PRODUCTIONS/OPERATIONS%20MANAGEMENT

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Transport mode and Intermodal transport
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Contents

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

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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.

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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.

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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.

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Operational factors

• These factors vary from country to country
• Basic infrastructure.
• Trade barriers (custom duty, import quotas,
  etc.).
• Export controls and licenses.
• Law and taxation.
• Financial institutions and services, and economic
  conditions (exchange rate stability, inflation,
  etc.).
• Communication systems.
• Cultures
• Climate.

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Operational factors (Cont.)

• Customer characteristics
• Service level/ type of service location.
• Delivery point constraints (access, equipments,
  etc).
• After-sales service needs.
• Credit rating
• Terms of sale preference (CIF/FOB)
• Order size preference
• Customer importance
• Product knowledge
• Customer service (speed, reliability, etc)
• Physical attributes (order or drop size,
  location, etc)

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Operational factors (Cont.)

• Physical product characteristics
• Volume 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.
• Value 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).

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Operational factors (Cont.)

• Substitutability 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.
• Special 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)

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Operational factors (Cont.)

• Fixed factors impose on any newly devised system
• Product locations.
• Supply points.
• Warehouse and storage facilities.
• Own transport.
• Marketing plans and policies.
• Financial situation.
• Existing delivery system.

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Transport mode characteristics

• Sea freight
• For conventional sea freight, main points are
• Cost economies.
• Bulk goods, large packaged consignments that are
  going long distances and speed of service is
  unimportant.
• Flexibility
• Many liners and tramp ships, many ports (large
  and small).
• Sailings are frequent.
• Number of alternatives are open.

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Transport mode characteristics (Cont.)

• Availability
• Liners services are widely advertised,
  extensively categorized, and can be accommodated.
• Speed.
• The actual voyage time is slow.
• The turnaround time in port.
• Need for double-handling.
• Inefficient handling methods
• Delay.
• Pre-shipment delays, delay at discharge port, and
  unexpected delays due to bad weather, missed
  tides.
• Damage. Double handling cargo.

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Transport mode characteristics (Cont.)

• Road 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.

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Transport mode characteristics (Cont.)

• 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.

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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.

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Transport mode characteristics (Cont.)

• Rail 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.

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Transport mode characteristics (Cont.)

• 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.

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Transport mode characteristics (Cont.)

• Air 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.

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Transport mode characteristics (Cont.)

• 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.

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Transport mode characteristics (Cont.)

• Container 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.

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Transport mode characteristics (Cont.)

• 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.

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Transport mode characteristics (Cont.)

• 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.

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Transport mode characteristics (Cont.)
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Transport mode characteristics (Cont.)
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Transport mode characteristics (Cont.)
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Transport mode characteristics (Cont.)
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Method of selection

• Identify operational factors
• External
• Customer
• Product
• Other logistical
• Identify transport mode characteristics
• Sea
• Inland waterway
• Road
• Rail
• Air
• container

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Method of selection (Cont.)

• Determine major consignment factors
• Routing responsibility
• Distance
• Cargo type
• Priority
• Make trade off
• Service
• Costs

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Method of selection (Cont.)

• Routing and through transit responsibility
• Is a direct route stipulated?
• Who is concerned with the through transit?
• Distance
• What is the distance to be moved?
• Type of cargo
• If bulk or general cargo, will a certain specific
  route be best?
• Quantity
• Full load or part load?

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Method of selection (Cont.)

• Unit size
• Small or large?
• Will unitization help?
• Is group an alternative?
• Priority
• How soon must the goods reach their destination?
• Does urgent really mean urgent?
• Commodity value
• How important is the transport cost element?
• If import/export, how is the commodity rated?
• Regular shipments size
• How often will these shipments be made?

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Method of selection (Cont.)

• 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.

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Method of selection (Cont.)
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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.

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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.

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Aspects of international trade (Cont.)

• 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.

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Aspects of international trade (Cont.)

• 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.

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Aspects of international trade (Cont.)

• 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.

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Aspects of international trade (Cont.)

• Document requirements
• The shippers 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.

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Aspects of international trade (Cont.)

• 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.

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Aspects of international trade (Cont.)

• 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.

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Intermodal transport

• Intermodal transport is the movement of goods in
  one and the same loading unit or vehicle, which
  uses successively several modes of transport
  without handling of the goods themselves 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.

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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.

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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.

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Intermodal equipment (Cont.)

• 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.

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Intermodal equipment (Cont.)
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Intermodal equipment (Cont.)

• 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.

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Intermodal equipment (Cont.)
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Intermodal equipment (Cont.)

• 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.

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Intermodal equipment (Cont.)
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Intermodal equipment (Cont.)
Piggyback
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Intermodal equipment (Cont.)
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Spine rail wagon
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Intermodal equipment (Cont.)

• 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
  ships cargo and the quayside.
• Moving along the quayside parallel to the ships
  side to aid positioning.

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Intermodal equipment (Cont.)
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Intermodal equipment (Cont.)
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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.

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Intermodal equipment (Cont.)
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Intermodal equipment (Cont.)
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Intermodal equipment (Cont.)

• 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.

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Intermodal equipment (Cont.)
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Intermodal equipment (Cont.)
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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.

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Intermodal vehicles (Cont.)
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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.

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Intermodal vehicles (Cont.)
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Intermodal vehicles (Cont.)

• 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.

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Intermodal vehicles (Cont.)
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Intermodal vehicles (Cont.)
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References

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.