Modes of Transportation in Supply Chain

Trey LynnBrigham Young University

BusM 361Professor S. Tom Foster

Agenda• Transportation defined• Brainstorming• Modes of transportation• Strengths and weaknesses of each mode• Pricing• UPS example• Exercise• Summary

Transportation

• means of conveyance or travel (of goods and services) from one place to another

Brainstorming

• What types of products require transportation in your organization?

• How far are these products required to travel?

• How important is the speed of delivery for these products?

Modes of Transportation

• Motor

• Air

• Rail

• Water

• Pipeline

• Intermodal

Motor (Trucking)

• 1970’s – economic deregulation of interstate traffic

• Lower costs

• Accessibility

• Small, frequent shipments

Trucking

• Disadvantages– Speed– Capacity– Range

Air

• Premium transportation

• Speed delivery

• Range

Air

• Disadvantages– Price– Non-direct points– Add-on charges– Necessary?

Rail

• Lowest overall cost per unit weight

• Consistent time schedule

• Recommended with most commodity types

• Weather

Rail

• Disadvantages– Inflexibility– Potential damage of goods– Ineffective with small shipments

Water (Ships)

• Large volumes

• Long distances

• Slower than air travel

• Limited access

Pipeline

• Transport of homogeneous materials

• Lower transportation costs than other modes

• Higher initial costs• Unable to transport a variety of

materials

Intermodal

• Use of various transportation modes

• Containers

• More popular due to globalization

Pricing

• Handling characteristics

• Distance freight is moved

• Weight of freight

• Costs inversely related to speed of service

United Parcel Service

• Small package shipper

• Business built around transportation

• Effective intermodal transportation

UPS - Methods

• Trucks– Small, frequent shipments– Deliver directly to homes and businesses

• Air– Time sensitive shipments– Small packages (long distances)

UPS - Methods

• Rail– Transcontinental distances– Used primarily in intermodal transport

• Sea– Door to door ocean shipping– Weekly departures between major ports

UPS

• Provides expertise as a resource to businesses

• http://www.ups-scs.com/transportation/

Exercise

• Take ideas from brainstorming and decide which modes of transportation would be best for your company.

• List circumstances which would require using alternate modes of transportation and consequences your company would encounter.

Summary

• Each mode of transportation has its own strengths and weaknesses

• The effectiveness of each mode depends on several factors including distance, price, and timeliness

• Services exist to help choose the best modes of transportation

BibliographyCavinato, Joseph L, Ralph G Kauffman. The Purchasing

Handbook. The McGraw-Hill Companies, 2002, New York, NY.

Copacino, William C. and James F. Robeson. The Logistics Handbook. The Free Press, 1994, New York, NY.

Taylor, David. Global Cases in Logistics and Supply Chain Management. International Thomson Business Press, 1997, London, UK.

http://www.ups-scs.com/transportation/