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Supply Chain Logistics Management Transportation Infrastructure & Regulation Role of Transportation in Logistics & Supply Chain Management Industry Deregulation Transportation Functions, Principles, Participants Transportation Regulation Transportation Industry Structure

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Supply Chain Logistics Management

Transportation Infrastructure & Regulation


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  • Transportation Functions, Principles, Participants Management

    • Transportation Functions

      • Product Movement

      • Product Storage

    • Transportation Principles

    • Transportation Participants

  • Transportation Regulation

  • Transportation Industry Structure

  • Transportation Services


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Product Movement Management


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Product Storage Management


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New Destination Management

NORFOLK

Diversion

Original Destination

NEW YORK

Los Angeles


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  • Transportation Functions, Principles, Participants Management

    • Transportation Functions

    • Transportation Principles

      • Economy of Scale

      • Economy of Distance (Tapering Principle)

    • Transportation Participants

  • Transportation Regulation

  • Transportation Industry Structure

  • Transportation Services


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Economies of Scale Management The more items (weight) is transported, the less the transportation costs per item (unit of weight)

$100/book

Transportation Cost per Book

$.10/book

1

1000

Number of Books in Shipment


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Economies of Distance Management Tapering PrincipleThe larger the distance, the less the transportation costs per unit of distance (e.g., per mile)

$.10/mile

Transportation Cost per Mile

$.05/mile

Tapering Principle

$50/mile

1 mile

500 miles

1000 miles

Shipment Distance


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Transportation Participants Management

I need something shipped at the lowest possible cost!


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Transportation Participants Management

I need something shipped at the lowest possible cost!

I need something delivered at the lowest possible cost!


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Transportation Participants Management

Carriers: We have the equipment!


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Transportation Participants Management

Carriers – we can find a shipper!

Shippers – we can find a carrier!


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Transportation Participants Management

the transportation system is vital for the country’s economic health


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Transportation Participants Management

purchase fuel, transportation equipment, supplies


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Transportation Participants Management

track shipments

purchase fuel, transportation equipment, supplies


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Transportation Participants Management

track shipments

purchase fuel, transportation equipment, supplies

match products needing to be shipped with available capacity


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Transportation Participants Management

Creates demand for transportation by purchasing products


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Types of Transportation Regulation Management

Economic

  • Investments in transportation infrastructure

  • (e.g., highways, airports, ports)

  • Control of routes, pricing, schedules


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Types of Transportation Regulation Management

Economic

  • Investments in transportation infrastructure

  • (e.g., highways, airports, ports)

  • Control of routes, pricing, schedules

Social/Safety

  • Protect the public, the environment

  • Make sure equipment operates safely, cleanly

  • Safe transportation of hazardous materials (HAZMAT)

  • Regulating hours worked


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History of Transportation Regulation Management

  • Pre-1920 – establish initial government control

    • Act to Regulate Commerce (1887)

    • Interstate Commerce Commission (ICC)


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History of Transportation Regulation Management

  • 1920-1940 – regulatory formalization, extension to other transportation modes

    • Motor Carrier Act (1935)

    • Civil Aeronautics Act (1938)

    • Civil Aeronautics Board (1940)

    • Federal Aviation Administration (FAA)

    • National Aeronautics & Space Administration (1951)


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History of Transportation Regulation Management

  • 1940-1970

    • Regulation of water transportation by ICC (1940)

    • Railroad Revitalization and Regulatory Reform Act of 1976

      • AMTRAK

      • CONRAIL


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History of Transportation Regulation Management

  • 1970-1980 – prelude to deregulation

    • Shift from regulation/control to fostering competition

    • Department of Transportation (DOT) 1961

    • Airline Deregulation Act 1978


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History of Transportation Regulation Management

  • 1980-2000 – deregulation

    • Motor Carrier Act 1980

    • Staggers (Rail) Act 1980

    • Interstate Commerce Commission (ICC) abolished 1996

    • Ocean Shipping & Reform Act 1998


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History of Transportation Regulation Management

  • 2000-Present – focus on technology, safety, and security

    • Patriot Act

    • Jones Act


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Five Basic Transportation Modes Management

Pipeline


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Five Basic Transportation Modes Management

Pipeline

Water


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Five Basic Transportation Modes Management

Pipeline

Water

Air


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Five Basic Transportation Modes Management

Pipeline

Water

Air

Rail


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Five Basic Transportation Modes Management

Pipeline

Water

Air

Rail

Highway




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Cost Structure For Each Transportation Mode Management

Rail

  • high fixed costs (land, tracks)

  • low variable costs (operating costs, e.g., labor, fuel)

  • slow, but inexpensive way to transport heavy freight that doesn’t require special handling, long distances


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Cost Structure For Each Transportation Mode Management

Highway

  • low fixed costs (government builds, maintains highways)

  • medium-high variable costs (operating costs, e.g., labor, fuel)

  • most accessible mode (more highways than railroads, waterways, pipelines); best for transporting medium to high value products short to moderate distances


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Highway Management

  • LTL – less than truckload

  • TL – truckload

  • Specialty


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Cost Structure For Each Transportation Mode Management

Water

  • moderate fixed costs (ships and freight handling equipment)

  • low variable costs (operating costs, e.g., labor, fuel)

  • very slow, but inexpensive way to transport large, heavy freight over long distances (e.g., oceans, rivers, inland waterways, lakes)


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Cost Structure For Each Transportation Mode Management

Cost Structure For Each Transportation Mode

Air

  • low fixed costs (aircraft and freight handling equipment)

  • highest variable costs (e.g., labor, fuel, maintenance)

  • very fast; used for transporting high value and/or high perishability product over short to medium distances.


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Cost Structure For Each Transportation Mode Management

Pipeline

  • highest fixed costs (right of way & construction costs of equipment)

  • lowest variable costs (no significant labor or fuel costs)

  • slow, but dependable (e.g., no weather, traffic disruptions); no flexibility with regard to types of products that can be transported – must be liquid (e.g., petroleum)


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  • Transportation Functions, Principles, Participants Management

  • Transportation RegulationTransportation Industry Structure

  • Transportation Services

    • Non Operating Intermediaries

    • Traditional Transportation Carriers

    • Package Services

    • Intermodal Transportation


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  • Transportation Functions, Principles, Participants Management

  • Transportation RegulationTransportation Industry Structure

  • Transportation Services

    • Non Operating Intermediaries

      • Freight Forwarders

      • Transportation Brokers

      • Shipper Associations/Cooperatives/Agents

    • Traditional Transportation Carriers

    • Package Services

    • Intermodal Transportation


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  • Transportation Functions, Principles, Participants Management

  • Transportation RegulationTransportation Industry Structure

  • Transportation Services

    • Non Operating Intermediaries

      • Freight Forwarders

      • Transportation Brokers

      • Shipper Associations/Cooperatives/Agents

    • Traditional Transportation Carriers

    • Package Services

    • Intermodal Transportation


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  • Transportation Functions, Principles, Participants Management

  • Transportation RegulationTransportation Industry Structure

  • Transportation Services

    • Non Operating Intermediaries

      • Freight Forwarders

      • Transportation Brokers

      • Shipper Associations/Cooperatives/Agents

    • Traditional Transportation Carriers

    • Package Services

    • Intermodal Transportation


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  • Transportation Functions, Principles, Participants Management

  • Transportation RegulationTransportation Industry Structure

  • Transportation Services

    • Non Operating Intermediaries

      • Freight Forwarders

      • Transportation Brokers

      • Shipper Associations/Cooperatives/Agents

    • Traditional Transportation Carriers

    • Package Services

    • Intermodal Transportation


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  • Transportation Functions, Principles, Participants Management

  • Transportation RegulationTransportation Industry Structure

  • Transportation Services

    • Non Operating Intermediaries

    • Traditional Transportation Carriers

    • Package Services

    • Intermodal Transportation


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  • Transportation Functions, Principles, Participants Management

  • Transportation RegulationTransportation Industry Structure

  • Transportation Services

    • Non Operating Intermediaries

    • Traditional Transportation Carriers

    • Package Services

    • Intermodal Transportation


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  • Transportation Functions, Principles, Participants Management

  • Transportation RegulationTransportation Industry Structure

  • Transportation Services

    • Non Operating Intermediaries

    • Traditional Transportation Carriers

    • Package Services

    • Intermodal Transportation


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  • Piggyback Management

  • Trailer on Flat Car (TOFC)

  • Container on Flat Car (COFC)

  • Fishyback

  • Trainship

  • Containership

  • Coordinated Air/Truck


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