chapter 11: strategic leadership chapter 15 the transport system
TRANSCRIPT
Chapter 11: Strategic Leadership
Chapter 15
The transport system
Chapter 11: Strategic Leadership
The transport system
This chapter covers the following topics:
• Operational characteristics of the various modes of freight transport
• Terminals
• The goods carried in the transport system
• Freight transport service providers
• The freight transport user
• Government as stakeholder in the transport system
Chapter 11: Strategic Leadership
Air transport
Operational overview:– Fast (short transit time)
– Long-distance service
– High-value freight
Chapter 11: Strategic Leadership
Air transport (continued)
Strengths:– Short transit times
– Long distance
– Reliable
– High goods security
– Low packaging cost
Chapter 11: Strategic Leadership
Air transport (continued)
Limitations:– Not door to door (terminal-bound)
– Low carrying capacity
– Low frequency (relative to road)
– Terminal congestion
– Sensitive to inclement weather at terminal
– Low accessibility (market coverage)
– High unit costs
Chapter 11: Strategic Leadership
Air transport (continued)
Air freight is determined by:– Type of commodity
– Demand of characteristics
– Nature of distribution
Chapter 11: Strategic Leadership
Road transport
Operational overview:– Comprehensive
– Flexible
– Versatile
– Reliable
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Road transport (continued)
Strengths:– Door-to-door service
– Accessible (good market coverage)
– Secure (few transfers)
– Fast on door-to-door basis
– Flexible/adaptable
– Frequent
Chapter 11: Strategic Leadership
Road transport (continued)
• Limitations:– Carrying capacity– Environmental impact– Vulnerability to external factors– High energy consumption– Shared right of way
• Freight characteristics:– Able to carry comprehensive range of goods– High-value finished products
Chapter 11: Strategic Leadership
Rail transport
Operational overview:– Limited to fixed routes
– Terminal-to-terminal service
Chapter 11: Strategic Leadership
Rail transport (continued)
Strengths:– Able to carry comprehensive range of goods
– Bulk carrier over long distance
– Efficient over long hauls
– Exclusive right of way
– Not affected by inclement weather
– Rolling stock cannot easily be stolen
Chapter 11: Strategic Leadership
Rail transport (continued)
Strengths (continued):
– Dedicated unit trains can achieve short transit times
– Possibility of private sidings can improve accessibility
– Energy-efficient
– Low accident rate
Chapter 11: Strategic Leadership
Rail transport (continued)
• Limitations:– Not door-to-door (terminal-bound); needs to be supplemented– Needs robust packaging; high damage record– Inconsistent service– Requires high capital investment– Vulnerable to pilferage of goods– High degree of empty running
• Freight characteristics:– Suitable for carrying large, high-density commodities and bulk consignments over long distances at low cost
Chapter 11: Strategic Leadership
Pipeline transport
Operational overview:– Infrastructure also the carrying unit
– Return journey (pumping) avoidable
– Product intake, haulage and discharge a single process
– Different commodities can be pumped consecutively
– Not labour-intensive
Chapter 11: Strategic Leadership
Pipeline transport (continued)
Strengths:– Environmentally sound
– Large volume over long distance at low cost and risk
– Reliable and secure
– Low unit cost
– Tank-to-tank service (no transfers)
Chapter 11: Strategic Leadership
Pipeline transport (continued)
• Limitations:– Limited range of commodities
– Fixed routes and terminals
– Inflexible service
– High investment cost
• Freight characteristics:– Limited variety: gas, fluids and slurrified material
Chapter 11: Strategic Leadership
Sea transport
Operational overview:– The most cost-effective way of transporting high-bulk commodities over long distances– Most widely used international shipment method– Has become highly specialised since the 1960s:
• Bulk carriers (dry goods)
• Tankers (fluids)
• Roll-on/roll-off (ro-ro) ships
• Oil-bulk-ore (OBO) vessels
• Container vessels
Chapter 11: Strategic Leadership
Sea transport (continued)
Strengths:– Low-cost unit
– Large volumes over long distances
– Little congestion on open sea
– Safe and secure service
Chapter 11: Strategic Leadership
Sea transport (continued)
• Limitations:– Terminal-to-terminal service only– Transhipment of freight unavoidable– Vulnerable to inclement weather/rough seas– Slow and low-frequency service
• Freight characteristics:– Wide variety of freight at relatively low cost– Vast majority of shipments not sensitive to short delivery times
Chapter 11: Strategic Leadership
Terminals• A terminal is an area at the end of a route – or where routes meet, branch out or cross – where goods are transferred.• A node is a fixed point in the logistics chain where goods come to rest (e.g. airport; seaport; tank farm; rail terminal; road terminal).• Functions of terminals:– Freight consolidation– Bulk breaking– Warehouse and transfer services– Vehicle services
Chapter 11: Strategic Leadership
The goods carried in the transport system• Three broad groups:– Raw materials– Semi-finished goods– Finished goods
• Five factors concerning goods influence transport costs:– In-transit care necessary– Density– Size and divisibility– Stowage ability and ease of handling– Potential liability of goods
Chapter 11: Strategic Leadership
Goods carried in the transport system
Chapter 11: Strategic Leadership
Freight transport service providers
• Background:– Accessibility
– Mobility
• Transport operators:– Private transport operators (first party)
– Professional carriers (third party)
Chapter 11: Strategic Leadership
Freight transport service providers (continued)
• Non-operating service providers (fourth party):– Freight forwarders– Freight brokers
• The freight transport user:– The user is the sender/shipper/Consignor.– The sender (i.e. first party) delivers to the receiver or consignee (the second party).
Chapter 11: Strategic Leadership
Government as stakeholder in the transport system
Reasons for government involvement in transport:– Control of excessive competition– Co-ordination of transport– Integration of transport with economic policy– Maintenance of safety, security and order– Provision of costly infrastructure– Provision of public goods
Chapter 11: Strategic Leadership
Government as stakeholder (continued)
Reasons for government involvement in transport (continued):
– Recovery of the true resource cost of transport inputs
– Regulation of harmful conduct and externalities
– Restraint of monopoly power
– Social support