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3. Introduction
Mode of transport
Intermodal transport
Ownership of transport
Routing vehicles
Case study – Mount Isa Mines
4. AIMS OF THE CHAPTER
After reading this chapter you should be able to:
APPRECIATE the importance of transport
COMPARE different modes of transport
DISCUSS the use of intermodal operations
COMPARE alternative forms of transport
ownership
LIST different organisations who offer services
for transport
APPRECIATE other operational problems, such
as routing of transport
6. TRANSPORT is responsible for the
physical movement of materials between
points in the supply chain
At the heart of logistics are transport
vehicles moving goods between suppliers
and customers
7. Transport Rate
If an organisation uses third-party transport, the
price of moving a unit of material between
locations is the rate or tariff.
This is set by the cost of the service provided,
value to the customer, the distance moved,
weight, size and value of goods, complexity of
journey, and so on.
8. Mode of Transport
The mode of transport describes the type
of transport used.
There are basically five different options;
*Rail * Road * Air
* Water * Pipeline
9. Rail
Most commonly used for heavy and bulky
loads over long land journeys
They are almost invariably public carriers
rather than private carriers
The rail service is not nationalised, it is
allowed a monopoly
10. Advantage of Rail
Rail is that once the infrastructure is in place, it
has very high capacity and low unit costs.
Railway is the safest form of transport
Railways perform many public utility services
Unit transport cost is low
11. Disadvantage of Rail
Its inflexibility
Trains can only travel along specified routes
between fixed terminals, and cannot stop at
intermediary points
Obvious limitation of only being used on land
Rail transport cannot provide door to door
service
12. Road
The most widely used mode of transport
and is used at least somewhere in almost
all supply chains.
Road transport can normally carry loads
up to, say, 20–30 tonnes
13. Advantage of Road
Main benefit is flexibility, being able to visit almost
any location
Travel speed can be an important consideration
Use extensive road networks
Large number of carriers working in the same areas
Easy to monitor location of goods
14. Disadvantage of Road
These become relatively expensive,so road
transport is generally used for shorter distances
Used for delivering finished goods than bulky
raw materials
Lorries are particularly vulnerable to congestion
and traffic delays
Obvious limitation of only being used on land
17. Water
Most supply chains use shipping to cross
the oceans,over 90% of world trade is
moved by sea (UK, Australia,USA..)
18. Advantage of Water
Ideal for transporting
heavy and bulky goods
Suitable for products
with long lead times
Cheapest traffic means
Requires cheap motor
powers than for
airplanes
19. Disadvantage of Water
Longer lead/delivery
times and slow
Difficult to monitor
exact location of
goods in transit
Its inflexibility in being
limited to appropriate
ports
Transfers to ships
take time
20. Basically three types of water
transport;
* Rivers and Canals →
← * Coastal Shipping
* Ocean Transport →
21. Different types of vessel
* General cargo ships →→
← ← ←* Bulk carriers
* Tankers →→ →→
23. Air
Passengers account for
most airline business,
with eight billion
passenger kilometres
flown a year in the UK.
24. Avantage of Air
Main advantage is speed of delivery
Useful for Cargo companies For ex;
Yurtiçi,UPS,Aras etc..
25. Disavantage of Air
Transfers to plane take time in the airport
It is costly transport
Competition can also be fierce
Weight limits is prevent carrying amount of
materials.
26. Pipeline
The main uses of pipelines are oil and gas
together with the utilities of water and
sewage.
They can also be used for a few other
types of product such as pulverised coal in
oil.
27. Advantage of Pipeline
Moving large quantities over
long distances.
Cheapest way of moving
liquids For ex; oil and gas
Local networks can add
flexibility by delivering to a
wide range of locations
28. Disadvantage of Pipeline
Being slow
Inflexible
Only carrying large
volumes of certain types
of fluid
Huge initial investment of
building dedicated
pipelines
31. Choice of Mode
* Choice of mode depends on a variety of
factors.The main ones are the nature of
materials to move, the volume and distance.
Other factors include:
Value of materials Reputation and
Importance stability of carrier
Security, loss and
Transit times,
damage
Reliability
Schedules and
Cost and flexibility to
frequency of delivery
negotiate rates
32. * Ranking for the cost, speed, flexibility and
load limits of different modes of transport
34. INTERMODAL TRANSPORT refers to
journeys that involve two or more different
modes of transport.
The aim of intermodal transport is to
combine the benefits of several separate
modes.We can avoid disadvantages with
this:
combining the low cost of shipping with
the flexibility of road
getting the speed of air with the cost of
road
35. →→The main problem is that each transfer
between modes causes
delays and
adds costs for extra handling.
36. At the heart of
intermodal transport
are the systems for
transferring materials
between
modes.
The aim is to give a
virtually seamless
journey, and the best
way of achieving this
is to use modular or
unitised loads.
37. Some of the benefits of containerisation
include:
● Simplified transport and flow of goods
● Easier and faster handling
● door-to-door service
● Faster deliveries
● Reduced loss due to damage,
misplacement and pilferage
38. ● Reduced packing costs
● Lower insurance costs
● Separation of incompatible goods
● Use of less congested routes
● Improved transport encourages trade.
39. Other types of intermodal transport
→A very wide range of materials can be put
into containers, but there are inevitably
some that cannot, or are cheaper to
transport by other means.
Oil, for example, might be put into
container-sized tanks but tankers or
pipelines give cheaper alternatives.
40. Another types of containers is piggy-back
transport, where a lorry – or usually just
the trailer – cars and lorries are driven onto
a train or ship for this part of their journey
41. Land bridges: These are used when
materials cross land on what is essentially
a sea journey. The most widely used in
EAST TO WEST transfer of materials.
43. Is it better for an organisation to run its own transport
fleet, to use public transport, or a combination of the
two?
44. With transport the more common terms are in-house or own account transport compared
with third-party transport.
45. OWN ACCOUNT TRANSPORT
An organisation using its own transport fleet to move
its materials.
The most common form of private transport has large
companies running their own fleets of trucks and this
has the advantage of :
flexibility
greater control
closer integration of logistics
easier communications
46. Transport can also be
made fit to the
organisation’s needs,
with the best type of
vehicles, fleet size,
delivery schedule,
customer service, and
so on.
47. Own account transport can be expensive and an
organisation should only run its own fleet when it is
cheaper than using a specialist third-party carrier. It
means that own account transport must be run as
efficiently as a specialised transport company.
Only larger organisations can afford the capital
investment and costs of running their own fleet.
48. THIRD-PARTY CARRIERS
Specialised transport companies offer a range of
services to other organisations. The advantage of this
arrangement is that specialised companies run the
transport, leaving the organisation to concentrate on its
core operations. By using their skills and expertise the
transport operators can give better services, or lower
costs than own account transport.
50. Most third-party transport is provided by
common carriers. Companies (like TNT)
move materials on a one-off basis
whenever asked by another organisation.
For example; If you want to send a cargo
to Poland, you might use a cargo service
such as MNG Cargo or Aras Cargo and
the company deliver your cargo.
51. Alternatively, an organisation can form a long-term relationship with a contract
carrier. This contract carrier then takes over a part of the organisation’s
transport for some extended period. For example;
52. CHOICE OF OWNERSHIP
Operating cost: In different situations either own account or third-party
transport might be cheaper, and the company should determine significiant
benefits before choosing.
Capital costs: Capital is always scarce, and even if own account transport
seems attractive,an organisation might find it difficult to justify the
investment in vehicles. so cost analyses should be done carefully before
reaching any conclusion.
Customer service: Organisations must use transport that provides
acceptable customer service in the best possible way. Sometimes, it is
impossible to get a third-party carrier that can meets all requirements, and
then own account transport is the only option or vice versa.
Control: An organisation clearly has greater control over transport if it runs
its own transport. However, this control might be bought at a high price, and
contract companies might offer equivalent services but without the
overheads and inflexibility of a private fleet.
53. Flexibility: The structure and operations of a private fleet are fairly rigid, as
you cannot make quick adjustments to allow for changing conditions. If
there is a sudden peak in demand, you cannot increase the size of the fleet
for a few days, and then reduce it again when the peak passes. Common
carriers can make these adjustments much faster.
Management skills: Managing transport needs specialised skills, which are
not readily available in even the biggest organisation. This gives a strong
argument for third-party carriers. Large transport companies can support the
management teams with specialist skills, knowledge and experience of
different conditions.
Recruitment and training: Road transport is generally the most labour
intensive. This gives high employment costs. There is also a shortage of
skilled drivers, with many organisations finding it difficult to recruit and train
suitable people. Both of these give an incentive to use third-party transport.
54. OTHER SERVICES
An organisation can pass all its transport problems to a third-party carrier,
but there are many other people who can offer their own specialised
services. These can provide the special skills that are not usually available
within a single organisation.
Some organisations give fairly general advice, such as management
consultants who work in logistics, and software companies that tailor
packages for transport. Other experts give more specific services, such as
freight forwarders and shipping agents.
55. Common carriers: move materials between two points for any customer,
usually in a one-off delivery using common facilities.
Contract carriers: offer transport services, but usually for a longer time.
They take over some, or all, aspects of an organisation’s transport for an
agreed period.
Intermodal carriers: Traditionally carriers have concentrated on one type of
transport, such as shipping lines or road haulers. They typically look after all
aspects of a journey between two specified points.
Terminal services: The terminals do more than just transfer materials, and
they might unload delivery vehicles, sort goods, break bulk for local delivery,
concentrate goods for onward movement, load outgoing transport, keep
track of all movements, and provide any other relevant services.
56. Freight forwarders: One problem with third-party carriers is the expense of
moving smaller loads. Unit transport costs fall with increasing quantity, and
transport now focuses on standard loads, such as a full container load. An
alternative is to use a freight forwarder. These are people who collect
relatively small loads, and consolidate them into bigger loads travelling
between the same points. A freight forwarder might, for example, combine six
or seven smaller loads to get a full container, giving lower unit costs faster
delivery.
Brokers: A broker acts as an intermediary between customers and carriers.
Effectively, they look at the goods to be moved, find the best routes and
carriers and negotiate conditions.
Agents: These are usually local people who represent, say, shipping
companies. They give a local presence and act as intermediaries between
distant carriers and local customers, exchanging information, arrangements,
and so on.
Parcel services: These are similar to a Post Office, as they deliver small
packages to any location. Companies such as PTT Cargo, United Parcel
Service (UPS) offer very fast deliveries to almost any location in the world.
Their strength is customer service, as they offer guaranteed next day delivery
over long distances.
58. Any organisation involved in transport has to
consider many types of problem.The number
of vehicles needed, type and size, special
features required, routes used, assignment of
loads and customers to vehicles, schedules,
maintenance schedules, measures of service
and quality, and so on.
59. A basic routing problem looks for the best path for a
delivery vehicle around a set of customers. There are
many variations on this problem, all of which are
notoriously difficult to solve.
Real problems are much more complicated.
competing aims
uncertain costs
variable delivery times
60. varying speeds caused by traffic
conditions
customers with different importance and
conditions for deliveries
incompatible products
different logistics facilities
61. There are two general approaches
The first uses geographical arguments to
look for the best routes,regardless of the
actual roads.
The second looks at the road network and
finds shortest routes through it.
62. The following list suggests some
specific methods that have been
proposed
1. Negotiations:This may not give the
best technical answer, but it has the
support of everyone concerned.
63. 2-Adjust previous plans:
This has the benefit of being relatively
easy and causing little disruption. It also
uses a well-understood procedure and
experts can give results that are trusted by
the organisation.
64. 3-Maps
The most popular are simple maps of key
features. Then schedulers can draw
routes and iteratively improve them.
65. 4-Spreadsheet calculations:
is a computer application with tools that
increase the user's productivity in
capturing, analyzing, and sharing tabular
data sets and look at the patterns in the
numbers.
66. 5-Simulation
It gives a dynamic view by imitating real
operations over a typical period. Suppose
that you want some information about
proposed routes. You could sit in cabs
and watch the process for some time, and
see what was happening. This
67. 6-Expert systems:
Expert system are designed to solve
complex problems by reasoning about
knowledge like an expert. The basic skills,
expertise, decisions and rules used by
experts are collected in a knowledge
base.
68. 7-Mathematical models
The most common mathematical
approach uses linear programming. These
methods are rather complicated, so they
are generally limited to small problems.
70. Mount Isa Mines is one of the world’s great
metal mines. Its main operations are at Mount Isa,
in Queensland, Australia.
71. Mount Isa has serious transport problems.
It produces huge quantities of ore in a
remote area of Australia, while the main
demand for finished metals is in the
industrialised areas of the world,
particularly Europe.
72. The problem is to process the ores and
move them to final markets as cheaply as
possible.
74. Copper is only one of Mount Isa’s products,
and it has similar transport problems with
lead and zinc. It also mines coal and gold,
has organised its transport operations into a
separate company, generates electricity
and supplies water for the city of Mount Isa,
and is involved in a wide range of mining
and associated ventures.
75. Questions
● How important do you think transport is for
the operations at Mount Isa?
● What alternatives are there for transport?
● Do other mining companies have similar
transport problems?
