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The Transportation Geography of Logistics

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The Transportation Geography of Logistics

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    1. The Transportation Geography of Logistics Jean-Paul Rodrigue Dept. of Economics & Geography Hofstra University Hempstead, New York, 11549 USA Jean-paul.Rodrigue@hofstra.edu

    2. Outline 1. Transportation and Logistics 2. The Spatial Structures of Logistics 3. Logistical Spatial Paradoxes Originated in military applications where time was a major factor in operations.Originated in military applications where time was a major factor in operations.

    3. Transportation and Logistics Distance Core concept to transport geography. Location and accessibility. Transportation technologies. Time Core management concept. Communication technologies. Managing distribution systems Information technologies. Gaining time by using efficiently distribution systems. Compromising space and time. Mainly support the “New” Economy. Concerns shifted from distance to time.Concerns shifted from distance to time.

    4. Logistical Transport Structures Various transport structures can be identified. Corridors. Represent infrastructures supporting modal flows of freight, people or information. They are generally concentrated along a communication axis and almost exclusively linear. Interfaces. They act as compulsory passages for various flows. An intermodal function is often performed. Thresholds. Organize the direction of flows along a corridor and can be considered as consolidation and distribution points. Various transport structures can be identified. Corridors. Represent infrastructures supporting modal flows of freight, people or information. They are generally concentrated along a communication axis and almost exclusively linear. Interfaces. They act as compulsory passages for various flows. An intermodal function is often performed. Thresholds. Organize the direction of flows along a corridor and can be considered as consolidation and distribution points.

    5. Fluxes in a Fordist and Post-Fordist Production System

    6. Fragmentation of the Industrial Production System

    7. International Configurations of Production

    8. Logistical Improvements, Manufacturing Sector, 1960-2000 Cycle time represents the delay between an order for a customer and the delivery of the product to the customer. Source: T. Hsu, FedEx, 1998.Cycle time represents the delay between an order for a customer and the delivery of the product to the customer. Source: T. Hsu, FedEx, 1998.

    9. Just-in-Time and its Logistic Inventory on roads.Inventory on roads.

    10. % of Products Shipped for “Just-in-Time” Manufacturing Source: T. Hsu, FedEx, 1998.Source: T. Hsu, FedEx, 1998.

    11. Effects of Logistics on a Transport Chain A transportation chain is a sequence of modes and infrastructures used to move from an origin to a destination.A transportation chain is a sequence of modes and infrastructures used to move from an origin to a destination.

    12. Distance and Network Connectivity Source: Adapted from William Black (2000) “An Unpopular Essay on Transportation”, Douglas Fleming lecture, Presented at the meeting of the Association of American Geographers, Pittsburgh, Pennsylvania.Source: Adapted from William Black (2000) “An Unpopular Essay on Transportation”, Douglas Fleming lecture, Presented at the meeting of the Association of American Geographers, Pittsburgh, Pennsylvania.

    13. The Emergence of the Logistics Industry Distribution Dilemmas Delays and bottlenecks. Increasing distribution costs. High investment costs for expansion. Logistics Industry Separate service function. Specialization. Mergers, acquisitions and strategic alliances. Controlling the whole transportation chain. Consolidation of deliveries. Warehousing management. Key players: UPS, FedEx, DHL, TNT. By the 1990s, several manufactures have reached distribution dilemmas and were facing increasing difficulties to organize their freight distribution systems. Instead of investing massive quantities of capital to expand their own distribution systems, manufacturers subcontracted their logistical operations to specialized companies, thus permitting the development of the logistics industry. The key players have developed in time an extensive expertise in freight distribution, notably mail and parcels. They are now offering this expertise to help the manufacturing sector improve its efficiency by taking charge of several, if not most, logistical operations. Similar to what happened to the industrial world, the logistics industry has seen processes of M&A as well as strategic alliances with other transport companies (often of different modes such as trucking), which has permitted the key players to achieve a control of whole transportation chains.By the 1990s, several manufactures have reached distribution dilemmas and were facing increasing difficulties to organize their freight distribution systems. Instead of investing massive quantities of capital to expand their own distribution systems, manufacturers subcontracted their logistical operations to specialized companies, thus permitting the development of the logistics industry. The key players have developed in time an extensive expertise in freight distribution, notably mail and parcels. They are now offering this expertise to help the manufacturing sector improve its efficiency by taking charge of several, if not most, logistical operations. Similar to what happened to the industrial world, the logistics industry has seen processes of M&A as well as strategic alliances with other transport companies (often of different modes such as trucking), which has permitted the key players to achieve a control of whole transportation chains.

    14. Major Air Hubs, UPS, FedEx and DHL, 2001 These corporations are at the forefront of logistical development through the management and expansion of an international freight distribution system, which jointly handles about 28 million parcels per day. A powerful recent trend has been for corporations, large and small alike and in every sector of the economy, to subcontract their logistical activities. As a result, civilian freight distribution systems are becoming more efficient, but also more vulnerable. Operations of civilian logistics mainly rely on hub-and-spoke structures, where logistical hubs are the heart of physical distribution systems. This network restructuring has been adopted by the whole air transport industry and has been linked with increased efficiency, but also increasing vulnerability. For instance, the main hub of UPS is located in Louisville, Kentucky and has the capacity to handle more than 5 million parcels per day. This gigantic air freight sorting and warehousing center receives on average 100 flights per day and employs more than 18,000 people. If for any reasons the Louisville hub was compromised, the whole UPS logistical system would also be compromised with significant delays in deliveries. It is worth mentioning that those carriers have a very high visibility at the global level since they are represented in almost every country and have their own air companies. UPS Airline, the 11th largest in the world, alone operates more than 238 aircrafts and serves more than 450 airports around the world, plus 475 airports in the United States. 1995 FedEx developed a major air hub at Subic Bay called “Asia One”.These corporations are at the forefront of logistical development through the management and expansion of an international freight distribution system, which jointly handles about 28 million parcels per day. A powerful recent trend has been for corporations, large and small alike and in every sector of the economy, to subcontract their logistical activities. As a result, civilian freight distribution systems are becoming more efficient, but also more vulnerable. Operations of civilian logistics mainly rely on hub-and-spoke structures, where logistical hubs are the heart of physical distribution systems. This network restructuring has been adopted by the whole air transport industry and has been linked with increased efficiency, but also increasing vulnerability. For instance, the main hub of UPS is located in Louisville, Kentucky and has the capacity to handle more than 5 million parcels per day. This gigantic air freight sorting and warehousing center receives on average 100 flights per day and employs more than 18,000 people. If for any reasons the Louisville hub was compromised, the whole UPS logistical system would also be compromised with significant delays in deliveries. It is worth mentioning that those carriers have a very high visibility at the global level since they are represented in almost every country and have their own air companies. UPS Airline, the 11th largest in the world, alone operates more than 238 aircrafts and serves more than 450 airports around the world, plus 475 airports in the United States. 1995 FedEx developed a major air hub at Subic Bay called “Asia One”.

    15. The Logistics of Mitsui & Co.

    16. National Semiconductors, Supply Chain, 1996 Source: T. Hsu, FedEx, 1998. Source: T. Hsu, FedEx, 1998.

    17. National Semiconductors, Improved Supply Chain, 1998 Source: T. Hsu, FedEx, 1998. Source: T. Hsu, FedEx, 1998.

    18. National Semiconductors, Logistical Impacts Before 5 regional distribution centers. 2 weeks delivery cycle. 700 logistics employees. Distribution costs 2.9% of sales. 42 freight forwarders contracting with 14 airlines. After 1 global distribution center (Singapore). 4 days delivery cycle. 200 logistics employees. Distribution costs 1.2 % of sales. 1 logistical supplier (FedEx). Source: T. Hsu, FedEx, 1998.Source: T. Hsu, FedEx, 1998.

    19. Logistics and E-commerce UPS handles 9 million parcels per day created by e-commerce. Reduce costs, such as process and transaction. Could reduce the cost of making a car by 14%. Paradox of trimming of the supply chain. Complexity of distribution. UPS handles 9 million parcels per day created by e-commerce. Reduce costs, such as process and transaction. Could reduce the cost of making a car by 14%. Paradox of trimming of the supply chain. Complexity of distribution.

    20. Logistical Friction Transportation costs Distance / time. Energy / Environmental impacts. Complexity of the supply chain Number of parts and tasks. Number of suppliers and clients. Extent of warehousing and of consolidation. Transactional environment Customs procedures and tariffs. Corporate management. Payments and foreign exchange. A trend is the creation of logistical consolidators servicing several enterprises. UPS and FedEx both have created subsidiaries specializing in logistical services.A trend is the creation of logistical consolidators servicing several enterprises. UPS and FedEx both have created subsidiaries specializing in logistical services.

    21. Logistics and instability

    22. Major Road Bottlenecks in the United States, 1998

    23. Hub-and-Spoke Network and the Environment

    24. Environmental Vicious Circle of Logistics

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