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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

Supply Chain Logistics Management

Transportation Infrastructure & Regulation

slide3
Transportation Functions, Principles, Participants
  • Transportation Regulation
  • Transportation Industry Structure
  • Transportation Services
slide4
Transportation Functions, Principles, Participants
    • Transportation Functions
    • Transportation Principles
    • Transportation Participants
  • Transportation Regulation
  • Transportation Industry Structure
  • Transportation Services
slide5
Transportation Functions, Principles, Participants
    • Transportation Functions
      • Product Movement
      • Product Storage
    • Transportation Principles
    • Transportation Participants
  • Transportation Regulation
  • Transportation Industry Structure
  • Transportation Services
slide8

New Destination

NORFOLK

Diversion

Original Destination

NEW YORK

Los Angeles

slide9
Transportation Functions, Principles, Participants
    • Transportation Functions
    • Transportation Principles
      • Economy of Scale
      • Economy of Distance (Tapering Principle)
    • Transportation Participants
  • Transportation Regulation
  • Transportation Industry Structure
  • Transportation Services
slide10
Economies of ScaleThe 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

slide11
Economies of DistanceTapering 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

slide12
Transportation Functions, Principles, Participants
    • Transportation Functions
    • Transportation Principles
    • Transportation Participants
  • Transportation Regulation
  • Transportation Industry Structure
  • Transportation Services
transportation participants
Transportation Participants

I need something shipped at the lowest possible cost!

transportation participants14
Transportation Participants

I need something shipped at the lowest possible cost!

I need something delivered at the lowest possible cost!

transportation participants15
Transportation Participants

Carriers: We have the equipment!

transportation participants16
Transportation Participants

Carriers – we can find a shipper!

Shippers – we can find a carrier!

transportation participants17
Transportation Participants

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

transportation participants18
Transportation Participants

purchase fuel, transportation equipment, supplies

transportation participants19
Transportation Participants

track shipments

purchase fuel, transportation equipment, supplies

transportation participants20
Transportation Participants

track shipments

purchase fuel, transportation equipment, supplies

match products needing to be shipped with available capacity

transportation participants21
Transportation Participants

Creates demand for transportation by purchasing products

slide22
Transportation Functions, Principles, Participants
  • Transportation Regulation Transportation Industry Structure
  • Transportation Services
slide23
Transportation Functions, Principles, Participants
  • Transportation Regulation
    • Types of Transportation Regulation
    • History of Transportation Regulation
  • Transportation Industry Structure
  • Transportation Services
slide24
Transportation Functions, Principles, Participants
  • Transportation Regulation
    • Types of Transportation Regulation
    • History of Transportation Regulation
  • Transportation Industry Structure
  • Transportation Services
types of transportation regulation
Types of Transportation Regulation

Economic

  • Investments in transportation infrastructure
  • (e.g., highways, airports, ports)
  • Control of routes, pricing, schedules
types of transportation regulation26
Types of Transportation Regulation

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
slide27
Transportation Functions, Principles, Participants
  • Transportation Regulation
    • Types of Transportation Regulation
    • History of Transportation Regulation
  • Transportation Industry Structure
  • Transportation Services
history of transportation regulation
History of Transportation Regulation
  • Pre-1920 – establish initial government control
    • Act to Regulate Commerce (1887)
    • Interstate Commerce Commission (ICC)
history of transportation regulation29
History of Transportation Regulation
  • 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)
history of transportation regulation30
History of Transportation Regulation
  • 1940-1970
    • Regulation of water transportation by ICC (1940)
    • Railroad Revitalization and Regulatory Reform Act of 1976
      • AMTRAK
      • CONRAIL
history of transportation regulation31
History of Transportation Regulation
  • 1970-1980 – prelude to deregulation
    • Shift from regulation/control to fostering competition
    • Department of Transportation (DOT) 1961
    • Airline Deregulation Act 1978
history of transportation regulation32
History of Transportation Regulation
  • 1980-2000 – deregulation
    • Motor Carrier Act 1980
    • Staggers (Rail) Act 1980
    • Interstate Commerce Commission (ICC) abolished 1996
    • Ocean Shipping & Reform Act 1998
history of transportation regulation33
History of Transportation Regulation
  • 2000-Present – focus on technology, safety, and security
    • Patriot Act
    • Jones Act
slide34
Transportation Functions, Principles, Participants
  • Transportation Regulation Transportation Industry Structure
  • Transportation Services
five basic transportation modes39
Five Basic Transportation Modes

Pipeline

Water

Air

Rail

Highway

cost structure for each transportation mode
Cost Structure For Each Transportation Mode

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
cost structure for each transportation mode43
Cost Structure For Each Transportation Mode

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
slide44

Highway

  • LTL – less than truckload
  • TL – truckload
  • Specialty
cost structure for each transportation mode45
Cost Structure For Each Transportation Mode

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)
cost structure for each transportation mode46
Cost Structure For Each Transportation Mode

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.
cost structure for each transportation mode47
Cost Structure For Each Transportation Mode

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)
slide48
Transportation Functions, Principles, Participants
  • Transportation RegulationTransportation Industry Structure
  • Transportation Services
slide49
Transportation Functions, Principles, Participants
  • Transportation RegulationTransportation Industry Structure
  • Transportation Services
    • Non Operating Intermediaries
    • Traditional Transportation Carriers
    • Package Services
    • Intermodal Transportation
slide50
Transportation Functions, Principles, Participants
  • Transportation RegulationTransportation Industry Structure
  • Transportation Services
    • Non Operating Intermediaries
      • Freight Forwarders
      • Transportation Brokers
      • Shipper Associations/Cooperatives/Agents
    • Traditional Transportation Carriers
    • Package Services
    • Intermodal Transportation
slide51
Transportation Functions, Principles, Participants
  • Transportation RegulationTransportation Industry Structure
  • Transportation Services
    • Non Operating Intermediaries
      • Freight Forwarders
      • Transportation Brokers
      • Shipper Associations/Cooperatives/Agents
    • Traditional Transportation Carriers
    • Package Services
    • Intermodal Transportation
slide52
Transportation Functions, Principles, Participants
  • Transportation RegulationTransportation Industry Structure
  • Transportation Services
    • Non Operating Intermediaries
      • Freight Forwarders
      • Transportation Brokers
      • Shipper Associations/Cooperatives/Agents
    • Traditional Transportation Carriers
    • Package Services
    • Intermodal Transportation
slide53
Transportation Functions, Principles, Participants
  • Transportation RegulationTransportation Industry Structure
  • Transportation Services
    • Non Operating Intermediaries
      • Freight Forwarders
      • Transportation Brokers
      • Shipper Associations/Cooperatives/Agents
    • Traditional Transportation Carriers
    • Package Services
    • Intermodal Transportation
slide54
Transportation Functions, Principles, Participants
  • Transportation RegulationTransportation Industry Structure
  • Transportation Services
    • Non Operating Intermediaries
    • Traditional Transportation Carriers
    • Package Services
    • Intermodal Transportation
slide55
Transportation Functions, Principles, Participants
  • Transportation RegulationTransportation Industry Structure
  • Transportation Services
    • Non Operating Intermediaries
    • Traditional Transportation Carriers
    • Package Services
    • Intermodal Transportation
slide56
Transportation Functions, Principles, Participants
  • Transportation RegulationTransportation Industry Structure
  • Transportation Services
    • Non Operating Intermediaries
    • Traditional Transportation Carriers
    • Package Services
    • Intermodal Transportation
slide57

Piggyback

  • Trailer on Flat Car (TOFC)
  • Container on Flat Car (COFC)
  • Fishyback
  • Trainship
  • Containership
  • Coordinated Air/Truck