Modes of Transportation in Supply Chain Trey Lynn Brigham Young University

Modes of Transportation in
Supply Chain
Trey Lynn
Brigham Young University
BusM 361
Professor S. Tom Foster
Agenda
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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
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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
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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)
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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
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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/