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Supply Chain Logistics Management

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

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  1. Supply Chain Logistics Management Transportation Infrastructure & Regulation

  2. Role of Transportation in Logistics & Supply Chain Management • Industry Deregulation

  3. Transportation Functions, Principles, Participants • Transportation Regulation • Transportation Industry Structure • Transportation Services

  4. Transportation Functions, Principles, Participants • Transportation Functions • Transportation Principles • Transportation Participants • Transportation Regulation • Transportation Industry Structure • Transportation Services

  5. Transportation Functions, Principles, Participants • Transportation Functions • Product Movement • Product Storage • Transportation Principles • Transportation Participants • Transportation Regulation • Transportation Industry Structure • Transportation Services

  6. Product Movement

  7. Product Storage

  8. New Destination NORFOLK Diversion Original Destination NEW YORK Los Angeles

  9. 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

  10. 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

  11. 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

  12. Transportation Functions, Principles, Participants • Transportation Functions • Transportation Principles • Transportation Participants • Transportation Regulation • Transportation Industry Structure • Transportation Services

  13. Transportation Participants I need something shipped at the lowest possible cost!

  14. Transportation Participants I need something shipped at the lowest possible cost! I need something delivered at the lowest possible cost!

  15. Transportation Participants Carriers: We have the equipment!

  16. Transportation Participants Carriers – we can find a shipper! Shippers – we can find a carrier!

  17. Transportation Participants the transportation system is vital for the country’s economic health

  18. Transportation Participants purchase fuel, transportation equipment, supplies

  19. Transportation Participants track shipments purchase fuel, transportation equipment, supplies

  20. Transportation Participants track shipments purchase fuel, transportation equipment, supplies match products needing to be shipped with available capacity

  21. Transportation Participants Creates demand for transportation by purchasing products

  22. Transportation Functions, Principles, Participants • Transportation Regulation Transportation Industry Structure • Transportation Services

  23. Transportation Functions, Principles, Participants • Transportation Regulation • Types of Transportation Regulation • History of Transportation Regulation • Transportation Industry Structure • Transportation Services

  24. Transportation Functions, Principles, Participants • Transportation Regulation • Types of Transportation Regulation • History of Transportation Regulation • Transportation Industry Structure • Transportation Services

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

  26. 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

  27. Transportation Functions, Principles, Participants • Transportation Regulation • Types of Transportation Regulation • History of Transportation Regulation • Transportation Industry Structure • Transportation Services

  28. History of Transportation Regulation • Pre-1920 – establish initial government control • Act to Regulate Commerce (1887) • Interstate Commerce Commission (ICC)

  29. 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)

  30. History of Transportation Regulation • 1940-1970 • Regulation of water transportation by ICC (1940) • Railroad Revitalization and Regulatory Reform Act of 1976 • AMTRAK • CONRAIL

  31. 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

  32. 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

  33. History of Transportation Regulation • 2000-Present – focus on technology, safety, and security • Patriot Act • Jones Act

  34. Transportation Functions, Principles, Participants • Transportation Regulation Transportation Industry Structure • Transportation Services

  35. Five Basic Transportation Modes Pipeline

  36. Five Basic Transportation Modes Pipeline Water

  37. Five Basic Transportation Modes Pipeline Water Air

  38. Five Basic Transportation Modes Pipeline Water Air Rail

  39. Five Basic Transportation Modes Pipeline Water Air Rail Highway

  40. Domestic Shipments by Mode and Volume

  41. Domestic Shipments by Mode and Revenue

  42. 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

  43. 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

  44. Highway • LTL – less than truckload • TL – truckload • Specialty

  45. 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)

  46. 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.

  47. 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)

  48. Transportation Functions, Principles, Participants • Transportation RegulationTransportation Industry Structure • Transportation Services

  49. Transportation Functions, Principles, Participants • Transportation RegulationTransportation Industry Structure • Transportation Services • Non Operating Intermediaries • Traditional Transportation Carriers • Package Services • Intermodal Transportation

  50. 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

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