Supply Chain Management PDF

ESCM 2724 SUPPLY CHAIN MANAGEMENT PROF C HENDRIKS LU 5 TRANSPORT SYSTEMS CHAPTER 15 ONLY TO 15.2.6.3 15.1 - outcomes explain the role of transport in the business logistics process; discuss the service characteristics of the basic modes of transport; identify the various components of the tr...

ESCM 2724 SUPPLY CHAIN MANAGEMENT PROF C HENDRIKS LU 5 TRANSPORT SYSTEMS CHAPTER 15 ONLY TO 15.2.6.3 15.1 - outcomes explain the role of transport in the business logistics process; discuss the service characteristics of the basic modes of transport; identify the various components of the transport system, and discuss the role(s) of each one; discuss the characteristics of goods, and explain the way in which each of them influences the transport cost of different groups of goods; identify the four types of service providers, and discuss the functions of each; discuss the ways in which freight forwarders and freight transport brokers can add value in the logistics channel; and discuss the various reasons why governments involve themselves in transport. 15.1 INTRODUCTION Freight transport is a key logistics activity that creates place and time utility. Place utility is the value added to goods by transporting them from a place where they occur in a useless form or where they are plentiful (i.e. in oversupply) to a place where they are processed into a useful form, or where they are relatively scarce in relation to needs (i.e. effective demand exists). Time utility is the value added by making goods available at the time they are required for processing, consumption or use. 15.2 OPERATIONAL CHARACTERISTICS OF THE VARIOUS MODES OF FREIGHT TRANSPORT 15.2.1Classification Three basic forms of transport: air, land and water transport. Surface transport, i.e. land and water transport, can be further divided into sub-forms, distinguishable by the physical right of way (or the fixed route the mode must travel) and the technology on which they rely. Land modes are represented by road, rail and pipeline transport. Water carriage can be grouped into sea transport and inland water transport. The latter includes navigable rivers, lakes and artificial waterways, 15.2.2 AIR TRANSPORT Four types of air carriers are available for freight consignors: Air parcel postal services, designed for carrying small, light packages, are provided by the public mail service of a country. Courier and express services are generally restricted to small consignments weighing less than 32 kg. Regularly, scheduled passenger flights carry freight in the cargo hold of the aircraft. Freight (or all-cargo) aircraft have larger hatch openings, freight compartments and higher floor-bearing ratings than passenger aircraft. 15.2.2.2 TYPICAL STRENGTHS OF AIR TRANSPORT High speeds over long distances - increased revenue to the user, expanded the geographical range of markets for high-value perishable goods, such as cut flowers. No physical en route obstacles Aircraft follow a straight flight path, while the routes of other modes are circuitous. (The flight distance between Cape Town and Johannesburg is 1 271 km, and the shortest route by road between the two cities is 1 393 km). Not exposed to unfavorable in-vehicle conditions for long periods. Standardised packing units and air cargo containers are used. Good security record, 15.2.2.3 LIMITATIONS OF AIR TRANSPORT Feeder and distribution services are needed. Carrying capacity (weight and volume) is limited Congestion at airports can increase total transport time. Frequent flights are not always available Air transport is directly influenced by inclement weather conditions, such as thunderstorms, gusting wind, fog and snow at airports, and turbulence and headwinds during flights. Airports are often situated far from industrial and commercial areas, affecting accessibility. The unit cost per consignment is high. 15.2.2.4 FREIGHT CHARACTERISTICS Most desirable form of transport when the commodity is: perishable; subject to quick obsolescence; required at short notice; valuable relative to weight; or expensive to handle or store. 15.2.2.4 FREIGHT CHARACTERISTICS Most desirable form of transport when the demand is: unpredictable; infrequent; in excess of local supply; or seasonal. 15.2.2.4 FREIGHT CHARACTERISTICS Most desirable form of transport when the distribution problems include: the risk of pilferage, breakage or deterioration; high insurance or interest costs for long in-transit periods; the need for heavy or expensive packaging for surface transportation; the need for special handling or care; or the need for warehousing or stock in excess of what would be required if airfreight were used. 15.2.3 ROAD TRANSPORT Truck/trailer/semitrailer types Vans designed for the transportation of moisture-susceptible goods Refrigerated van completely enclosed and insulated Container carriers – containers - boxes, crates, pallets Flatbed trailers - loading with a forklift Lowbed semitrailers (colloquially called gooseneck trailers) – transport machinery is driven on 15.2.3 ROAD TRANSPORT Truck/trailer/semitrailer types (12 types) Tankers are suitable for the carriage of a wide variety of bulk liquids, gas and powders/pellets in tanks integrated into the vehicle. Livestock trailers Dry bulk trailers (hopper trailers) are used to transport free-flowing dry bulk commodities. Furniture vans (pantechnicons) Motorcar carriers Side stanchion trailers – Logs, poles, masts Open top trailers – scrap metal 15.2.3.2 ADVANTAGES OF ROAD TRANSPORT Door-to-door service Accessibility Freight protection Speed Capacity High frequency 15.2.3.3 LIMITATIONS OF ROAD TRANSPORT Limited carrying capacity High environmental impact (pollution) Vulnerability to external factors High energy consumption (fuel) Shared right of way 15.2.4 RAIL TRANSPORT Contemporary rail wagon types commonly used. covered wagon/van; refrigerated wagon/van; flat wagon; tank wagon; well wagon (picture) 15.2.4 RAIL TRANSPORT open wagon; hopper wagon (picture for iron ore) side stanchion and centre partition wagon; and motorcar wagon. 15.2.4.2 ADVANTAGES OF RAIL TRANSPORT Almost any type of commodity can be conveyed Large volumes of bulk loads can be carried Rail transport generally costs less (relative to weight) than air and road freight transport Not as vulnerable to traffic congestion as road transport. Rail transport is less affected by inclement weather conditions than other modes. Rail wagons cannot be stolen or hijacked as easily as road vehicles. High average trip speeds can be achieved by trains. Private sidings can connect the facilities of clients to the rail network to allow for loading and unloading. Rail transport is cost- and energy-efficient The accident safety record of rail transport is good, especially with the transport of hazardous goods 15.2.4.3 LIMITATIONS OF RAIL TRANSPORT Limitations of a fixed track and specific terminals, rail services often need to be supplemented with additional feeder and distribution services Rail transport has a high damage record Users perceive rail services to be of lower quality because of damage to freight and inconsistent service Rail transport requires enormous capital investment. Rail transport is vulnerable to pilferage when rail wagons remain stationary in marshalling yards for long periods. Directional traffic volume imbalances cause a high degree of empty running, so that return freight revenue often does not cover the costs of the return journey. 15.2.5 PIPELINE TRANSPORT Pipeline transport has unique characteristics: The infrastructure is also the carrying unit. It does not necessarily require a return journey or return pumping process. Product intake, haulage and discharge are combined in one process 15.2.5 PIPELINE TRANSPORT Pipeline transport offers superior reliability at a relatively low cost. Pipelines can deliver commodities punctually for the following reasons: – Pipelines are not labour-intensive; they are largely automated and only a few employees are needed to control pumps and valves, or undertake maintenance. – Worker strikes and absence have relatively little effect on their operations. – Commodity flows through pipelines are electronically monitored and controlled. – Weather conditions do not disrupt service. – Losses from pipeline leaks or damage are very rare. 15.2.5.2 ADVANTAGES OF PIPELINE TRANSPORT Pipelines are environmentally sound. Pipelines can move voluminous slugs of fluids and gas reliably over long distances at a low unit cost and low risk. Once the investment is made, the variable costs are low. Although the transit speed is low – between 10 and 15 km/h – the product is immediately discharged into storage tanks upon arrival. Pipelines can be constructed and operated through difficult terrain, production points and areas that may not be accessible by other modes of transport can be reached by pipe, making the gathering of crude oil from such origins a viable proposition. 15.2.5.3 LIMITATIONS OF PIPELINE TRANSPORT Pipelines are able to transport only a limited range of products commercially, mainly fluids and gases. Pipelines are geographically inflexible as they are designed to serve fixed locations. There is a finite capacity that cannot be altered to accommodate sudden surges in demand. Pipelines require a high investment cost. 15.2.6 SEA TRANSPORT Bulk carriers carry unpacked cargoes with low value-to-weight ratios, such as ore, grain, coal and scrap metal. Container vessels have greatly expanded the use of sea transport for many commodities. Conventional cargo vessels, carry freight not necessarily packed in standard intermodal containers (maize and rice) Roll-on/roll-off (ro-ro) ships carry cargo that is driven directly onto the ship or into its cargo hold(s) Combination carriers (also called combi vessels/ships) have divided cargo holds to enable the carriage of more than one type of freight in terms of containment characteristics. 15.2.6 SEA TRANSPORT Lighter-aboard ships (LASH) are specially designed ocean-faring ships that carry barges that are themselves loaded with freight to a foreign port to be dropped off in the harbour. 15.2.6 SEA TRANSPORT Livestock carriers are used for the carriage of large numbers of live animals (mainly sheep and cattle) together with their requirements for the voyage, such as food, water, sawdust bedding, medication, etc. Livestock carriers require more crew members than conventional cargo ships of similar size because stockmen are an essential part of the crew. 15.2.6.2 ADVANTAGES OF SEA TRANSPORT A low-cost service can be supplied. Large volumes of high-density freight can be conveyed over long distances. Standard intermodal containers can be utilised to facilitate freight handling and transhipment. Traffic congestion is virtually non-existent on the open sea. Sea transport offers a very safe and secure service. 15.2.6.3 LIMITATIONS OF SEA TRANSPORT A service can only be rendered to and from seaports that have the facilities to receive the ship and conduct the required transshipment. A door-to-door service is not possible. Because transshipment is unavoidable at both ends of a voyage, more freight handling takes place than with other surface transport modes. Ships are vulnerable to inclement weather conditions. This can delay delivery and in some cases prevent it altogether. Sea transport offers a slow and low-frequency service.