Transportation Management

1. Transportation Management EIN 5346 Logistics Engineering, Spring 2010 Alejandro Leon Arjit Joshi Poonam Ranka Bader Alwoimi

2. Project Flow • Legalities • Documentation • Modal Selection • Making and Receiving Shipments • Transportation Management Systems

3. Why think about legalities? • Many agencies/ departments affect trade • The number of regulating bodies multiplies when you move into international trade • The governing body becomes even more nebulous when several bodies compete for control

4. Domestic trade • US Constitution • Art. 1, Sec.8: Congress shall have the power “To Regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes” • Art. 1 Sec. 9: “No Tax or Duty shall be laid on Articles exported from any State.” and “No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another; nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.”

5. Domestic Regulating Agencies • U.S. Department of Transportation • Federal Aviation Administration (FAA) • Federal Highway Administration (FHWA) • Federal Motor Carrier Safety Administration (FMSCA) • National Highway Traffic Safety Administration (NHTSA) • Federal Railroad Administration (FRA) • Pipeline and Hazardous Materials Safety Administration (PHMSA) • Maritime Administration (MARAD) • Surface Transportation Board (STB) • Florida Department of Transportation • Department of Highway safety and Motor Vehicles • Seaport Office • Office Motor Carriers Compliance • Office of Forms and Procedures

6. Domestic Regulating Agencies (cont.) • National Transportation Safety Board • Charged with determining the cause of transportation accidents and regulate what can be done to make transportation safer. • Includes vehicular and conveyance transportation • Department of Commerce • Regulates what can be traded to/with foreign countries. • Department of Homeland Security • Houses Customs and Border Protection • Environmental Protection Agency (EPA) • Regulates the impact companies can have on the environment and public lands • Federal Trade Commission • Regulates against monopolies, anti-competitiveness, and deceptive business practices • National Labor Relations Board • Regulates Labor unions and employer/ employee relations

7. Non-Governmental “Regulators” • Not affiliated with the government but make recommendations that government often use when making regulation or negotiate on behalf of labor groups. • National Fire Protection Agency (NFPA) • Insurance Institute of Highway Safety • Labor Unions • Teamsters • Transport workers Union

8. National Fire Protection Agency Hazard Diamond

9. Domestic Agencies Dealing with International Trade • United States International Trade Commission • A whistle blower on when the US is being harassed with unfair trade arrangements • Office of the United States Trade Representative • Enforcer of international trade agreements

10. International Trade Agreements • US has Free Trade Agreements with 17 nations • Australia • Bahrain • Canada • Chile • Costa Rica • Dominican Republic • El Salvador • Guatemala • Honduras • Israel • Jordan • Mexico • Morocco • Nicaragua • Oman • Peru • Singapore China?? India?? Japan?? Korea??

11. Major US Trade Agreements • North American Free Trade Agreement • Bilateral Investment Treaties • Protect Private investment to promote US exports • Major Agreements still in the works • Korea Free Trade Agreement • Trans-Pacific Partnership Agreement

12. World Trade Organization • International body that deals with rules and guidelines of international Trade • 153 nations are members • A forum where members can discuss trade issues • Brings countries together to lower tariffs and promote free trade • Works against protectionism within countries • Assistance and Protection for developing countries

13. Documentation to Comply with Laws and Regulations • Many times you need to keep/ produce many documents to comply with regulation • Truck Driver’s Log • Made to insure that a truck driver is not driving more hours than allowed • Bill of Landing • A receipt of Delivery • Freight Bill • An invoice submitted by a carrier requesting to be paid • Freight Claims • Documentation produced to return freight when wrong/defective deliveries are made. • Customs Declaration • Form produced to inform governments of delivery contents when transporting internationally

14. Customs Declarationfor Apollo 11flight

15. Modes of Transportation • primary modes of transportation • truck • rail • air • water • pipeline • intermodal transportation

16. Modes of Transportation Motor Carriers • widely used mode of transportation in the domestic supply chain • economic structure of the motor carrier industry contributes to the vast number of carriers in the industry • comprised of for-hire and private fleet operations • Truckload carriers. • Less-than-truckload (LTL) • Small package carriers • Low fixed cost, high variable Railroads • Activity levels have been achieved despite a lack of direct accessibility to all parts of the supply chain • Railroads are “natural monopolies” • Two carrier types: • Line haul • Shoreline carriers • High fixed, low variable

17. Modes of Transportation Water • Major facilitator of international trade • High variable and low fixed cost • Two primary carrier types • Liner • Charter • Options include • Container ships • Bulk carriers • Tankers • General cargo ships • Roll-on, roll-off (RO–RO) vessels Air Carriers • 491 air cargo carriers • Combination carriers • Air cargo carriers • Integrated carriers • Nonintegrated carriers • Domestic market is dominated by 14 major carriers • High variable and low fixed cost

18. Pipeline • Unique mode of transportation as the equipment is fixed in place and the product moves through it in high volume • 174 operators of hazardous liquid pipelines that primarily carry crude oil and petroleum products • Three primary types • Gathering lines • Trunk lines • Refined product pipelines • High fixed versus low variable

20. Modal Selection • Accessibility • Accessibility advantage: Motor carriage • Accessibility disadvantage: Air, rail, and water • Transit Time • Transit time advantage: Air and motor carriage • Transit time disadvantage: Rail, water, and pipeline • Reliability • Reliability advantage: Motor carriers and air carriers • Reliability disadvantage: Water carriers and rail carriers

21. Modal Selection • Product Safety • Safety advantage: Air transportation and motor carriage • Safety disadvantage: Rail and water • Cost • Cost advantage: The cost of transportation service varies greatly between and within the modes • Cost disadvantage: Motor carriage and air transportation

22. Carrier Selection • selecting the individual transportation service providers within the mode • major difference between modal and carrier selection is the number of options • difference is the frequency of the decision • type of service provided within a mode impacts carrier selection • most carriers have the capabilities to provide a similar level of service • Core carrier • limited number of carriers • leverage its purchasing dollars

23. MAKING AND RECEIVING SHIPMENTS This refers to tactical planning and control of shipments along with supervision of freight loading and unloading. Consolidating small Shipments: Defined as those that weigh more than 150 pounds and less than 500 pounds.

24. Pic from scanner

25. Smaller Shipments Are Problematic • Carrier Perspective: • Require a high degree of manual labor. • Increasing labor costs. • Lose money on small shipments because the revenues from them don’t sufficiently reflect cost considerations. • Transportation Manager Perspective: • - Large number of small shipments means that there needs to be an information system capable of keeping track of each shipments statues. • -It’s easier to keep track of one shipment of 10 units than to keep track of 10 shipments of one unit. • - Accumulate 10 units would increased the time then, could result in poorer service to the final customer.

27. Solutions ( Example 10 Units) • 1- Consolidation across Time: • - Accomplished through volume guidelines ( minimum shipment of 8 units which would mean a shipment on the fourth day) or time guidelines (ship every third day in which case the shipment volume would be 6 units). • 2- Consolidation across Place: • The transportation manager looks to build volume with shipments going to a similar destination or similar destinations and this often involves looking outside one’s firm. • Transportation specialist such as freight forwarders, shippers’ associations, and transportation brokers can be helpful in achieving consolidation across place.

28. Demurrage: • Is a penalty payment made by the shipper or consignee to a railroad for keeping a railcar beyond the time when it should be released back to the carrier. • Detention: • Is basically the same concept as demurrage, except that it usually refers to the trucking industry. • Diversion: • Occurs when the shipper notifies the carrier prior to the shipments arrival in the destination city, of a change destination. • Reconsignment: • Is similar to diversion , but it occurs after the shipment has arrived in the destination city.

30. How to track your shipment using • http://www.youtube.com/watch?v=hWa3J-zv1EE • http://www.ups.com/tracking/tracking.html • http://www.youtube.com/watch?v=fCrqy5S-H_A&feature=related

32. Why TMS? Efficiency and productivity in daily operations • Enable companies to centralize the logistics function, providing support across their entire organization. • Adhering to and enforcing business rules and processes to ensure proper execution. • Order processing is automated through the point of load costing, carrier selection, tendering, carrier acceptance and shipment visibility. • TMS systems improve carrier communications through EDI, Internet portals, and the use of email. • Access to data through standard reports and additional report writers for customized reporting and tracking of data such as Freight accruals, fuel surcharge, and accessorial charges.   • Automated electronic reconciliation improves the speed and accuracy of freight bill audit and payment. • Reduced costs through carrier selection compliance and optimization • Improved customer service levels through consistent and expected delivery. .

33. Types of licensing arrangements • On-Premise Licensing (traditional purchased license) • Hosted (remote) • On-Premise Hosted Licensing (a blend of 1 & 2)

34. TMS - manage three key processes of transportation management: 1. Planing and Decision Making TMS will define the most efficient transport schemes according to given parameters, which have a lower or higher importance according to the user policy: transport cost, shorter lead-time, fewer stops possible to insure quality, flows regrouping coefficient… 2. Transport follow-up TMS will allow following any physical or administrative operation regarding transportation: traceability of transport event by event (shipping from A, arrival at B, customs clearance…), editing of reception, custom clearance, invoicing and booking documents, sending of transport alerts (delay, accident, non-forecast stops…)

35. TMS - manage three key processes of transportation management: 3. Measurement • TMS have or need to have a Logistics KPI reporting function for transport. • Various functions of a TMS: • Planning and optimizing of terrestrial transport rounds • Transportation mode and carrier selection • Management of air and maritime transport • Real time vehicles tracking • Service quality control • Vehicle Load and Route optimization • Transport costs and scheme simulation • Shipment batching of orders • Cost control, KPI (Key performance indicators) reporting and statistics • Typical KPIs include but not limited to: •  % of On Time Pick Up or Delivery Performance relative to requested • Cost Per Metric - mile; km; Weight; Cube; Pallet

36. Inter-relationships of TMS with ERP and WMS WMS Inbound deliveries to Warehouse Outbound deliveries to Stores Customer or Stores ERP TMS Transportation Visibility Tool for Shipment Tracking

37. Typical Global Supply Chain for Today’s Retailers

38. Example: Transportation Visibility Flow

39. THANK YOU.QUESTIONS?