transportation and distribution managementutcc transport mode and intermodal transport

Transportation and Distribution Management UTCC

Transport mode and Intermodal transport


Contents

• Introduction• Operational factors• Transport mode characteristics• Method of selection• Aspects of international trade• Intermodal transport• Intermodal equipment• Intermodal vehicles• References


Introduction

• Companies move toward global operations has had impact on different modes of transport.

• In global context, more products are moved far greater distances with concepts of focus factories.

• Single global manufacturing point for certain products and concentration of production facilities

on low-cost manufacturing locations.


Introduction (Cont.)

• In Europe, road freight transport is the dominant mode of transport.

• The upward trend of road transport have continued for many years but its trend may have

reached a plateau.• Rail freight has declined for many years but its

trend is stable.• Inland waterways are also important.

• Pipeline has continued for certain specialized movements.


Introduction (Cont.)

• To select the most appropriate transport mode, both costs and customer service must be

balanced.

• Hence, characteristics of different modes and method of selection are important.


Operational factors

• These factors vary from country to country:

1. Basic infrastructure.

2. Trade barriers (custom duty, import quotas, etc.).

3. Export controls and licenses.

4. Law and taxation.

5. Financial institutions and services, and economic conditions (exchange rate stability, inflation, etc.).

6. Communication systems.

7. Cultures

8. Climate.


Operational factors (Cont.)

• Customer characteristics:

1. Service level/ type of service location.

2. Delivery point constraints (access, equipments, etc).

3. After-sales service needs.

4. Credit rating

5. Terms of sale preference (CIF/FOB)

6. Order size preference

7. Customer importance

8. Product knowledge

• Customer service (speed, reliability, etc)

• Physical attributes (order or drop size, location, etc)



• Physical product characteristics:

1.1. Volume to weight ratioVolume to weight ratio : the relative amount of cubic capacity taken up by a given weight of product.

• For example, one tone of paper tissues takes up far more space than one ton of brocks.

• Charging structures: by weight or by cubic volume.

2.2. Value to weight ratioValue to weight ratio : the value of the product to be transported.

• The relative transport cost of a high-value, low-weight product is likely to be so insignificant to the overall

value of product that the choice of mode from a cost perspective is irrelevant (jewelry or computer chips).



3.3. SubstitutabilitySubstitutability : Product alternative.• If a product can be substituted by an alternative from

another source, fast but expensive transport mode may be used to ensure the order is accepted by

customer.• If no substitute product is available, a slower and less

expensive can be used. 4.4. Special characteristicsSpecial characteristics : hazard, fragility, perishability,

time constraints, security.• Chemicals may be restricted in how it is allowed to be

transported. • A time-constrained product may have to be moved on

a fast and expensive mode of transport (newspapers)



• Fixed factors impose on any newly devised system:

1. Product locations.

2. Supply points.

3. Warehouse and storage facilities.

4. Own transport.

5. Marketing plans and policies.

6. Financial situation.

7. Existing delivery system.


Transport mode characteristics

Sea freightSea freight • For conventional sea freight, main points are:

1. Cost economies.• Bulk goods, large packaged consignments that

are going long distances and speed of service is unimportant.

2. Flexibility• Many liners and tramp ships, many ports (large

and small).• Sailings are frequent.

• Number of alternatives are open.


Transport mode characteristics (Cont.)

3. Availability

• Liners services are widely advertised, extensively categorized, and can be accommodated.

4. Speed.

• The actual voyage time is slow.

• The turnaround time in port.

5. Need for double-handling.

• Inefficient handling methods

6. Delay.

• Pre-shipment delays, delay at discharge port, and unexpected delays due to bad weather, missed tides.

7. Damage. Double handling cargo.



Road freightRoad freight • Road freight is the most important mode within

Europe and UK. • It consists of the through transport of goods from

factory or warehouse direct to customers abroad.• International distribution from UK is in terms of the

use of roll-on,roll-off (RORO) ferry services and the Channel Tunnel route.

• Quick service if ferry/tunnel schedules are carefully times into the route plans.



• It is cost competitive in a case of complete unit loads with single origin and destination points.

• Reduce need to double handle and tranship goods and packages.

• Completely eliminate direct, full load deliveries which saves time and minimizes the likelihood of

damage.• A great flexibility for through movement as unit

load in cross-Channel routes.


Transport mode characteristics (Cont.)• It is Packaging cost is kept at minimum since

loads are less susceptible to the extreme transit ‘shock’ that other modes can cause.

• They system provides regular, scheduled services due to frequent ferry/tunnel ‘sailings’ and due to

the flexibility of road vehicle scheduling.

• The RORO/tunnel system loses many of its advantages when used for less than lorry-sized loads. These entail group and involve double-

handling (at both ends of the journey), additional packaging and time delay.



Rail freightRail freight • The development of containerized systems using

ISO containers as the basic unit load.• Conventional rail freight system is a relatively

cheap form of transport, especially, bulky and heavy consignments that require movement over medium to long distances and where speed is not

vital.• Shunting shocks can cause damage.

• Need to double-handle loads because the first and last led of a ‘through’ journey often needs to be by

road transport.



• Limited number of railheads available-many companies with railway sidings on their premises

have closed them down.

• Rail transport is very slow mean of carriage.

• Rail freight transport is very unreliable. Batches of wagons may arrive at irregular intervals.

• Further delays for international traffic if a complete shipment is on a single customs document.



Air freightAir freight

• Air freight is competitive over longer international movements. It has rapid transit times over these

longer distances.

• Fast transport but it can be delayed at airports.

• Lead-time economy. It is unnecessary to hold stocks in the counties. The short lead time required between the ordering and receiving of goods results

in savings of inventory holding costs.



• Market flexibility. Number of counties and markets can be reached quickly and easily. A company need not

to set up stock holding network.

• Suitable for commodities with high value to weight ratios, perishable,s, fashion foods, emergency

supplies, and spare parts (class A).

• Delivery time lost due to airport congestion, and handling and paperwork delays.

• Severe lapses in security of good moved.



Container systemsContainer systems

• Container system is a fundamental feature of all the major national and international transport modes-

road, rail, sea, and air.

• Containerization supports the development of the “intermodal’ system of freight transport.

• Enable the uncomplicated movement of goods in bulk from one transport mode to another.



• Enable a number of small packages to be consolidated into large single unit loads.• Reduction in handling of goods.

• Reduction in individual packaging requirements, depending on load within the container.

• Reduction in damaged products caused by other cargo.

• Insurance charges are lower due to the reduced damage potential.

• Handling costs at the docks and the at the other model interfaces are reduced.

• Quicker turnaround for all the types of transport used. Port utilization improves.



• The all- around delivery time is speedier and raises service levels.

• Simpler documentation.

• Through transit becomes feasible and allow for a truly integrated transport system to be developed.

• A need for special facilities and handling equipments.

• The initial cost of the containers is very high.

• The return of empty containers are expensive.

• Containers may leak, causing damage due to rain.

• Loads may be affected by their position of stow, e.g. above or below deck.


Method of selection

1. Identify operational factors• External • Customer• Product

• Other logistical2. Identify transport mode characteristics

• Sea• Inland waterway

• Road• Rail• Air

• container


Method of selection (Cont.)

3. Determine major consignment factors

• Routing responsibility

• Distance

• Cargo type

• Priority

4. Make trade off

• Service

• Costs



1. Routing and through transit responsibility

• Is a direct route stipulated?

• Who is concerned with the through transit?

2. Distance

• What is the distance to be moved?

3. Type of cargo

• If bulk or general cargo, will a certain specific route be best?

4. Quantity

• Full load or part load?


Method of selection (Cont.)5. Unit size

• Small or large?• Will unitization help?

• Is group an alternative?6. Priority

• How soon must the goods reach their destination?• Does “urgent” really mean “urgent”?

7. Commodity value • How important is the transport cost element?• If import/export, how is the commodity rated?

8. Regular shipments size • How often will these shipments be made?



• The final decision is made based on trade off between cost and service.

• It must be undertaken with relevant operational factors, transport mode characteristics and

consignment factors.• The volume of freight to be moved and the

distance to be traveled dictate the choice of mode.

• Other elements e.g. speed of delivery required or reliability of service may override these purely

economic factors.


Aspects of international trade

• The introduction of a number of international trade agreements and economic unions e.g. EU,

NAFTA, ASEAN, etc., has had a major impact on the globalization of trade.

• In Europe, major barriers are being overcome includes:

• Physical barriers-removal of customs control, single administrative document and immigration

and passport control.


Aspects of international trade (Cont.)

• Technical barriers- removal of all barriers to trade between member states, free movement of goods,

capital, services, and workers, harmonization of technical standards, common protection of

intellectual and industrial property.

• Fiscal barriers – approximation of indirect taxation (VAT and excise duties), and consequent removal

of fiscal frontier checks.

• Access to Central and Eastern European countries.

• Introduction of the euro currency.



• Goods and services can be bought anywhere in the community.

• Customs barriers have been virtually abolished.• Documentation has been simplified and

standardized.• Operating (transport) permit restrictions have

been removed.• Testing standard are acceptable in all

community states.• Free movement of capital.



• More competition between TPL companies because of increased market.

• Transport and TPL distribution companies can give a more European-wide service.

• Easier and faster movement of goods across borders.

• Distribution and transport can be bought in any countries.

• Increased opportunities for joint ventures with other European or international operators.

• New depot locations and consequent transport flows can be determined to suit both sources and

markets.



Crucial elements to be considered:Crucial elements to be considered:• Type of payment: an open account, a draft, a letter

of credit, and cash in advance.• Taxes and duties: Import tariffs, value added tax

or quota payment.• Transport costs: costs related to different modes.

An allowance for inland carriage from point of origin, plus international carriage, plus final delivery from

the destination port.• Associated transport charges: port fees, bunker

adjustment fees or fuel charges.• Other charges: insurance, break bulk, storage and

handling.



Document requirements:

• The shipper’s export declaration

• Bill of lading

• Consular documentation

• Single administration document (SAD)

• Certificate of origin

• Packing note

• Insurance certificate

• Export clearance

• Customers requirements for import and export.



Freight forwarders’ services: • Preparation and checking of shipping

documents.

• Booking space with carriers.

• The order collection from the point of origin to the shipping port.

• Customs clearance and final delivery at the destination country.



Freight forwarders’ services: • Provision of advice in export regulations,

documentation requirements, etc.

• Detailed knowledge of carriers, ports, etc.

• Knowledge of the different modes of international transport.

• Knowledge of the different costs with modes/destinations.


Intermodal transport

• Intermodal transportIntermodal transport is the movement of goods the movement of goods in one and the same loading unit or vehicle, in one and the same loading unit or vehicle, which uses successively several modes of which uses successively several modes of

transport without handling of the goods transport without handling of the goods themselves in changing modesthemselves in changing modes.

• Freight containers have ability to move freight swiftly and safely aids the logistics process, as the

elimination of wasted time.

• They can also be traced through the transport system and their progress monitored.


Intermodal equipment

Intermodal container

ISO containers

• International Standards Organization have defined the important features of the container e.g.

dimensions, to allow for the widest possible use of this equipment around the world.

• Containers are rectilinear steel boxes.

• Their common sizes are 20, 30, 40, 45 feet in length.

• The height and width dimensions are the same for all lengths at 8 fee wide by 8 feet 6 inches high.


Intermodal equipment (Cont.)

steel boxes.

• Their common sizes are 20, 30, 40, 45 feet in length.

• The height and width dimensions are the same for all lengths at 8 fee wide by 8 feet 6 inches high.

• Twenty feet equivalent unit (TEU) refers to the 20- feet container.

• Forty feet equivalent unit (FFU) refers to the 40-feet container.



The swap body

• A container used on bimodal operations, road and rail.

• Three standard lengths – 7.15, 7.45, and 7.82 meters.

• It is transferred from road vehicle to rail wagon by means of an overhead straddle crane.



Road-Railer trailers

• Road-Railer refers to a method of converting a road-going articulated semi-trailer into a rail-going rail

wagon.

• Placing a railway bogie under the rear of a specially designed road semi-trailer.

• The road wheels of the semi-trailer are mechanically retracted to prevent them from interfering with the

movement of the train.

• Rapid transfer of vehicle from road to rail.



Unaccompanied trailers

• Unaccompanied road semi-trailers may be used to send goods by roll-on roll-off sea ferry (RORO).

• Tariffs on service relate to the length of the vehicle.

• Unaccompanied trailer will be shorter and cheaper.

• Unaccompanied trailers are moved on and off the ferry by means of a motive unit fitted with a

hydraulic mechanism for attaching in front of the trailer and lifting the semi-trailer without the need to

raise the landing legs.



Piggyback


Spine rail wagon



Intermodal handling equipment

Transtainers• Large devices mounted on rails, which are able

to transfer containers from the sea-going vessel to trucks or rail wagons.

• A large boom spans the distance between the ship’s cargo and the quayside.

• Moving along the quayside parallel to the ship’s side to aid positioning.


Intermodal equipment (Cont.)Gantry (portal) crane

• Straddle carrier is a crane designed to life containers and swap bodies.

• It has four legs, one at each corner, with wheels at the bottom of each leg.

• It is equipped with a spreader beam that has a twist-locking device at each corner, with locates in the

corner casting of the container.

• The spreader beam is able to move in several directions to aid accurate location either of the

spreader beam prior to pocking up the container or when positioning the container on a road vehicle or

rail wagon.



Reach stacker• A heavy-duty material handling truck that is fitted

with a lifting arm and a spreader beam.

• Capable of lifting containers and swap bodies.

• Load and unload road and rail wagons.

• Stack containers one on top of the other and to reach over a row of stacked containers.


Intermodal vehicles

The cellular ship

• A custom-built seagoing vessels for containers carriage.

• Containers are loaded one on top of the other and guided into position by the means of vertical guides

at each corner of the container.

• The stacks on containers are secured by means of deck lashings for added stability during the sea

journey.


Intermodal vehicles (Cont.)



The roll-on roll off ferry (RORO)

• A sea vessel that is designed to carry road vehicles.

• The vehicles are either driven on the vessel by the driver or by port-based vehicle.

• Allow unaccompanied vehicles or trailers to be delivered to the port of departure and then collected

from the port of arrival.

• Other roll-on roll-off ferry are designed to carry rail wagons.

• The decks of these vessels are equipped with railway lines to allow ease of loading rail wagons.



Skeletal trailer• a semi-trailer designed to carry ISO containers.• All the carriage of different sizes of containers.

44-ton trailer• Large vehicles that have six axles may operate

at a gross vehicle weight of 44 tons.


1. Rushton, A., Oxley, J. and Croucher, P. (2000), The handbook of Logistics and Distribution Management 2nd edition, the institute of Logistics and transport, Kogan Page Ltd.

References

transportation and distribution managementutcc transport mode and intermodal transport

Documents

intermodal transport

weight ratio

dominant mode of transport

appropriate transport

lowweight product

given weight of product

product alternative

road freight transport