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Transport Fundamentals: When The Chinese Write The Word "Crisis," They Do So in Two Characters - One Meaning, The Other

The document discusses transportation fundamentals and logistics. It covers various parties involved in transportation like shippers, consignees, and customers. It also describes different transportation options like single services using rail, air, or intermodal transport. The document discusses concepts like stop-off privileges, shipping containers, and special service charges. It provides examples to illustrate transportation cost calculations and optimization.

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52 views28 pages

Transport Fundamentals: When The Chinese Write The Word "Crisis," They Do So in Two Characters - One Meaning, The Other

The document discusses transportation fundamentals and logistics. It covers various parties involved in transportation like shippers, consignees, and customers. It also describes different transportation options like single services using rail, air, or intermodal transport. The document discusses concepts like stop-off privileges, shipping containers, and special service charges. It provides examples to illustrate transportation cost calculations and optimization.

Uploaded by

Fatman Rules
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 28

Transport Fundamentals

When the Chinese write the word “crisis,” they do


so in two characters—one meaning danger, the
other opportunity.

Chapter 6
CR (2004) Prentice Hall, Inc.
6-1
Importance of an effective
transportation system

• Greater competition
• Economies of scale
• Reduced price

CR (2004) Prentice Hall, Inc.


6-2
Parties involved
Shipper
A shipper is the party who is exporting the shipment. It could be the
seller of the cargo, the manufacturer or simply the company located
at the origin where the cargo to be picked up. The shipper is also
referred to as the exporter.

Consignee
The consignee is the party receiving the cargo at the destination.
This could be the buyer of the cargo, or any company, which the
cargo is destined to. The consignee is also referred to as the
importer or the receiver.

Customer
When using the term customer, it simply refers to the company
which book and pay for the shipment with a freight forwarder. This
would normally either be the shipper or the consignee, but could in
principle, also be someone else who simply has a need to move
some cargo from one place in the world to another.
Service choices an their
characteristics
 Performance
- Average transit time
- Transit time variability
- Loss and damage
- Other factors including availability, capability,
frequency of movement, and various less
tangible services

 Cost
- Line haul
- Terminal/local
- Accessorial or special charges

CR (2004) Prentice Hall, Inc.


6-4
Transportation Choices- Single
Service

6-5
Transportation Choices- Single
Service
Rail: Exists in two forms,
a. Common Carrier (Carload, Less than carload, multiple
carload)
b. Privately owned

Air: Exists in three forms,


a. Common Carrier
b. Contract Carrier
c. Private legal form

Direct air service is offered in seven types:


1. Regular domestic truck-line carriers
2. All-cargo carriers
3. Local service airlines
4. Supplemented carriers
5. Air taxis
6. Commuter airlines
7. International carriers
6-6
Transportation Choices
Intermodal Service
a. Piggyback /Trailer on flatcar
b. Fishyback (Containerized freight)

Agencies and small shipment


Agents:
a. Freight forwarder
b. Shipper’s association
c. Transport brokers and agents

Small-shipment services
a. UPS
b. Federal express
c. Postal Services
6-7
Company Controlled Transportation
Shipping Container
 A twenty-foot equivalent unit (TEU) is a shipping
container whose internal dimensions measure about
20 feet long, 8 feet wide, and 8 feet tall. It can hold
between 9 and 11 pallets, depending on whether they
are standard pallets or EUR-pallets. Two TEUs have
the capacity of a single FEU.

 A forty-foot equivalent unit (FEU) is a shipping


container whose internal dimensions measure about
40 feet long, 8 feet wide, and 8 feet tall. It can hold
between 20 and 24 pallets, depending on whether
they are standard pallets or EUR-pallets.
Different types of containers
Dry Storage container

Flat rack container


Open top container Tunnel container

Open side storage container


Double doors container Refrigerated ISO containers

Insulated or thermal containers


Tanks Cargo storage roll container

Car carriers
Intermediate bulk shift containers

Drums

Special purpose containers

Swap bodies
Different Types of Pallets
Special Service charges

Special Line-haul charges


a. Diversion and reconsignment
b. Transit privileges
c. Protection
d. Interlining

Terminal Services
a. Pick up and delivery
b. Switching
c. Demurrage and detention

6-15
Stop-Off Privilege Example
Suppose 3 shipments of J=8,000 lb., K=12,000 lb.,
and L=10,000 lb. originating at I are to be delivered
in the following way.

CR (2004) Prentice Hall, Inc.


6-16
Stop-Off Privilege Example (Cont’d)
First, we compare the costs without the stop-off privilege. This would be to
price as if each shipment is a separate shipment from I. Suppose we know
the rates. Hence,
Load, lb. Points Rate, $/cwt. Charges
8,000 I to J 3.05 $244.00
12,000 I to K 3.35 402.00
10,000 I to L 3.60 360.00
Total $1006.00
Now, we price with the stop-off privilege. We assume that all the volume
(30,000 lb.) is to be delivered to the farthest stop and we use the rate to
that point ($3.00/cwt.). A small stop off charge of $15.00 is made for each
stop including the last stop. Hence,
Rate,
Load, lb. Points $/cwt. Charges
30,000 I to L 3.00 $900.00 The better
3 stops at choice
All volume to $15 each 45.00
the farthest stop
Total $945.00 6-17
CR (2004) Prentice Hall, Inc.
6-18
Inventory Policy
Decisions
“Every management mistake ends up in inventory.”

Michael C. Bergerac
Former Chief Executive
Revlon, Inc.

Chapter 9
CR (2004) Prentice Hall, Inc.
9-19
9-20
9-21
9-22
What are Inventories?
•Finished product held for sale
•Goods in warehouses
•Work in process
•Goods in transit
•Staff hired to meet service needs
•Any owned or financially controlled
raw material, work in process, and/or
finished good or service held in
anticipation of a sale but not yet sold

CR (2004) Prentice Hall, Inc.


9-23
Where are Inventories?
Material Inbound Production Outbound Finished goods Customers
sources transportation transportation warehousing

Receiving
Production
materials

Inventories
in-process

Shipping
Finished goods

Inventory
locations

CR (2004) Prentice Hall, Inc. 9-4


Reasons for Inventories
•Improve customer service
-Provides immediacy in product availability
•Encourage production, purchase, and transportation
economies
-Allows for long production runs
-Takes advantage of price-quantity discounts
-Allows for transport economies from larger shipment sizes
•Act as a hedge against price changes
-Allows purchasing to take place under most favorable price
terms
•Protect against uncertainties in demand and lead times
-Provides a measure of safety to keep operations
running when demand levels and lead times cannot be known
for sure
•Act as a hedge against contingencies
-Buffers against such events as strikes, fires, and
disruptions in supply
CR (2004) Prentice Hall, Inc.
9-25
Reasons Against Inventories

•They consume capital resources that might be put to


better use elsewhere in the firm
•They too often mask quality problems that would more
immediately be solved without their presence
•They divert management’s attention away from careful
planning and control of the supply and distribution
channels by promoting an insular attitude about
channel management

CR (2004) Prentice Hall, Inc.


9-26
Types of Inventories
•Pipeline
-Inventories in transit
•Speculative
-Goods purchased in anticipation of price increases
•Regular/Cyclical/Seasonal
-Inventories held to meet normal operating needs
•Safety
-Extra stocks held in anticipation of demand and
lead time uncertainties
•Obsolete/Dead Stock
-Inventories that are of little or no value due to being
out of date, spoiled, damaged, etc. 9-27
Nature of Demand
•Perpetual demand
-Continues well into the foreseeable future
•Seasonal demand
-Varies with regular peaks and valleys throughout
the year Accurately forecasting
•Lumpy demand demand is singly the
-Highly variable most important factor
•Regular demand in good inventory
management
-Not highly variable
•Terminating demand
-Demand goes to 0 in foreseeable future
•Derived demand
-Demand is determined from the demand of another
item of which it is a part 9-28

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