SCLM Transportation Infrastructure - CH 7

Supply Chain Logistics Management
Role of Transportation in Logistics & Supply Chain Management Industry Deregulation
Transportation Functions, Principles, Participants Transportation Regulation Transportation Industry Structure Transportation Services
Transportation Functions, Principles, Participants

Transportation Functions Transportation Principles Transportation Participants
Transportation Regulation Transportation Industry Structure Transportation Services


Transportation Functions
Product Movement Product Storage

Transportation Principles Transportation Participants
Product Movement
Product Storage
New Destination NORFOLK
Diversion
Original Destination NEW YORK
Los Angeles

Transportation Functions Transportation Principles
Economy of Scale Economy of Distance (Tapering Principle)

Transportation Participants
Economies of Scale
The more items (weight) is transported, the less the transportation costs per item (unit of weight)
$100/book
Transportatio n Cost per Book
$.10/book
1 Number of Books in Shipment Supply Chain Logistics Management
1000
Economies of Distance
Tapering Principle
The larger the distance, the less the transportation costs per unit of distance (e.g., per mile)
$.10/mile
Transportatio n Cost per Mile
$.05/mile
Tapering Principle
$50/mile
1 mile 500 miles Shipment Distance Supply Chain Logistics Management 1000 miles

Transportation Functions Transportation Principles Transportation Participants

I need something shipped at the lowest possible cost!
I need something shipped at the lowest possible cost! I need something delivered at the lowest possible cost!
Carriers: We have the equipment!
Carriers we can find a shipper! Shippers we can find a carrier!
the transportation system is vital for the countrys economic health
purchase fuel, transportation equipment, supplies
track shipments
track shipments
match products needing to be shipped with available capacity
Creates demand for transportation by purchasing products
Transportation Functions, Principles, Participants Transportation Regulation

Types of Transportation Regulation History of Transportation Regulation
Transportation Industry Structure Transportation Services



Types of Transportation Regulation

Economic
Investments in transportation infrastructure (e.g., highways, airports, ports) Control of routes, pricing, schedules
Types of Transportation Regulation

Economic
Investments in transportation infrastructure (e.g., highways, airports, ports) Control of routes, pricing, schedules
Social/Safet Protect the y public, the environment
Make sure equipment operates safely, cleanly Safe transportation of hazardous materials (HAZMAT) Regulating hours worked


History of Transportation Regulation Pre-1920 establish initial government control

Act to Regulate Commerce (1887) Interstate Commerce Commission (ICC)
History of Transportation Regulation 1920-1940 regulatory formalization, extension to other transportation modes
Motor Carrier Act (1935) Civil Aeronautics Act (1938) Civil Aeronautics Board (1940) Federal Aviation Administration (FAA) National Aeronautics & Space Administration (1951)
History of Transportation Regulation 1940-1970

Regulation of water transportation by ICC (1940) Railroad Revitalization and Regulatory Reform Act of 1976
AMTRAK CONRAIL
History of Transportation Regulation 1970-1980 prelude to deregulation

Shift from regulation/control to fostering competition Department of Transportation (DOT) 1961 Airline Deregulation Act 1978
History of Transportation Regulation 1980-2000 deregulation

Motor Carrier Act 1980 Staggers (Rail) Act 1980 Interstate Commerce Commission (ICC) abolished 1996 Ocean Shipping & Reform Act 1998
History of Transportation Regulation 2000-Present focus on technology, safety, and security

Patriot Act Jones Act
Five Basic Transportation Modes

Pipeline

Pipeline Water

Pipeline Water
Air

Pipeline Water
Air
Rail

Pipeline Water
Air
Rail
Highway
Domestic Shipments by Mode and Volume
Domestic Shipments by Mode and Revenue
Cost Structure For Each Transportation Mode

Rail
high fixed costs (land, tracks) low variable costs (operating costs, e.g., labor, fuel) slow, but inexpensive way to transport heavy freight that doesnt require special handling, long distances

Highway
low fixed costs (government builds, maintains highways) medium-high variable costs (operating costs, e.g., labor, fuel) most accessible mode (more highways than railroads, waterways, pipelines); best for transporting medium to high value products Supply Chain Logistics Management
Highway
LTL less than truckload TL truckload Specialty

Water
moderate fixed costs (ships and freight handling equipment) low variable costs (operating costs, e.g., labor, fuel) very slow, but inexpensive way to transport large, heavy freight over long distances (e.g., oceans, rivers, Chain Logistics Management Supply inland waterways, lakes)
Cost Structure For Each Transportation Cost Structure For Each Transportation Mode Mode
Air
low fixed costs (aircraft and freight handling equipment) highest variable costs (e.g., labor, fuel, maintenance) very fast; used for transporting high value and/or high perishability product over short to medium Supply Chain Logistics Management distances.

Pipeline
highest fixed costs (right of way & construction costs of equipment) lowest variable costs (no significant labor or fuel costs) slow, but dependable (e.g., no weather, traffic disruptions); no flexibility with regard to types of productsSupplycan be transported must be liquid that Chain Logistics Management
Non Operating Intermediaries Traditional Transportation Carriers Package Services Intermodal Transportation
Transportation Participants Transportation Transportation Transportation
Functions, Principles, Regulation Industry Structure Services
Non Operating Intermediaries
Traditional Transportation Carriers Package Services Intermodal Transportation

Freight Forwarders Transportation Brokers Shipper Associations/Cooperatives/Agents






Piggyback Trailer on Flat Car (TOFC) Container on Flat Car (COFC)
Fishyback Trainship Containership
Coordinated Air/Truck Supply Chain Logistics Management

SCLM Transportation Infrastructure - CH 7

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Supply Chain Logistics Management

Supply Chain Logistics Management

Role of Transportation in Logistics & Supply Chain Management Industry Deregulation

Supply Chain Logistics Management

Supply Chain Logistics Management

Transportation Functions, Principles, Participants

Transportation Regulation Transportation Industry Structure Transportation Services

Transportation Functions, Principles, Participants

Transportation Regulation Transportation Industry Structure Transportation Services

Transportation Principles Transportation Participants

Supply Chain Logistics Management

Supply Chain Logistics Management

New Destination NORFOLK

Original Destination NEW YORK

Supply Chain Logistics Management

Transportation Functions, Principles, Participants

Transportation Regulation Transportation Industry Structure Transportation Services

Transportation Functions, Principles, Participants

Transportation Regulation Transportation Industry Structure Transportation Services

Supply Chain Logistics Management

Supply Chain Logistics Management

Supply Chain Logistics Management

Supply Chain Logistics Management

Supply Chain Logistics Management

purchase fuel, transportation equipment, supplies

Supply Chain Logistics Management

purchase fuel, transportation equipment, supplies

Supply Chain Logistics Management

purchase fuel, transportation equipment, supplies

match products needing to be shipped with available capacity

Supply Chain Logistics Management

Supply Chain Logistics Management

Supply Chain Logistics Management

Transportation Functions, Principles, Participants Transportation Regulation

Transportation Industry Structure Transportation Services

Transportation Functions, Principles, Participants Transportation Regulation

Transportation Industry Structure Transportation Services

Types of Transportation Regulation

Supply Chain Logistics Management

Types of Transportation Regulation

Social/Safet Protect the y public, the environment

Supply Chain Logistics Management

Transportation Functions, Principles, Participants Transportation Regulation

Transportation Industry Structure Transportation Services

History of Transportation Regulation Pre-1920 establish initial government control

Supply Chain Logistics Management

History of Transportation Regulation 1940-1970

Supply Chain Logistics Management

History of Transportation Regulation 1970-1980 prelude to deregulation

Supply Chain Logistics Management

History of Transportation Regulation 1980-2000 deregulation

Supply Chain Logistics Management

History of Transportation Regulation 2000-Present focus on technology, safety, and security

Supply Chain Logistics Management

Supply Chain Logistics Management

Five Basic Transportation Modes

Supply Chain Logistics Management

Five Basic Transportation Modes

Supply Chain Logistics Management

Five Basic Transportation Modes

Supply Chain Logistics Management

Five Basic Transportation Modes