Transportation Management PDF

Transportation Management The Role and Importance of Transportation Transportation Management Transportation is the creation of place and time utility. When goods are moved to places where they have higher value than they had at the places from which they are originated, they have pl...

Transportation Management The Role and Importance of Transportation Transportation Management Transportation is the creation of place and time utility. When goods are moved to places where they have higher value than they had at the places from which they are originated, they have place utility. Transportation Management Time utility means that this service occurs when it is needed. Time and place utility are provided to passengers when they are moved from where they do not want to be to places where they do want to be, and at the demanded time. Transportation Management Transportation is a service to user, but it has basic characteristics that make purchasing this service similar to buying goods. One aspect of transportation is the movement service. This includes speed (whether it is door to door or terminal to terminal), reliability, and frequency of Transportation Management service. Another factor is the equipment used, which is a major factor for both passengers and freight. For passengers, the equipment affects comfort and safety. For freight, equipment Transportation Management affects shipment preparation, the size of the shipment, and loading and unloading costs. The third factor is the cost of the transportation service. Cost includes a charge or rate quoted by the primary carrier as well as the peripheral costs borne by the user. Transportation Management The latter might include pick up and delivery costs, packaging requirements, damage or detention charges, and special service charges such as refrigeration or heat. Transportation should never viewed as the simple movement of persons or things through space. The user is actually Transportation Management purchasing a bundle of services from a carrier at a certain cost. The bundle of services varies among carriers and modes of transportation, with different price frequency in effect from the different services. if the user focuses on the simplistic version of transportation, that is, Transportation Management movement through space, the lowest priced service will be selected. However, the higher priced carrier might be the best choice because of superior service, which will result in lower costs in other areas, such as inventory. Transportation is also one of the economic factors in the production of goods and Transportation Management services. The basis function of transportation is to provide the market with access to the resultant products. Transportation plays a major role in the spatial relations between geographic points, and it also affects temporal relationships. Transportation Management FREIGHT AND PASSENGER TRANSPORTATION Transportation Management Demand for Transportation: Transportation is an important and pervasive element in our society, affecting every person, either directly or indirectly. The goods we consume, our economic livelihood, our mobility, and our entertainment are in some way affected by transportation. Transportation Management The interrelationship between transportation and mass production points out the dependency of our society on transportation. As each of us specializes in the production of a particular good or service, we are relying upon someone else to produce the goods and services that we need to survive. Transportation Management Also, we depend upon transportation to move these goods and services to our location in an efficient and economical manner, as we are not self-sufficient. The demand for transportation can be examined at different levels of aggregation. Aggregate demand for transportation is the Transportation Management sum of the individual demands for freight and passenger transportation. In addition, aggregate demand is the sum of the demand for transportation via different modes, and the aggregate demand for a particular mode is the sum of the demand for specific carriers in that mode. Transportation Management Demand Measurement Units Transportation demand is essentially a request to move a given of cargo or people a specific distance. Therefore, the demand for transportation is measured in weight/passenger-distance units. For freight, the demand is ton-mile and for people it is passenger-mile. Transportation Management The demand for 200 ton-miles of freight transportation could be for moving 200 tons one mile, 100 tons two miles, one ton two hundred miles, or any other combination of weight and distance that equals 200 ton-miles. This demand could be by road, rail, water or air. Transportation Management In relation to people, a demand for 500 passenger-miles could be one passenger moving 500 miles or 500 passengers moving one mile. The demand for 500 passenger-miles could be via automobile, railroad or air. Transportation Management FREIGHT TRANSPORTATION In general, the demand for freight transportation is inelastic. Freight rate reductions will not drastically increase the demand for freight transportation because transport costs represent, in the aggregate, less than four percent of a product landed costs. Substantial rate reduction would be Transportation Management Required for a meaningful increase in the demand for product and consequently demand for transportation of the product. On a modal and specific carrier basis, demand is price-sensitive. The relative modal share of aggregate demand is in part determined by the rate charged. Transportation Management Reductions in rate charged by a particular mode will result in increase in volume of freight handled by that mode. This assumed that the mode that reduced the rate is physically capable of transporting the freight. Transportation Management Additionally, the demand for freight transportation is a derived demand. The demand for freight transportation is based upon the demand for the product in a given location. Freight is generally not transported to a location unless a need for the product exists at that location. Transportation Management Service Components of Freight Demand: Shippers of freight have varying service requirements of transport providers. These service requirements range from specific pick up times to equipment and communication. Transportation Management The services demand are related to the cost implications of the transportation service provided. The transportation service characteristics of freight shippers include transit time, reliability, accessibility, capability and security. Transportation Management Transit Time Transit time affects the level of inventory held by both the shipper and the receiver and the cost of holding inventory. The longer the transit time, the higher the inventory levels and inventory carrying costs. Also, transit time impact the cost of inventory in the supply chain. Transportation Management Reliability Reliability refers to the consistency of transit time. Meeting pick up and delivery schedules enables shippers and receivers to optimized inventory levels and minimized stockout costs. Unreliability transit time requires the freight receivers to either increase inventory Transportation Management levels to guard against stockout conditions or incur stockouts. Accessibility Accessibility is the ability of the transportation provider to move the freight between a specific origin and destination. The inability of a carrier to provide direct service between an origin and destination Transportation Management results in added costs and transit time for the shipper. Capability The ability of the carrier to provide such special service requirements is the essence of capability. Based on the physical and marketing characteristics of the freight, Transportation Management shippers have unique demands for equipment, facilities and communications Security Security is concerned with the safety of the goods in transit. Shipments that are damaged or lost in transit cause increased costs in the areas of inventory &/or stockout Transportation Management PASSENGER TRANSPORTATION Passenger transportation is the movement of people. The study of passenger demand requires an examination of people’s motives for travel and movements. Attention is directed initially at long distance, intercity passenger demand and finally urban short-distance, travel demand. Transportation Management Business travel is one of the major passenger market, this is employment related travel, and it is often travel in which the person is reimbursed or otherwise compensated in some way. This is a major market for the airline industry. Business travel is a much smaller part of the bus and water passenger markets Transportation Management The air travel business market is highly sensitive to schedule rather than price. Vacation travel or pleasure travel, represents another major passenger market. These travelers often view transportation as a means of getting to a vacation destination point. In some cases, carriers have been Transportation Management able to include the transportation leg itself as part of the vacation experience; that is , the transportation leg can be both part of the derived demand for the trip to a destination as well as part of the vacation experience. This is the case with cruise ship travel and long distance rail movement. Transportation Management Vacation travel is typically price sensitive and often concerned with the particular time of day or day of week schedules. Vacation travel has been heavily promoted by airlines for Saturday and Sunday travel, when their transport capacity is not heavily used by business travelers. Transportation Management Personal travel is the other long distance travel passenger market; this is travel that is motivated by visit to home, travel to school, and emergency trips. People in this market segment might be attracted to faster possible means of travel, but low price can also be a significant demand characteristics Transportation Management Urban transit trip demands fall into three broad categories that provide insights into origin-destination density patterns or primary trip markets. The first is the work or school trip. The need for this type of trip is the most consistent and repetitive because is has one origin and destination. The second major trip needed in a household is Transportation Management the tip to shop for food and other necessities. This can also be repetitive in pattern. The third type of trip , miscellaneous, includes recreational and medical trips. Miscellaneous trips are the least repetitive and are not always conducive to transit service attraction. Transportation Management Passenger Demand Characteristics: The demand characteristics of passenger transportation consists of many individual components. These range from very objective and tangible items to some that are very intangible. Transportation Management Destination The destination is where the traveler seeks to go. It can be important, such as business destination or it can have a vacation appeal. In today’s cruise travel, the destination is the origin and the important aspects of the cruise is the quality of the trip. Transportation Management Schedule and Speed Often a means of travel is selected because it is the only one with a convenient departure and arrival time. The consistency with which a carrier meets schedules is also an important factor. Further, the speed of travel can be an advantage or disadvantage. The speed of the airplane allows travelers Transportation Management more productive time on the ground at the origin and destination. However, the arrival or destination time is of less importance and slow speed is an advantage when touring. Cost Cost is one objective measure of the transportation product. It comprises the Transportation Management actual fare and several other costs. These other costs include access, parking, overnight lodging, food and in some cases, ability or opportunity to perform or make sales calls. Equipment This factor can be part of the advertised Transportation Management appeal of travel. In the cruise industry, the ship is the item that is advertised; it is a major component of the entire vacation. Entertainment and Attention These amenities are often important in vacation travel. This is the case with onboard entertainment, food and available Transportation Management diversion on ships. Terminals These are the points from which persons board and depart the transportation vehicles. To be attractive to the traveling public, terminals must be accessible, clean and safe. They should be designed to move Transportation Management baggage efficiently and give easy access to other modes of transport. Complaints and Experiences Passenger travel is a highly visible service industry. Unlike industrial buying where many objective elements come into the buying decision, passenger travel can be Transportation Management subject to sudden shifts resulting from intangible perceptions Role of the Travel Agent The travel agent is a valuable but often overlooked and misunderstood facilitator of passenger travel. Though not providing movement service themselves, travel agents Transportation Management provide a wide range of informational and arrangement services. The travel agent is a link between the passenger, on the one hand, and carriers and hotels on the other.  Transportation Management QUESTIONS & ANSWERS  Transportation Management Source: Management of Transportation by Bardi, Coyle & Novack