SCLM/U2 Topic 5 Transportation – Function, Cost & Mode of Transportation
Transport or Transportation is the movement of humans, animals and goods from one location to another. In other words, the action of transport is defined as a particular movement of an organism or thing from a point A to a Point B. Modes of transport include air, land (rail and road), water, cable, pipeline and space. The field can be divided into infrastructure, vehicles and operations. Transport enables trade between people, which is essential for the development of civilizations.
Transport infrastructure consists of the fixed installations, including roads, railways, airways, waterways, canals and pipelines and terminals such as airports, railway stations, bus stations, warehouses, trucking terminals, refueling depots (including fueling docks and fuel stations) and seaports. Terminals may be used both for interchange of passengers and cargo and for maintenance.
Function of Transportation
Transportation Functionality provides 2 major functions which are described below:
- Product Movement
To move various types of product whether it is raw materials component, semi- finished goods, finished goods, packaging material, scrap and so on. Transportation has become a very essential. Infact if human beings are considered as a product. One can be amount of people transport from one place to another by private and public carriers.
Transportation of a product involves the use of temporal resources. This is because a particular product is inaccessible while it is in-transit. i.e while it is being transport from one place to another place. These products are called in-transit inventories. These products are significantly important because they influence a variety of supply chain decision. For e.g, if supply chain is a considering a just in time strategy, or say. quick response strategy with regard to supply of goods to the customer then this influences the time for which the goods should be in transit because the goods have to reach quickly, or just in time to meet the requirement of the customer. Further, if goods are dispatched only when a customers requires them. Then such decision also affects the amount of inventories that have to be stored at the distribution centers.
Transportation of product involves the use of financial resources. Expenses on transport result from cost of driver, cleaner, casual laborer, taxes, administrative costs, and repairs/ maintenance. In addition, if during transportation there is product loss or product damage, may be this expenses have also to be taken into consideration.
Transportations of product also use environmental resources. Either directly or indirectly. In direct terms, transportation uses a very large amount of energy in term of fuel and oil. Though attempts are being made to make transport vehicles more fuel efficient. But consumption of fuel and oil is not expected to decrease because of the ever-increasing global operation in indirect term, transportation create environmental expenses in terms of congestion, air pollution, and noise pollution.
- Product storage
Though it is not very common, but one of the functions of transportation is also temporary storage of goods. Of course, storing goods in vehicles is quite an expensive affair. However, in case of goods have to be moved once again within Just a few days. It is advisable to keep them stored in transport vehicles themselves. This will avoid the cost of unloading and loading as well as the possible damage to goods during such operation.
It may happen that a company has limited storage facility at a particular warehouse. Hence, when the company loads the goods in to the transport vehicle to be sent to the warehouse. It may request the transport company to take a longer route to reach the destination. This will act as temporary storage for the goods.
Transport systems face requirements to increase their capacity and to reduce the costs of movements. All users (e.g. individuals, corporations, institutions, governments, etc.) have to negotiate or bid for the transfer of goods, people, information and capital because supplies, distribution systems, tariffs, salaries, locations, marketing techniques as well as fuel costs are changing constantly. There are also costs involved in gathering information, negotiating, and enforcing contracts and transactions, which are often referred as the cost of doing business. Trade also involves transactions costs that all agents attempt to reduce since transaction costs account for a growing share of the resources consumed by the economy.
Frequently, corporations and individuals must take decisions about how to route passengers or freight through the transport system. This choice has been considerably expanded in the context of the production of lighter and high value consuming goods, such as electronics, and less bulky production techniques. It is not uncommon for transport costs to account for 10% of the total cost of a product. This share also roughly applies to personal mobility where households spend about 10% of their income for transportation, including the automobile which has a complex cost structure. Thus, the choice of a transportation mode to route people and freight between origins and destinations becomes important and depends on a number of factors such as the nature of the goods, the available infrastructures, origins and destinations, technology, and particularly their respective distances. Jointly, they define transportation costs.
Transport costs come as fixed (infrastructure) and variable (operating) costs, depending on a variety of conditions related to geography, infrastructure, administrative barriers, energy, and on how passengers and freight are carried. Three major components, related to transactions, shipments and the friction of distance, impact on transport costs.
MODE OF TRANSPORTATION
- Road transportation
Road infrastructures are large consumers of space with the lowest level of physical constraints among transportation modes. However, physiographical constraints are significant in road construction with substantial additional costs to overcome features such as rivers or rugged terrain. While historically road transportation was developed to support non-motorized forms of transportation (walking, domestication of animals and cycling at the end of the 19th century), it is motorization that has shaped the most its development since the beginning of the 20th century.
Road transportation has an average operational flexibility as vehicles can serve several purposes but are rarely able to move outside roads. Road transport systems have high maintenance costs, both for the vehicles and infrastructures. They are mainly linked to light industries where rapid movements of freight in small batches are the norm. Yet, with containerization, road transportation has become a crucial link in freight distribution.
- Rail transportation and pipelines
Railways are composed of a traced path on which wheeled vehicles are bound. In light of more recent technological developments, rail transportation also include monorails and maglev. They have an average level of physical constrains linked to the types of locomotives and a low gradient is required, particularly for freight. Heavy industries are traditionally linked with rail transport systems, although containerization has improved the flexibility of rail transportation by linking it with road and maritime modes. Rail is by far the land transportation mode offering the highest capacity with a 23,000 tons fully loaded coal unit train being the heaviest load ever carried. Gauges, however, vary around the world, often challenging the integration of rail systems.
Pipeline routes are practically unlimited as they can be laid on land or under water. The longest gas pipeline links Alberta to Sarnia (Canada), which is 2,911 km in length. The longest oil pipeline is the Transiberian, extending over 9,344 km from the Russian arctic oilfields in eastern Siberia to Western Europe. Physical constraints are low and include the landscape and pergelisol in arctic or subarctic environments. Pipeline construction costs vary according to the diameter and increase proportionally with the distance and with the viscosity of fluids (from gas, low viscosity, to oil, high viscosity). The Trans Alaskan pipeline, which is 1,300 km long, was built under difficult conditions and has to be above ground for most of its path. Pipeline terminals are very important since they correspond to refineries and harbors.
- Maritime transportation
Because of the physical properties of water conferring buoyancy and limited friction, maritime transportation is the most effective mode to move large quantities of cargo over long distances. Main maritime routes are composed of oceans, coasts, seas, lakes, rivers and channels. However, due to the location of economic activities maritime circulation takes place on specific parts of the maritime space, particularly over the North Atlantic and the North Pacific. The construction of channels, locks and dredging are attempts to facilitate maritime circulation by reducing discontinuity. Comprehensive inland waterway systems include Western Europe, the Volga / Don system, St. Lawrence / Great Lakes system, the Mississippi and its tributaries, the Amazon, the Panama / Paraguay and the interior of China. Maritime transportation has high terminal costs, since port infrastructures are among the most expensive to build, maintain and improve. High inventory costs also characterize maritime transportation. More than any other mode, maritime transportation is linked to heavy industries, such as steel and petrochemical facilities adjacent to port sites.
- Air transportation
Air routes are practically unlimited, but they are denser over the North Atlantic, inside North America and Europe and over the North Pacific. Air transport constraints are multidimensional and include the site (a commercial plane needs about 3,300 meters of runway for landing and take off), the climate, fog and aerial currents. Air activities are linked to the tertiary and quaternary sectors, notably finance and tourism, which lean on the long distance mobility of people. More recently, air transportation has been accommodating growing quantities of high value freight and is playing a growing role in global logistics.
- Intermodal transportation
Concerns a variety of modes used in combination so that the respective advantages of each mode are better exploited. Although intermodal transportation applies for passenger movements, such as the usage of the different, but interconnected modes of a public transit system, it is over freight transportation that the most significant impacts have been observed. Containerization has been a powerful vector of intermodal integration, enabling maritime and land transportation modes to more effectively interconnect.
Cover a grey area in terms of if they can be considered as a transport mode since unlike true transportation, telecommunications often do not have a physicality. Yet, they are structured as networks with a practically unlimited capacity and very low constraints, which may include the physiography and oceanic masses that may impair the setting of cables. They provide for the “instantaneous” movement of information (speed of light). Wave transmissions, because of their limited coverage, often require substations, such as for cellular phone networks. Satellites are often using a geostationary orbit which is getting crowded. High network costs and low distribution costs characterize many telecommunication networks, which are linked to the tertiary and quaternary sectors (stock markets, business to business information networks, etc.). Telecommunications can provide a substitution for personal movements in some economic sectors.