Modes of Transportation in Supply Chain Trey Lynn Brigham Young University BusM 361 Professor S. Tom Foster Agenda • • • • • • • • Transportation defined Brainstorming Modes of transportation Strengths and weaknesses of each mode Pricing UPS example Exercise Summary Transportation • means of conveyance or travel (of goods and services) from one place to another Brainstorming • What types of products require transportation in your organization? • How far are these products required to travel? • How important is the speed of delivery for these products? Modes of Transportation • • • • • • Motor Air Rail Water Pipeline Intermodal Motor (Trucking) • 1970’s – economic deregulation of interstate traffic • Lower costs • Accessibility • Small, frequent shipments Trucking • Disadvantages – Speed – Capacity – Range Air • Premium transportation • Speed delivery • Range Air • Disadvantages – – – – Price Non-direct points Add-on charges Necessary? Rail • Lowest overall cost per unit weight • Consistent time schedule • Recommended with most commodity types • Weather Rail • Disadvantages – Inflexibility – Potential damage of goods – Ineffective with small shipments Water (Ships) • • • • Large volumes Long distances Slower than air travel Limited access Pipeline • Transport of homogeneous materials • Lower transportation costs than other modes • Higher initial costs • Unable to transport a variety of materials Intermodal • Use of various transportation modes • Containers • More popular due to globalization Pricing • • • • Handling characteristics Distance freight is moved Weight of freight Costs inversely related to speed of service United Parcel Service • Small package shipper • Business built around transportation • Effective intermodal transportation UPS - Methods • Trucks – Small, frequent shipments – Deliver directly to homes and businesses • Air – Time sensitive shipments – Small packages (long distances) UPS - Methods • Rail – Transcontinental distances – Used primarily in intermodal transport • Sea – Door to door ocean shipping – Weekly departures between major ports UPS • Provides expertise as a resource to businesses • http://www.ups-scs.com/transportation/ Exercise • Take ideas from brainstorming and decide which modes of transportation would be best for your company. • List circumstances which would require using alternate modes of transportation and consequences your company would encounter. Summary • Each mode of transportation has its own strengths and weaknesses • The effectiveness of each mode depends on several factors including distance, price, and timeliness • Services exist to help choose the best modes of transportation Bibliography Cavinato, Joseph L, Ralph G Kauffman. The Purchasing Handbook. The McGraw-Hill Companies, 2002, New York, NY. Copacino, William C. and James F. Robeson. The Logistics Handbook. The Free Press, 1994, New York, NY. Taylor, David. Global Cases in Logistics and Supply Chain Management. International Thomson Business Press, 1997, London, UK. http://www.ups-scs.com/transportation/