Twenty feet equivalent unit (TEU) refers to the 20 feet container. Forty feet equivalent unit (FFU) refers to the 40 -feet container. Transportation and Distribution Management UTCC

Intermodal equipment (Cont. ) The swap body • A container used on bimodal operations, road and rail. • Three standard lengths – 7. 15, 7. 45, and 7. 82 meters. • It is transferred from road vehicle to rail wagon by means of an overhead straddle crane. Transportation and Distribution Management UTCC