11f05 scm 8 ex bg
TRANSCRIPT
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By. Prof. Bharat Goel
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Transport economicsy Transport economics and pricing are concerned with the
factors and characteristics that determine transport costs
and rates. Transport economics is influenced by sevenfactors. These factors are important while developingtransportation rates. The specific factors are:
Distance
Density
Stowability ( To place or arrange, especially in a neat, compact way)
H andling
Liability
Market Factors
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Total Transportation Costsy In addition to the basic cost charged for movement of
goods, the total transportation cost reflects a large
number of other factors, such as transit time costs,obsolescence and deterioration (To diminish or impair in quality, character, or value )costs, protectivepackaging costs, and transit insurance costs, etc.
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Transportation Infrastructurey Transportation infrastructure can broadly be classified
as hardware and software. Hardware consists of
physical assets that comprise terminals, storagefacilities, right of way for movement and vehicles/equipment. Software, which is essentially theservice superstructure, consists primarily of maintenance, operations and value added services.
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The selection of the mode of transportation
is based on these criteria.
y R oad network
y R oad freight has the advantage of transporting cargo
from point to point without stopovers. As roadnetworks improve, road freight plays a moresignificant role in the transportation of goods.
y India has one of the largest road networks in the world
(over 3.3 million km in 2002). The road network hasexpanded from 0.4 million km to 3.3 million km,interms of length during 1951 to 2002.
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Railwaysy The characteristics of railways as a transportation
mode are as follows:
1. R ail network has a capability to transport largeshipments economically with more frequency.
2.R ailroad operations incur high fixed costs because of expensive equipment, right-of way (the railways
maintain their own track), switching yards andterminals.
3.R ailways have relatively low variable operating costs.
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4. The replacement of steam by diesel power hasconsiderably reduced the variable cost per kg/km and
electrification has further provided for morereductions.
5. Bulk industries and heavy manufacturing use railwaysmore frequently.
6.R
ailways can improve the effectiveness of transportation by having alliances with other modes.
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Water Transporty W ater-based transport is effective as generally
speaking, operating costs of fuel are low and
environmental pollution is lower than forcorresponding volumes of movement by road, rail orair. A major advantage is that the main infrastructure -the waterway - is often naturally available.
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Pipelinesy Pipelines form a unique mode of transportation. They
can move large quantities of certain types of
commodities, mainly fluids, over long distances atrelatively low cost.
y Compared to normal surface mode like railways and
road vehicles, the following advantages are particularly
attractive:
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Cont.i. They do not require the return of 'empties' to the starting
point and as such are ideal for unidirectional traffic.
ii. They are insensitive to surface conditions such as storms,inclement weather, etc.
iii. Operating costs are low.
iv. Capital cost being the major cost of transportation;
inflationary influences have a small effect on transport
cost.
v. They are environment friendly.
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Airportsy Air freight is the newest but least utilized mode of
transport. Its significant advantage lies in the speed
with which a shipment can be transported. Theprohibitive aspect of air transport is its high cost. Thetrade-off is its high speed, which allows otherelements of logistical design, such as warehousing or
inventory, to be reduced or eliminated. Air transportstill remains more of a potential opportunity than areality.
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Cont.y In the case of perishable products like fruits and
vegetables, the total time from production toconsumption is critical and needs to be minimized.
y There are more than 20 international airports located within India. Besides these airports, several otherdomestic airports are located in India. In total, thereare more than 334 (2002 est.) civilian airports in India.
y The Indira Gandhi International Airport at Delhi andthe Chatrapati Shivaji International Airport atMumbai handle more than half of the air traffic inSouth Asia.
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Animal Drawn Transporty The importance of R ural Transport (RT) to economic
and social development where three fourth of India's 1billion plus population live in six lakh villages.
y RT is concerned with transporting goods and people within the village, between villages and urban areas,linking village roads with district roads, state highwaysand national highways.
y During the last three decades, improved carts (ICs)using pneumatic tyre, fitted with smooth bearings,steel wheels and axles have become popular in semi-urban areas and for sugarcane transport.
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C ont.
Mode Nature of Traffic
R ail Extracting industries, heavy manufacturing, and agricultural commodities.
R oad Medium and light manufacturing, distribution between wholesalers and retailers.
W ater Mining and basic bulk commodities, chemicals, cement, some agricultural products
Pipeline Petroleum, natural gas, coal slurry
Air Emergency, perishable goods, limited marketing period, high value premium products
Animal-drawn R ural distribution
Operating Characteristics R ail R oad W ater Pipeline Air Animal Drawn
Speed 3 2 4 5 1 6
Availability 3 2 5 6 4 1
Dependability 4 3 5 1 6 2
Capability 2 3 1 5 4 6
Frequency 4 3 6 1 5 2
Composite score 16 13 21 18 20 17
Summary of nature of traffic and mode selection
R elative Operating Characteristics of Transportation Modes