transport assignment

8/2/2019 Transport Assignment

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ASSIGNMENT-3

ASSIGNMENT ON TRANSPORTATION

NAME: MEHWISH ALI

ID NO# MBA -

SUBJECT: SCM (3-6 SAT)

SUBMITTED TO: SIR MASOOD SUBZWARI

DATE: 21ST

-APRIL-2012


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1. Seven economic drivers that influence transportation cost weredescribed in transportation text. Select a specific product and discuss

how each factor will influence determination of a freight rate.

ANSWER:

Economic Drivers

Transportation costs are driven by seven factors. While not direct components of transporttariffs, each factor influences rates. The factors are:

(I) Distance,

Distance is a major influence on transportation cost since it directly contributes tovariable expense, such as labor, fuel, and maintenance.

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Distance is a major influence on cost

Directly contributes to variableexpenses

Labor, fuel, and maintenance Cost curve starts above zero

because of fixed costsassociated with pickup anddelivery regardless of distance

However, rate of costdecreases as distanceincreases

This is called thetaperingprinciple

Figure 9.1 Generalized Relationship betweenDistance and Transportation Cost


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(2) Volume,The second factor is load volume. Like many other logistics activities,transportation scale economies exist for most transportation movements. Themanagement implication is that small loads should be consolidated into largerloads to maximize scale economies.

Weight is the second major factor formost transportation costs

Cost per pounddecreases as weightincreases until thecarrier vehicle is full

Relationship starts againfor the next vehicle load

Small loads should beconsolidated into largerloads to maximize scaleeconomies

Generalized Relationship between Weightand Transportation Cost/Pound


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(3) Density,

A third factor is product density. Density is a combination of weight and volume.In general, traffic managers seek to improve product density so that trailer cubiccapacity can be fully utilized.

Density is the combination of weight andvolume

Volume is importantbecause vehicles aretypically constrainedmore by cubic capacitythan by weight loaded

Cost per unit of weightdeclines as productdensity increases

Higher density productsallowed fixed transportcosts to be spread overmore weight

Figure 9.3 Generalized Relationship betweenDensity and Transportation Cost/Pound


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(4) Stow-ability,

Stow-ability refers to how product case dimensions fit into transportation

equipment. Although density and stow ability are similar, it is possible to haveitems with similar densities that stow very differently. Stow-ability is alsoinfluenced by other aspects of size, since large numbers of items may be nested inshipments whereas they may be difficult to stow in small quantities.

Stowability is how product dimensionsfit into transportation equipment

Odd package shapesand sizes can wastecubic capacity

Items with rectangularshapes are easier tostow

Nesting refers to abilityof product to be placedin itself or collapsed forbetter stowability


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(5) Handling,

Special handling equipment may be required to load and unload trucks, railcars,or ships. In addition to special handling equipment, the manner in which productsare physically grouped together in boxes or on pallets for transport and storagewill impact handling cost.

Handling some products may requirespecial equipment

Special equipmentmay be needed to loadand unload trucks,railcars, or ships

How products aregrouped together inboxes or pallets willalso impact handling

cost


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(6) Liability,

Liability includes product characteristics that can result in damage and potentialclaims. Carriers must either have insurance to protect against possible claims oraccept financial responsibility for damage.

Liability includes productcharacteristics that can result in

damage Carriers must pay for

liability insurance oraccept financialresponsibility

Shippers can reducetheir risk by Improved packaging and

loading For example - pneumatic

dunnage Reducing susceptibility to

loss or damage


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(7) Market

Finally, market factors such as lane volume and balance influence transportation

cost.

Market factors such as lane volumeand balance influence transportation

cost Transport lane refers to

movements betweenorigin and destinationpoints

Carriers must find abackhaul load or vehicleis returned empty

Imbalances in volumebetween shippingpoints can result inhigher transport costs


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2. Compare and contrast the transport principles of economy of scale andeconomy of distance. How do they combine to create efficienttransportation?

ANSWER:

Economy of scale in transportation deals with reduced costs in relation to the size of shipment.Larger shipments tend to have lesser cost of transportation per pound since fixed costs associatedwith transportation are shared/distributed over the entire shipment.

Ex: shipment, larger capacity transportation vehicle (rail, water, airplane) are less cost per unit of weight than smaller capacity transportation vehicle (bus, truck).

Economy of distance deals with the reduced costs in relation to the distance of shipment. Thelarger the distance to be shipped, the lesser the cost of transportation per mile of the distance.

Ex: at a small weight shipment 800 miles will cost less to perform than two shipment eachmoving 400 miles.

Economy of transportation and economy of distance can be clubbed to form an efficienttransportation strategy. A company shipping large sized shipments over a longer distance todestination will save more money in terms of transportation costs than a company shippingsmaller shipments multiple times over shorter distances.

3. Identify basic modes of transportation, their costs, and their suitabilityfor different types of products.

ANSWER :

Transportation modes include:

1) Rail

Historically, railroads have handled the largest number of ton-miles within thecontinental United States.

Rail: characteristics of railway transportation :

Economically transport capability for large shipment Railroads have largest percentage of intercity freight ton miles Train enjoys relatively low variable operating cost Train enjoys relatively large tonnage over long distance Railroad operation have fixed cost


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Electrification and technology development reduced variable cost per ton

Train is faster and more expensive to operate VIII. It is nonstop from origin to destination

2) Motor

Highway transportation has expanded rapidly since the end of World War 11. To asignificant degree the rapid growth of the motor carrier industry has resulted fromspeed and ability to operate door-to-door.

Motor: characteristics of motor in highway transportation:

Motor have flexibility to transport. Motor carriers have the largest revenue. It is able to operate on a variety of roadways Ability to operate door to door Motor have relatively small fixed investment than other modes. Motor operations are characteristics by low fixed cost and high variable cost. Motor handle small shipment moving short distances. Easy to moving from wholesaler warehouses to retail store.

3) Water

Water is the oldest mode of transport. The original sailing vessels were replaced bysteam-powered boats in the early 1800s and by diesel in the 1920s. A distinction isgenerally made between deepwater and navigable inland water transport.

Water: characteristics of waterway transportation:

Water is oldest mode of transportation Capacity to transport extremely large shipment Ability to achieve economy of distance. Moderate fixed cost Low variable cost to transport large tonnage.

4) Pipeline

Pipelines are a significant part of the U.S. transportation system.

Fixed costs high (increase almost directly with distance) Line-haul costs are lowest (even lower than water) Long haul in bulk Liquid fuels in large volumes


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Restricted commodity use; regular flow and demand required

Pipeline: characteristics of pipeline transportation:

Pipeline transportation use basically for petroleum ton miles movement.

It transported natural types of product Pipeline is unique than others. Pipelines operate 24 hr and 7 days nonstop.

5) Air

The newest but least utilized mode of transportation is airfreight. The significantadvantage of airfreight lies in the speed with which a shipment can be transported.

Air: characteristics of air transportation:

The newest but utilize mode of transportation. Airfreight lies in the speed than others Very much costly. Use sensitive product transportation. High fixed cost and variable cost.

4. Describe the factors driving transportation costs including distance,volume, density, stow-ability, handling, liability, and market factors.

ANSWER:

Transportation costs are driven by seven factors. While not direct components of transporttariffs, each factor influences rates. The factors are:

(I) Distance,

Distance is a major influence on transportation cost since it directly contributes tovariable expense, such as labor, fuel, and maintenance

(2) Volume,

The second factor is load volume. Like many other logistics activities,transportation scale economies exist for most transportation movements. Themanagement implication is that small loads should be consolidated into largerloads to maximize scale economies.


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(3) Density,

A third factor is product density. Density is a combination of weight and volume.In general, traffic managers seek to improve product density so that trailer cubiccapacity can be fully utilized.

(4) Stow-ability,

Stow-ability refers to how product case dimensions fit into transportationequipment. Although density and stow ability are similar, it is possible to haveitems with similar densities that stow very differently. Stow-ability is alsoinfluenced by other aspects of size, since large numbers of items may be nested inshipments whereas they may be difficult to stow in small quantities.

(5) Handling,

Special handling equipment may be required to load and unload trucks, railcars,or ships. In addition to special handling equipment, the manner in which productsare physically grouped together in boxes or on pallets for transport and storagewill impact handling cost.

(6) Liability,

Liability includes product characteristics that can result in damage and potentialclaims. Carriers must either have insurance to protect against possible claims oraccept financial responsibility for damage.

(7) Market

Finally, market factors such as lane volume and balance influence transportationcost.

5. Summarize the key elements of transportation management includingequipment scheduling, load planning, routing, and carrieradministration.

ANSWER:

TRANSPORT MANAGEMENT SYSTEM:

Transportation management systems (TMS), plans, executes, and manages transport andmovement functions

Parties involved include: Shipper, Carrier, and Consignee (recipient)


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Functions of TMS:

Carrier Selection

Carrier Scheduling

Dispatching

Document preparation/ Freight payment

Performance Measurement

Shipment consolidation and routing shipment rating

Shipment scheduling

Shipment tracing and expediting vehicle loading

EQUIPMENT SCHEDULING:

Scheduling is a key component

Yard management requires careful load planning, equipment utilization, and driverscheduling

Arrangement of delivery and pickup

Pre schedule dock positions or slots

Scheduling is a huge part and important process in carrier and private transportation. Bottleneckscan occur from improper equipment scheduling which can result in transportation equipmentwaiting to be loaded and unloaded. Some companies strive to put into practice advancedscheduling appointments at the time of the order commitment. Effective scheduling is the key tomeeting demand and time arrangements.

LOAD PLANNING:

Determine capacity of load

What is the size of individual shipments?

Delivery sequences

Almost all large companies use TMS software to help in load planning

If load planning is performed effectively it will positively impact overall logistical efficiency. If done effectively equipment must be available to maintain an orderly flow of product and materialfrom warehouse or factory to shipment destination.


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ROUTING:

Routing software ASN provided to customers Delivery specifications for customers

Route optimization is utilized in most large companies. Routing must be performed in a efficientmanner while meeting customer service requirements.

CARRIER ADMINISTRATION:

Administer the performance of for-hire and private transportation

Implement core carrier strategy

Determine to use integrated service providers (ISPs)

Identify most economical mode

Core carrier strategy is building a working relationship with a small number of transportationproviders. Even if your company is huge and uses a private fleet to an extent every firm uses for-hire carriers. ISPs are often used to administer and consolidate freight across a wide variety of shippers. Determine mode by parcel, LTL, TL, pool distribution, stops in transit, etc

6. What is inter-modal transportation? How does it benefit supply chaintransportation?

ANSWER:

Intermodal Transport

Intermodal freight transport involves the transportation of freight in an intermodalcontainer or vehicle, using multiple modes of transportation (rail, ship, and truck), without anyhandling of the freight itself when changing modes. The method reduces cargo handling, and soimproves security, reduces damages and losses, and allows freight to be transported faster.Reduced costs over road trucking are the key benefit for intra-continental use. This may be offsetby reduced timings for road transport over shorter distances.


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There are many people who are not aware of the benefits of Intermodal TransportServices. However, it has a great role in the long run of a business. This type of transportservices will help the growth of a business by providing all types of services it requires.

This transport services will not only help the local business, but can also provide manybenefits for the international traders. They make sure they provide a safe and quick servicewithout any higher charges.

If you are a business owner, you will be aware of the importance of a good transportationservice. Transportation is very important for the development of a business as they will help youto trade and shift your goods. The demand of this transportation, which is cost-effective, has alsogiven birth to the rising use of multiple modes transportation in the supply chain of several firms.If you are selecting a transportation service for your business, you have to make sure that theywill provide the best service.

Safe and punctual transportation is very important, as you should be able to deliver your good tothe clients on perfect time. Therefore, Intermodal Transport Services could be the finest optionfor you, as they will make sure that your goods will deliver safely on time in front of yourclients. They provide speed, security, reliability and tracking services to their potential clientsand customers. It is proposed to benefit the businesses, researchers and policy makers from bothdeveloping and the developed world.
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