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Chapter 8
Transportation
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PIPELINE
– The first pipeline in US was built in 1865. This pipeline
(6,5 km length) for oil transportation had used.
– By increasing of production and consumption of natural
gas and oil, pipeline systems building has been also
increasing.
– Transportation costs are lower than in the road and rail
transport, but sea transport has lower costs (especially
for petroleum products) than pipeline system.
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PIPELINE
– Only a few products can be transported by pipelines:petroleum
products, gas, liquid chemicals
– Pipeline has dual role: it is mean of transportation, and in the
same time road.
– In contrast to the other modes, only goods move – means
stand.
– Pipelines have very high fixed costs but very low variable costs.
– Losses and damages are rare
– Climatic conditions have minimal effect
– Flow is monitored and controlled by computer
– Not labor intensive
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Bakü-Tiflis-Ceyhan Oil Pipeline-2006
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Blue Stream Pipeline-from Russia through Black
Sea
•
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Relative Rankings of Transportation Mode by Cost and Operating
Performance Characteristics
PERFORMANCE CHARACTERISTICS
Delivery-Time
Variability
Mode of Costb
Average
Absolute Percent d Loss and
Transport 1=Highest Delivery 1=Least
1= Least Damage
ation
Timec
1= Least
1= Fastest
Rail
3
3
4
3
5
Truck
2
2
3
2
4
Water
5
5
5
4
2
Pipe
4
4
2
1
1
Air
1
1
1
5
3
a Service is assumed to be available
b Cost per ton-mile
c Door-to-door speed
d Ratio of absolute variation in delivery time to average delivery time
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INTERMODAL TRANSPORTATION
• The carriage of goods by at least two different modes
of transport in the same loading unit (an Intermodal
Transport Unit-ITU) without stuffing or stripping
operations when
changing modes.
• Unit load: vital element of intermodal-consignment of
freight into a swap body or in a container in order to
save from transhipment or repacking time-costhandling.
• Intermodality enables economies of scale within a
transportation system where modes are used in the
most productive manner.
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INTERMODAL TRANSPORTATION
• Enables a systems approach to transport : MODEINDEPENDENT DOOR-TO-DOOR CONNECTION
• Safer transit for dangerous products
• Reduced consumption of fossil fuels
• Reduction in road traffic congestions
• Lower transit costs
• Faster delivery times
• More efficient and cost-effective use of the
transport system in an environmentally
sustainable manner.
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INTERMODAL SERVICES
1. Piggyback
– TRAILER-ON-FLATCAR (TOFC)
– CONTAINER-ON-FLATCAR
(COFC)
2. Road Railers
3. Other Combinations
Air-water,air-rail,rail-water
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1. PIGGYBACK
• A motor carrier trailer or a container is placed on a rail
flatcar and transported from one terminal to another.
• Combines low cost of long haul rail and flexibility and
convenience of truck.
• Railroad carries freight on the long haul and trucking
company picks up and delivers between customer and
railroad.
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TOFC
• TOFC (trailer-on-flatcar) refers to
transporting truck
trailers (semi-trailers)
on rail flatcars, usually
over longer distances
than truck normally
haul
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COFC
• COFC (container-on-flatcar) refers to transporting
standardized containers.
• Container is transferable
to all transportation
modes with the exception
of pipeline
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2. Roadrailers
• An innovative intermodal concept was introduced in late
1970’s.
• Roadrailers (trailertrains) combine motor and rail transport in a
single piece of equipment.
• Trailer has steel rail wheels and rubber truck tires-can go on
highway as well as on railroad without the need of rail flatcars
• Less switching time
• Disadvanteges: added weight of rail wheels-higher costs and
higher consumption of fuel.
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Logistics Villages
• The clusters in which various organisations provide
all activities related with logistics.
• With the beginning of 2012, there are 70 logistics
villages registered to Europlatforms (i.e: in Germany,
France, Italy, Greece, etc.)
• In Turkey, there are 12 logistics villages to be planned
by TCDD: İstanbul (Halkalı), İzmit (Köseköy),
Balıkesir(Gökköy), Uşak, Eskişehir
(Hasanbey),Samsun (Gelemen), Denizli
(Kaklık),Mersin (Yenice), Kayseri (Boğazköprü),Konya
(Kayacık), Erzurum (Palandöken) ve Bilecik (Bozöyük).17
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Logistics Villages
(Cont’d)
• Istanbul Metropolitan Municipality has also planned
2 logistics villages: Hadımköy and Tuzla
• Besides these, there are two more projects
developed by public and private
institutes:Tekirdağ/Çorlu and Manisa (MOSBAR)
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Some activities provided in
Logistics Villages
•
•
•
•
•
•
•
•
Warehouse
Distribution
Customs
Inventory Management
Packaging
Order Management
Materials Handling
Intermodal Transportation
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Qatar Logistics Village Layout
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Logistics Villages – Nuremberg
(Germany)
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CARRIER OPTIONS
•
•
•
•
•
•
Motor
Rail
Air
Water
Pipeline
Intermodal
services
n
n
Third parties
Smallpackage
carriers
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-THIRD PARTIES
• Similar to channel intermediaries that provide linkages
between shippers and carriers
• Often, third parties do not own transportation equipment
• They partner with a number of carriers who provide the
necessary equipment to transport their shipments
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Types of Third Parties
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1.
2.
3.
4.
Transportation brokers
Freight forwarders (domestic and foreign)
Shippers’ associations
Intermodal marketing companies (
shippers’ agents)
5. Third-party logistics service providers
6. Fourth party logistics service providers
7. Small package carriers
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1.Transportation Brokers
• They provide services to both shippers and carriers by
arranging and coordinating the transportation of
products.
• They charge a fee to do so, which usually is taken as a
percentage of the revenue collected by the broker from
the shipper.
• The broker partially replaces one of the firm’s own traffic
department
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2. Freight Forwarders
• Freight forwarders purchase transport services from various
carriers, although in some instances they own the equipment
themselves.
• They consolidate small shipments from a number of shippers into
large shipments moving into a certain region at a lower rate.
• Domestic/international or surface/air
• Because of consolidation efficiencies, these companies can offer
shippers lower rates than the shippers could obtain directly by the
carrier.
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Differences Between a Freight Forwarder and a
Transportation Broker
• A forwarder is the shipper to
a carrier and the carrier to a
shipper.
• A forwarder can arrange for
transportation of freight or
any mode.
• A forwarder is primarily
liable to a shipper for cargo
loss and damage.
• A broker is neither a shipper
nor carrier, but an
intermediary between the
two.
• A broker can arrange for
freight transportation only
by a motor carrier.
• A broker is not usually liable
for cargo loss and damage,
although many do provide
this coverage.
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3. Shippers’ Association
• In their operations, shippers’ associations are much
like freight forwarders, but they differ in terms of
perception by regulatory authorities.
• A shippers’ association can be defined as a
nonprofit cooperative that consolidates small
shipments into truckload freight for members’
companies.
• They primarily use truck and rail carriers for
transport-large blocks of rail wagons-use also
TOFC(trailer on flat cars)
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4. Intermodal Marketing Companies (IMC or
Shippers’ Agents)
• They specialize in providing piggyback services to
shippers and are an important intermodal link
between shippers and carriers.
• They purchase large quantities of TOFC/COFC
services at a discount and resell them in small
quantities.
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5. Third-Party Logistics Providers
( 3PLs)
• Third party logistics providers typically specialize in
integrated operation, warehousing and transportation
services that can be customized to customer’s needs
based on market conditions and the demands and
delivery service requirements for their products and
materials.
• The companies known as ‘logistics’ companies in market.
• Balnak Logistics, Elmas Logistics, Barsan Logistics...
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6. Fourth-Party Logistics Providers
( 4PLs)
• The 4PL acts as a single point of interface with the client organization
and provides the management of multiple service providers through a
teaming partnership or an alliance.
• 4PL uses a 3PL to supply service to customers, owning only computer
systems and intellectual capital.
• To be successful, a 4PL leverages a full range of service providers (3PLs,
IT providers, contractlogistics providers, call centres, etc.) along with
the capabilities of the client and its supply chain partners.
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7. SMALL-PACKAGE CARRIERS
•
For companies such as electronic firms,
catalog
merchandisers,
cosmetic
companies, textbook distributers, smallpackage carriers can be important
transportation options
• Uses a combination of different modes,
especially air.
• FedEx, DHL
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Legally Defined Forms of Transportation
• Common Carriers: published rates, offering to general
public, demand is uncertain
• Contract Carriers: serve to a limited number of shippers
under contractual agreements, demand is known,
specified cost
• Exempt Carriers: transport certain products like fish,
newspapers,unprocessed agriculturals.
• Private Carriers: a firm owns and transports primarily for
its own products-leases equipments- flexibility-costservice advantage
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Cost-of-Service Pricing
...establishes transportation rates at levels that
cover a carrier’s fixed and variable costs,
plus allowances for some profit.
Value-of-Service Pricing
...is based on charging what the market will
bear; and is based on the demand for
transportation services and the competitive
situation.
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Incentive Pricing Arrangements
• Quantity Discounts
- Cumulative quantity discount
on the amount of purchases over some
prescribed period of time
- Non-cumulative quantity discount
*applied to each order
* larger shipments
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Mode/Carrier Selection Process
1.
2.
3.
4.
Problem recognition
Search process
Choice process
Post-choice evaluation
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Constraints for Mode/Carrier Selection
• Economic and resource
constraints
• Competitive pressures
• Customer requirements
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1. Problem Recognition
• Customer requirements, dissatisfaction with
an existing mode, and changes in the
distribution patterns of the firm affect this
stage
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2. Search Process
• Transportation executives scan a variety of
information sources to aid them in making
optimal mode/carrier decisions
• Possible sources are:
– Past experiences,
– Carrier sales calls,
– Company shipping records,
– Customers of the firm
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3. Choice Process
• ...involves the selection of an option from the several
modes and carriers available
• the transportation executive determines which of the
available options best meets the firm’s customer service
requirements at an acceptable cost
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4. Post-choice Evaluation
• Once management has made its choice of mode or
carrier, it must institute some evluation procedure to
determine the performance level of the mode/carrier
– customer complaints,
– cost studies, audits,
– reviews of on-time pick-ups and delivery performance
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Creating possible alternatives depend on:
1) Technological characteristics of the origin and
destination points (Port,Road,Railway)
2) Characteristics of goods
3) Distance
4) Quantity of goods
5) Available time for transit
6) Customer service level required
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