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Globalization and Transportation Production Networks, Logistics, Intermodalism and Supply Chain Management Globalization Refers to increasing geographical scale of economic, social and political interactions Examples: international trade, mobility of capital, tourism, expanding media delivery

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globalization and transportation

Globalization and Transportation

Production Networks, Logistics, Intermodalism and Supply Chain Management

  • Refers to increasing geographical scale of economic, social and political interactions
  • Examples: international trade, mobility of capital, tourism, expanding media delivery
  • Also changing patterns of institutional organization and structural shifts in world economic order
  • Most conspicuous are expanding MNCs, regional trade alliances, and roles of NGOs
globalization and mncs
Globalization and MNCs
  • Global level corporate opportunities are reinforced by privatization and deregulationof public controls
  • Combined with technological developments these changes facilitate structural adjustments that alter networks of goods and services production and distribution
  • Allow exploitation of international division of labor
  • MNCs and global city regions are dominant
transport and globalization
Transport and Globalization
  • Too often transport in globalization is ‘invisible’
  • But transport is central and functions as an enabling mechanism and space adjusting technology (SATs) which integrates production and distribution points
  • SATs such as transport produce flows linking places, not goods in places
globalization and transport
Globalization and Transport
  • Transport, and especially freight, services have become more critical in order for firms to compete
  • Accommodating new technologies, new markets and new organizational structures requires change- both from providers and consumers whether individuals or firms
  • Need for greater efficiencies has made urgent the need for a more “seamless” transport market
  • “Seamlessness” suggests an environment in which neither national nor modal boundaries neither delay movements nor hinder choice of efficient route/mode combination
driving factors in search for seamlessness
Driving Factors in Search for Seamlessness
  • 1/ Competitive pressures require goods and services producing firms to manage almost simultaneously multiple inter-organizational info and material flows
  • 2/ Externalization of production trend is heightened- seeking efficiency in managing flow from source to consumer
  • 3/ Logistics and supply chain management depend upon ways in which separate modal systems are joined: containerization, load centers, hub/feeder networks
  • 4/ Role of real time in global operations has been heightened: JIT, time based competition
  • 5/ Rise of e-commerce has huge consequences for transport system and logistics
obstacles to a seamless world
Obstacles to a Seamless World
  • Enhancement of goods flow has been empowered by liberalization, intermodalism and new technologies in logistics but contradictory forces also exist
  • “Choiceless churning”-inability of concerned social and political forces to confront challenges
  • Extending appropriate entry and exit approaches from national to regional and international levels may be a major issue
  • What policy research is required in this light?
transport demand responses to globalization
Transport Demand Responses to Globalization
  • Longer and more customized transport linkages
  • Sensitivity to timing of connections, arrivals, and departures
  • Speed of movements and transactions
  • Expanded reliance on e-communications and e-commerce
  • Holding together Global Production Networks (GPNs)
trends in global restructuring
Trends in Global Restructuring
  • Above demand sensitive logistical concerns are consistent with many trends
  • Reliance on out-sourcing
  • Customized production runs
  • Flexibility in resource access
  • Just-in-time management of production and distribution processes
  • Zero inventory
  • Opportunities for economies of scope
globalization and transport vulnerability
Globalization and Transport Vulnerability
  • High levels of auto and oil dependence expose transport to risks of boycott and embargoes
  • Global solutions to environmental problems (air pollution and global warming) expose transport and their dependent economies
  • Transport serves as vehicle for intensifying mass consumption but more info based goods and service (dematerialization) mean transport inputs to various goods might be reduced
  • Freight transport is both an industry and core input in manufacturing process
  • Must understand how raw, semi-finished and final commodities are moved to serve businesses
  • Changes in technology, markets, institutional structures, and management theory have led to new ways of tying transport into production process
evolution of logistics
Evolution of Logistics
  • Initially a military activity concerned with moving men and munitions to battlefronts
  • Now logistics has integral role in firm operations
  • Ability to move goods quickly, safely and economically are vital to firm’s profitability and the global economy
  • Why new emphasis? Competitiveness of firms, technology, deregulation, packaging
aspects of logistics in the economy
Aspects of Logistics in the Economy
  • Two aspects: logistics management and logistics providers
  • Logistics management in manufacturing and distribution organizations
  • Logistics organizations providing services to manufacturing and distribution firms
  • Growth of integrators—(firms that both fly the cargo between airports and handle ground pick up from and delivery to customers) UPS, FedEx, DHL
  • Growth of 3PLs-third party logistics providers
transportation and the supply and distribution chain
Transportation and the Supply and Distribution Chain








supply chain management scm
Supply Chain Management (SCM)
  • Firms now compete not as entities but rather as supply chains
  • Definition: a business strategy to improve shareholder and customer value by optimizing the flow of products, services and related information from source to customer
  • Generally management of multiple relationships across the suppliers, producers and distributors
push and pull supply chains
Push and Pull Supply Chains
  • Porter’s value chain-system shows how firms construct value by gathering profits at various points in the production chain
  • Push chain- costs are transmitted up the chain determined by selling price at preceding level-cost plus approach
  • Pull chain- place downward pressure on suppliers who determine profits from their input costs
global production chains and networks
Global Production Chains and Networks
  • Production Chain: Materials > Procurement > Transformation > Marketing and Sales >Distribution > Service
  • Definition: transactionally linked sequence of functions where each stage adds value to the process of goods and services production
  • Two aspects important: coordination and regulation and geographical configuration
  • Production chains may be very localized but increasingly are global in scale to take advantage of international division of labor
kia auto parts flow
KIA Auto Parts Flow
  • Assembled in S Korea KIA Sorrento clear example of global supply chain
  • Uses 30K parts from all around world
  • Parts shipped from places as diverse as Wales and Mexico—but very risky
  • War in Iraq and piracy in Malacca Straits
  • Demonstrate surprising adaptability due to advance planning, multiple sourcing of parts and ability to shift routes on short notice
kia auto parts flow23
KIA Auto Parts Flow
  • Communicates regularly with suppliers-at least once a week
  • Order several months in advance
  • If necessary use air freight instead of sea freight
  • Greater demand forced KIA to air freight airbags from Swedish company which makes them in the U.S.
  • Greater expense of trans-Pacific flight better than slowing down production line
  • One of most dynamic sectors of transport industry
  • Common meaning: flow of goods involving more than one transport mode
  • Mutimodal transport- involve several different modes
  • Intermodal transport- flow of cargos from shipper to consignee involving single cargo unit across at least two different modes using a single through rate
intermodal transport goals
Intermodal Transport Goals
  • Goal to remove barriers to flows inherent in traditional systems
  • Includes technical limits of transferring freight between competitors and organizational and legal constraints imposed by separate rates and bills
  • Attempt to achieve seamlessness where relative advantages of each mode are captured
elements of intermodal transport
Elements of Intermodal Transport
  • Transferability of a unit load- largely technological problem
  • Provision of door to door service- requires organizational control that may face regulatory restrictions
  • Transferability has been achieved through containerization- boxes of standard dimensions
first intermodal revolution
First Intermodal Revolution
  • Several attempts to integrate transport modes-
  • “Piggyback” or trailer on flatcar (TOFC)
  • Early success limited by rate restrictions, poor reliability and low profitability
  • Containerization was the revolutionary breakthrough
  • Transfer of cargo can be mechanical by crane and safety and security is improved
  • Fast loading and unloading reduces port congestion
  • Growth has occurred through conversion of cargo from traditional break of bulk and the growth of world trade
impacts of containerization on ships
Impacts of Containerization on Ships
  • First generation vessels- WWII liquid bulk tankers
  • Second generation – late 1960s larger ships (2000 TEUs) capable of stacking 10 lines of containers appeared
  • Third generation- 1980s size and fuel efficiency- up to 4000 TEUs
  • Fourth generation- 6-8000 TEU ships
impacts of containerization on shipping
Impacts of Containerization on Shipping
  • 1. Effects on shipping services and routing
  • Goal to maximize number of voyages and minimize port stays- a. use fleet as efficiently as possible
  • Container services are liner services with regularly schedules arrivals and departures
  • Service frequency is important in designing networks – b. generate cargo and market share
  • Selection of port of call is strongly influenced by cargo availability
  • 2. Effects on structure and organization of industry
  • Development of alliances has been common
impacts of containerization on ports
Impacts of Containerization on Ports
  • Huge investments in machines to lift and move containers
  • Provision of new berths for large ships
  • Extensive storage space required until land modes can receive cargo
  • Larger demand for adequate port sites and old terminals have been abandoned
  • Elimination of labor has provoked resistance to containerization
second intermodal revolution
Second Intermodal Revolution
  • By early 1990s first intermodal revolution had matured
  • Global assault on regulatory restrictions- liberalization removing control over rates and permitting multimodal ownership
  • Information technology assisting in problems of documentation, security and safety
  • New revolution characterized by “through transport” concept- organization of trade is “door to door” and attempt to integrate various modes into production and consumption systems
  • Implies landward links where rail and highway play major roles