SCMN 3720 Test 3 Slides PDF

SCMN 3720 Test 3 Slides 15. Railroads & Intermodal - Train fatalities, injuries, and accidets have gone down since 2000 - Manline accidents have dropped 44% since 2000 - Boxcar: standardized roof freight car with sliding doors on the side used for general commodities(plain);...

SCMN 3720 Test 3 Slides 15. Railroads & Intermodal - Train fatalities, injuries, and accidets have gone down since 2000 - Manline accidents have dropped 44% since 2000 - Boxcar: standardized roof freight car with sliding doors on the side used for general commodities(plain); can be specially modified (equipped) for specialized merchandise, such as automobile parts - Hopper car: A freight car with the floor sloping to one or more hinged doors used for discharging bulk materials - Covered hopper: (most used) a hopper car with a roof designed to transport bulk commodities that need protection from the elements - Flatcar: a freight car with no top or sides used primarily for TOFC (trailer on flatcar) service, and movements of machinery and building materials - Refrigerated car: A freight car with refrigeration equipment for temperature control - Gondola: A freight car with a flat bottom, fixed sides, and no top primarily for hauling bulk commodities - Tank car: specialized car used for the transport of liquids or gases - Rail intermodal is the long-haul movement of shipping containers and truck trailers by rail, combined with a truck or water movement at one or both ends - Intermodal accounted for approximately 30% or revenue for major U.S. railroads, more than any other single rail traffic segment - Piggybacking: “circus style”, allowed horses to pull circus wagons onto and off trains via a single ramp - Container Intermodal service: SeaLand company began working with maritime shippers, freight railroads and truckers to develop a common standard, allowing containers to be easily transferred across modes of transportation - Double Stacking: Malcom McLean partnered with Southern Pacific Railroad(SP) to create and test the first double stacked intermodal rail car - Trailer on Flatcar (TOFC) [Piggyback services] : Transports highway trailers on railroad flatcars, combines line-haul efficiencies of rail with the flexibility of motor transport, on-time deliveries, regularly scheduled departures, and fuel efficiency major reasons for growth - Container on Flatcar (COFC): transports shipping containers on railroad flatcars, double-stack container trains greatly improves rail equipment and train productivity - Line Haul: the transportation of goods between two or more points over long distances, using multiple modes of transportation - Benefits of Intermodal Rail: fuel-efficient (3-4 more times than trucks, reduces GHG emissions by up to 75% compared to trucks), easing street congestion (removes many trucks off roads and helps shippers eliminate time and fuel wasted from trucks in traffic), Trade connector (helps U.S. firms connect with rest of the world), relieving truck driver shortages (intermodal rail service takes millions of trucks off our highways each year) - Current issues in railroad industry: strained labor relations/labor availability, intense competition with trucking, forced switching, decline of coal volume, lack of digital advancement compared to trucking, threats of increasing regulation 16. Ocean Cargo - Absolute advantage: trade is beneficial if the cost of production for the same product differ between countries - Comparitive advantage: trade is also beneficial even if one country has lower cost of production in multiple products if the opportunity cost is greater - Seaborne Trade: volume has nearly tripled due to greater acceptance of importing finished products and cost/price benefits associated with sourcing from developing countries - The main three products that the U.S. imports are electronics, machinery, and vehicles - U.S. imports mosty from Asia - Maritime has longest trip time but lowest unit transport costs - Water modal: moves goods between international seaports - Water modal freight characteristics: low-value raw materials and bulk commodities, containerized goods - Water modal strengths: High capacity, Low cost, commodity flexibility - Water modal limitations: slow line-haul transit, in country accessibility - Air Modal: moves urgent shipments between international airports - Air modal freight characteristics: high-value, time sensitive goods, small shipments - Air modal strengths: speed, freight protection, flexibility - Air modal limitations: accessibility beyond airports, high cost, low capacity - Liner service: regular voyages on fixed routes with set ports of call - Charter service: hiring ship for direct point-to-point service - Private service: privately owned or leased ships by importers or exporters - Bulk freight: heavy and high volume raw materials and loose cargo transferred by pumps, vacuums, scoops, or conveyors between water, rail and/or pipeline modes - Break-bulk freight: wide variety of products moved by variety of industrial equipment  - Containerized freight: loaded into containers or onto pallet at origin and delivered to destination in/on same equipment - Ten-foot equivalent unit (TEU): 1 x 20-foot (length) x 8-foot (width) container - Most common container: 40 foot container - Ocean rates & pricing structure: determined by carrier cost structure, commodity, freight volume, origin and destination, ancillary services (support to activities or operation), type of service - Ocean rates include: basic rate (quotes by TEU or container), mandatory surcharges, and costs for extra services - Ports: facilitate ship loading and unloading, facilitate intermodal transfers, provide temporary storage in port area - Only 20 ports can accommodate a ship of 19,000 TEUs - Top two U.S. port cities by TEU: LA, New York-New Jersey - Triple E: largest container ship - Largest Triple E ship: MSC Celestino Maresca (24,000 TEUs) - Top two world’s largest shipping companies: MSC - Mediterranean Shipping Company, APM-Maersk - International Freight Forwarders (IFFs): facilitate international cargo movement by providing expertise and specialized services, identifying and booking optimum routes, modes, and carriers, and consolidating freight - Ocean freight forwarders: do not own any assets (ships), purchase bulk capacity with the ship lines - Largest ocean freight forwarder: Kuehne+Nagel - Challenges in the ocean cargo industry: lack of automation in ports, east coast port strikes, panama canal drought, suez canal issues, shift to nearsourcing, shippers feel abused by line pricing due to covid 17. Air Cargo - Accounts for less than 1% or trade by volume but makes up 35% of all global trade by product value - Air freight has the shortest trip time but the highest unit transport cost - Why do shippers use air cargo: 1. Speed (for high value,time sensitive freight, can deliver anywhere in the world within 2-3 days), 2. Reliability (predictability and departure schedule makes it very reliable and suitable for high value goods), 3. Security (safety controls and protocols over air cargo are tightly managed and leave little room for theft or potential damage. - Typical air cargo commodities: retail & e-commerce, automotive, consumer electronics, pharmaceuticals & healthcare, food & beverages - Intermodal Competition for Air: limited competition from other nodes for time-sensitive long distance (800+ miles) trips. - Intramodal Competition: intense competition among air carriers in terms of rates and service as driven by: new entrants in selected routes (markets), market coverage expansion, excess capacity - Air operating strengths: high terminal-to-terminal speeds, reliability (dependable transit times), low damage rates, ideal for high value to volume shipments, or high opportunity for value emergency shipments - Air operating constraints: High rates, limited accessibility, reduced frequency of flights, hub-and-spoke approach = congestion & limited slot availability at hubs, added access and terminal time and cost significant for short distances (under 800 miles) - Air carriers pay for the use of the airport through: landing fees, rent and lease payments for space, taxes on fuel, aircraft registration taxes - Air operations variable cost: (80%), airports and airways usage fees are variable in nature, labor costs (32.3%) and fuel costs (17.8%) are major elements of operating costs, operating costs vary by different types of aircraft used - Air operations fixed cost: (20%), low fixed-cost structure is attributable to publicly provided airways and terminals - Highest costs for air carriers: fuel and labor - Benefits of airlines hub network: contributes to operating efficiency - Operating ratio = (operating expense / operating revenue) - Load factor = (total weight shipped / maximum weight capacity) - Factors affecting air cargo rates: market demand, capacity, and load factors - How much is global air cargo expected to grow over the next 20 years? 4% - Projected growth of airline fleets by 2041: 60% - Payload of a 777f is equivalent to: 1 rail car - Top 3 cargo airlines: 1. Federal Express, 2. Qatar Airways, 3. United Parcel Service (UPS) - Air freight forwarder: do not own any assets (aircraft), specializes in moving freight by air on either passenger aircragtes or specially designed cargo aircrafts, arrange all the movements from pickup to final delivery using many service providers along the way (they contract with the air carriers - not the shippers), they better understand the intricacies of air freight to provide better air rates - Top 3 Airfreight forwarders: 1. Kuehne+Nagel, 2. DHL Supply Chain & Global Forwarding, 3. DSV - Top 2 cargo airports: 1. Hong Kong SAR (HKG), 2. Memphis USA (MEM) - Unit Load Devices (ULDs): a container used to load luggage, freight, and mail on wide-body aircraft and specific narrow-body aircraft - Challenges in Air Cargo Industry: uncertainty in global economy, possible import tariffs, capacity & pricing, digitalization, sustainability 18. Transportation Management - % of US business logistics costs (USBLC) spend on transportation: 69% - Transportation management: managing the outbound and inbound transportation for an organization - Tactical Transportation Management: mode selection, shipment planning, load consolidation, carrier scheduling, shipping operations, dock & yard management, shipment monitoring, issue resolution - Financial Transportation Management: Freight Invove, audit & payment, internal allocation of freight costs, freight claims processing, TMS rate load & maintenance, carrier integration monitoring - Strategic Transportation Management: Carrier sourcing & contracting, carrier performance analytics - carrier scorecards, spend analysis - freight cost reporting, proactively identifying cost and service improvements - Keys to successful transportation management in order: 1. Create global ownership, 2. Consistent and relevant global KPIs, 3. create global standards and processes, 4. Hold carriers accountable, 5. Fully leverage a TMS, 6. Provide enriched analytics solutions - Create global ownership: create a global owner of transportation that is accountable to the business units to support their business volumes and provide carriers that will deliver cost-effective, on-time delivery - Consistent and relevant global KPIs: Provide consistent and relevant KPIs, cost reporting, and analytics to measure and manage the business - provide monthly freight cost reporting by BU (business unit), region, and customer including identification and understanding of what is driving any anomalies in costs - Create global standards and processes: establish KPIs targets across all regions and BUs as well as structured global freight bill audit and claims processes to further identify cost leaks - Hold Carriers accountable: Publish carrier performance scorecards covering carrier performance around service, costs, and quality, communicated monthly and reviewed quarterly with key partner carriers - Fully leverage a TMS: utilize the full functionality and capabilities of a TMS, includonig full end-to-end planning and monitoring of shipments as well as enabling audit, claims, and freight cost allocation features - Provide enriched analytics and solutions: Proactively identify solutions and provide alternative delivery models that support the business volumes to improve order fill rates and customer delivery performance - Transportation KPIs help identify opportunities in three key areas: 1. Costs (measure cosys and identify opportunities for savings), 2. Quality (measure percent of total shipments that deliver to customers damage free without issue), 3. Service (measure your carrier on time pickup and delivery) - Key activities in carrier performance management analytics teams: data-driven group working to provide reports and analytics on carrier performance and costs, carrier RFP (request for proposal) & contract processes, scheduled and conducts monthly & quarterly reviews with carriers, ensures audit, proper financial GL (general ledger) coding and processing of freight payments, processes claims, documents carrier issues, TMS support for rate load and maintenance as well as owner of TMS user work-flow and carrier data timeliness - Savings by areas of cost improvements as a result of TMS & Carrier: 1. Procurement savings (carrier rates): global data and deep analytics enable identification of key partner carriers - true strategic sourcing, 2. Increased usage of preferred carriers: reports and tools to monitor and measure site compliance, 3. Collaboration with carriers: sharing volume forecasts and utilizing mutually beneficial regions and lanes, 4. Better analytics: better understanding of freight costs and cost drivers - Current challenges for shippers: 1. Lowering freight costs, 2. Fuel Prices, 3. Re-identifying partner carriers, 4. Attracting & retaining transportation talent 19. Transportation Technology - Transportation Management System (TMS): a technology platform used to help a shipper plan, execute, and monitor both inbound and outbound shipments, allows a shipper to optimize cost and delivery service, utililizing the best rate to achieve the desred delivery date, assists with the strategic activities involved in carrier selection and managing the performance of their carrier base - Key functionalities of a TMS: 1. Plan, 2. Execute, 3. Settle, 4. Carrier Sourcing, 5. Carrier Management - Tactical key functionalities of a TMS (Plan): load consolidation, mode selection, carrier selection, routing & scheduling - Tactical key functionalities of a TMS (Execute): tender shipment, track shipment, manage exceptions, deliver shipment - Tactical key functionalities of a TMS (Settle): Receive freight invoice, audit freight invoice, pay freight invoice, process claims - Strategic key functionalities of TMS (Carrier Sourcing): bid management, carrier selection, carrier contracting - Strategic key functionalities of TMS (Carrier Management): performance metrics, carrier collaboration, contract management - Top 3 factors motivating organizations to invest in a TMS: 1. Reducing operating and support costs, 2. Enhancing decisions making, 3. Customer expectations or demands - Top key benefit of TMS savings: Planning and optimization, 5%-15% - Typical savings from a TMS: 75% or organizations see saving from a TMS between 5% and 15% - Top 2 TMS Systems: Oracle & Blue Yonder - Electronic Logging Devices (ELDs): a hardware device that connecys to a commercial vehicle’s engine and allows a driver to easily log his activities and track his hours of service (HOS) compliance, captures vital data such as engine hours, miles driven, and location using GPS technology - What does ELDs provide over traditional paper logs: simplifies HOS compliance, accurate and tamper-proof records, reduces administrative burdens - How much does aerodynamic device save on fuel: at least 5% - How much does two or more aerodynamic devices save on fuel: at least 9% - Fuel savings modifications to trucks and trailers: integrated sleeper cab roof fairing, aerodynamic mirrors, aero profile tractor, aerodynamic bumper, fuel tank skirts, idle reduction technology, cab side gap fairings, trailer front, rear, and under fairings, low rolling resistance tires - Transportaion equipment technology enhanced safety features: collision mitigation systems, blind spot monitoring, lane departure warning, adaptive cruise control, electronic stability control, rear-view cameras - How much reductions in CO2 emissions resulted from innovation in heavy truck engines: 30% - Key issue driving need for innovation in autonomous commercial vehicles: driver shortage - Benefits of electric commercial trucks: zero emissions, lower operating costs, improved safety - Challenges of electric commercial trucks: upfront cost, charge time duration, limited range, limited charging network, electric grid capacity - Challenges of autonomous transportation: technological, risk/liability, political 20. Governments Role in Transportation - Department of Transportation (DOT): responsible for planning and coordinating federal transportation projects, also sets safety regulations for all major modes of transportation - Federal Aviation Administration (FAA): DOT agency responsible for regulation of civil aviation and U.S. commercial space transportation, maintain and operate air traffic control and navigation systems for both civil and military aircrafts, and develop and administer programs relating to aviation safety and the National Airspace System - Federal Motor Carrier Safety Administration (FMCSA): DOT agency responsible for regulating and providing safety oversight of commercial motor vehicles (CMVs). - Federal Railroad Administration (FRA): DOT agency responsible for the safe, reliable, and efficient movement of people and goods on rail - Surface Transportation Board (STB): Independent federal agency responsible for the economic regulation of various modes of surface transportation, primarily freight rail. The STB exercises its statutory authority and resolves disputes in support of an efficient, competitive, and economically viable surface transportation network that meets the needs of its users - Federal Maritime Commision (FMC): Independent federal agency responsible for regulating the U.S. international ocean transportation system for the benefit of U.S. exporters, importers, and the U.S. consumer - Economic regulation: role is to transform monopolistic industries into competitive ones by determining if a firm can enter an industry, determining which markets a firm can serve in that industry, determining the prices that a firm can charge the customers - Result of Interstate Commerce Commision Termination Act (ICCTA) of 1995: all modes but rail operate free from economic regulation - Who is still in control of economic regulation on railroads: Surface Transportation Board (STB) - Antitrust regulation: Intended to outlaw price fixing among competing firms, eliminate business practices that tended towards monopolization, prevent any firm or combination of firms from refusing to sell or deal with certain firms or avoiding geographic market allocations - Safety regulation: established minimum level of safety for public and the environment - Federal Motor Carrier Safety Administration (FMCSA) big 5: 1. Fleet legalization, 2. Driver qualification, 3. Driver drug and alcohol testing, maintenance and inspections, driver hours of service - Hours of Service (HOS): the maximum amount of time commercial drivers are permitted to be on duty including driving time, and specifies the number and length of rest periods, to help insure that drivers stay awake and alert. - 11-Hour Driving Limit: May drive a maximum of 11 house after 10 consecutive hours off duty - 14-Hour limit on duty & driving: May not drive beyond the 14th consecutive hour after coming on duty, following 10 consecutive hours off duty. Off-duty time does not extend the 14-hour period - 30-minute driving break: drivers must take a 30 minute driving break when they have driven for a period of 8 cumulative hours without at least a 30-minute interruption. The break must be satisfied by any non-driving period of 30 consecutive minutes (i.e., on-duty not driving, off duty, sleeper berth, or any combination of these taken consecutively) - 60/70 hour limit: May not drive after 60/70 hours on duty in 7/8 consecutive days. A driver may restart a 7/8 consecutive day period after taking 34 or more consecutive hours off duty (Moving window) - Short-Haul (Local Driver) Exception: a driver is exempt from requirements if the driver operates withing a 150 air-mile radius of the normal work reporting location, and does not exceed a duty period of 14 hours. Drivers using this exception must report and return to the normal work reporting location within 14 consecutive hours, and stay within a 150 air-mile radium of the work reporting location - Benefit/cost ratio: compares total societal cost to total societal benefits - Air Modal Promotion benefits: air traffic control system, subsidies to serve low-traffic cities, terminal development and construction - Motor and Highway modal promotion benefits: highway development, design, improvement, construction, and safety, motor carrier vehicle safety, regional infrastructure improvements - Rail modal promotion benefits: rail line abandonment subsidies, R&D in rail technology and safety, amtrack appropriations - Domestic waterway modal promotion benefits army corps of engineers river and port channel dredging (removing material), lock and dam construction, operation and maintenance, USCG navigation aids and systems - Types of User Charges for transportation programs: 1. Existence charge, 2. Unit Charge, 3. Relative use - Existence charge: charge made against the person or tangible item unit regardless of the extent of use made of the services (e.g. driver’s license and auto registration fees) - Unit Charge: fee assessed for use of facility or resource, variable according to use, but does not distinguish between passengers of freight within each unit (e.g. tolls and fuel mileage use) - Relative use: fees assessed according to the investment of cost incurred by the agency to provide the service (e.g., increased vehicle registration fees for heavier tractor-trailers) - Four uses or user charges: 1. Compensate public for assistance during modal conception and encouragement, 2. Finance construction, 3. Cover operating costs (e.g., airport landing fees, road tolls, and state fuel tax applied to road maintenance), 4. Equalize intermodal competitive conditions - How is the interstate highway system funded: federal government pays 90% of construction cost for interstate system and 50% of construction cost for all other federal-aid road - U.S. state average fuel tax: $0.57 per gallon 21. Third Party Logistics - Third-Party Logistics Company (3PL): refers to a company - not the shipper and it’s customer - but a third patry that the shipper will utilize to perform the order fulfillment process, outsourcing of logistics processes can include any or all of the transportation and warehousing functions as well as many additional value-added services - What industry fostered the growth of 3PLs: automotive - What service sparked the growth of 3PLs: outsourcing activity - Top 4 benefits of 3PLs: 1. Reduce operating costs, 2. Allows buyers to concentrate on core business activities, 3. Increase capabilities quickly – warehouse management, order management and tracking tools, 4. Scale fast - increase space, through-put, and production capability quickly with minimal startup costs - Top 3 risks of 3PLs: 1. Less control of resources and operations - emergency, extreme short notice orders are more difficult to execute, 2. Risk not being a priority among vendor’s customers, 3. Loss of integration between sales and supply chain - 3 Keys to outsourcing decision: 1. Fully understand your current and projected costs, 2. Create a financial business case comparing all insource costs vs outsource costs, 3. Determine which option will most likely provide the best customer service and best value - Top 2 3PLs in North America: 1. DHL Supply Chain, 2. UPS Supply Chain Solutions - Asset Based 3PLs: owns assets and labor force needed to run transport and logistics activities (e.g., UPS, JB Hunt, FedEx) - Advantages of asset based: Readily available capacity, permanent employees, and direct control of the customers’ freight - Concerns of asset based: Potential for bias toward 3PL’s own internal resources in developing solutions for customers - Non-Asset based 3PLs: contracts with other firms to provide services rather than owning requires assets (e.g., CH Robinson, XPO logistics, Kuehne + Nagel) - Advantages of non-asset based: more flexible vs asset based 3PLs, unbiased decision making - Concerns of non-asset based: subject to competition for capacity from external providers, more intense relationship management required - Transport based 3PL services: Move freight, dedicated fleet, manage transportation operations, operate fulfillment centers, develop logistics solutions - Distribution based 3PL services: Focus on inventory management, warehousing, and order fulfillment, but may also provide transportation services - Forwarder baded 3PL services: arrang transportation services for LTL shipments, air cargo, and ocean freight; facilitate international freight movements using the broker/forwarder’s contracts - Freight Management: carrier selection, shipment routing & scheduling, shipment monitoring, carrier performance management, freight bill audit & payment - 3PL Dedicated Fleet: for-hire trucking company that provides committed capacity to a shipper, usually involving a multi-year contract, most all liability and compliance risks are shifted to the 3PL - Top 2 primary activities outsourced to 3PLs: 1. Domestic Transportation, 2. Freight Forwarding - Are all shippers satisfied with the value 3PLs bring: not all shippers are satisfied - Top 2 strategic needs of 3PL Shippers: 1. Strategic Innovation, 2. IT (technology) capabilities 22. Logistics Industry Challenges & Careers - Projected future growth of freight activity by 2050: 50% - Congestion cost increase from 2016 to 2021: 27% - Which port in the U.S. had the most congestion and delays: Los Angeles - Which area in railroads needs the most investment to prepare for project growth by 2035: Line haul expansion - Top 3 ATRI critical issues in trucking industry: 1. Economy, 2. Truck Parking, 3. Insurance Cost/Availability - Top 2 SCM Management skills needed: 1. Decision Making, 2. Critical Thinking - Top 2 SCM technical skills needed: 1. Financial Management, 2. Technology (TMS, WMS) - Key findings in ASCM study: 1. Salary surge - 4% increase year-over-year, 2. Job Satisfaction - 60% of SC professionals rate career satisfaction 8/10 or higher - Average starting salary with less than 1 year of experience in supply chain: 2023 - $65,000, 2024 - $70,000