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Domestic Transportation System

Domestic Transportation System - The Domestic...

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The Domestic The Domestic Transportation System Transportation System
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6-2 The Domestic Transportation System Transportation is the movement of goods and people between two points Modes of Transportation Air Water Motor carriage Rail Pipeline Intermodal transportation: coordinated movement involving multiple modes and containers that can be transferred among the modes.
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6-3 The Domestic Transportation System Interfaces between transportation and other logistics/supply chain activities Transportation costs are affected by facility locations Inventory requirements are influenced by mode Packaging requirements are dictated by mode Materials handling equipment and loading dock design are dictated by mode Strategic use of order-management technology can lead to maximum consolidation of loads to reduce transport costs Customer service goals influence carrier choice
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6-4 Carrier Costs Terminal and facility operations Loading/unloading; staging; handling Administrative (order processing; documentation; clerical; etc.) Line-haul operations Labor: driver, crew Fuel Equipment operating costs (maintenance, repair) Capital costs Equipment Facilities Right-of-way and physical infrastructure
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6-5 Product and Shipment Factors Affecting Cost Handling characteristics (e.g., bulk, packaged, susceptibility to damage, shape) Weight and density Weight affects fuel consumption, wear and tear on equipment, etc. Density affects equipment capacity utilization Distance Time (e.g., total time from pick-up to delivery; time of year – peak/off-peak, weather) Total volume (and predictability)
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6-6 Carrier Cost Structures Cost structure = ratio of fixed to variable costs Fixed costs do not vary with volume; variable costs do Carrier cost structures vary across the modes Highest fixed cost modes of transportation are pipeline and railroad Role of public provided facilities – user charges
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6-7 The Transport Selection Decision The lowest price carrier does not guarantee the lowest landed cost – trade-off between price and service. Carrier selection determinants: Price Transit time and reliability Capability Accessibility Security
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6-8 Modal Shipment Size Capabilities Small shipments are transported by parcel carriers, air cargo carriers, and less-than- truckload (LTL) carriers Large shipments may be transported by truckload (TL) carriers, railroads, water carriers (barge lines) Today, many transportation companies have multi-modal capabilities (e.g., UPS and FedEx provide air cargo, LTL and TL)
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6-9 Parcel Shipments Parcels are packages weighing up to 150 pounds and having small dimensions Parcel carriers are firms that specialize in small packages (≤ 150 pounds) UPS FedEx USPS Passenger carriers – air and bus
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6-10 Air Cargo Air Cargo Can be given directly to airlines, but most air cargo handled by
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