TRANSPORTATION SYSTEM

Module outline
Introduction Transportation: Malaysian scenario Role of transportation in logistics Transportation selection decision Basic modes of transport

Introduction
Provide the movement of materials and goods One of the key activities in logistics Mode of transportation includes air, rail, water, road, pipeline or intermodal

Introduction
Below table shows the operating characteristics for each transportation modes:
Relative Operating Characteristics Operating characteristics Rail Road Water Speed Availability Dependability Capability Frequency Composite 1 - Best; 5 - Worst 3 2 3 2 4 14 2 1 2 3 2 10 4 4 4 1 5 18 Air 1 3 5 4 3 16 Pipe 5 5 1 5 1 17

Introduction
Growth of transportation has parallel help the growth of industry In 1996, US transportation expenditure were approximately $455 billion of the nations total logistics cost, which were estimated to be $797 billion

Introduction
Transportation determines how fast and how consistently a material moves from one point to another We call this time-in-transit.

Introduction
Ensuring product availability at a precise time is vital Issues like lost sales, production down time, and customer dissatisfaction will be needed to face if transportation unable to deliver the products on time.

Transportation: Malaysian Scenario

Malaysia recognizes the contribution of transportation sector to economic growth A good and efficient transportation system is a requirement for economic development in Malaysia

Transportation: Malaysian Scenario

More linkages and connectivity by sea, air and land transportation both within Malaysia and other overseas destinations can promote and facilitate the trade and tourism industry A total sum of RM61.2 billion was spent under the Eighth Malaysia Plan

Transportation: Malaysian Scenario

According to Kong, Malaysia Transport Minister:
Malaysia is poised to grab a bigger slice of intraAsean and intra-Asian trade given its excellent port infrastructure and good maritime institutional and regulatory framework. With the Asean Free Trade Area set to become a reality by 2015, Malaysia's ports, some of which offer world- class services at a competitive cost, are set to reap the opportunities presented by a huge and integrated regional market.

Role of transportation in logistics

Transportation system is a key element in a logistics chain which can link the separated activities Transportation is required in the whole production procedures, from production to distribution to the final destination and returns

Role of transportation in logistics

A better logistics efficiency, reduce operation cost and promote service quality can only be achieved thru good transport system With a well-handled transport system, product could be sent at right time to the right place in order to fulfill the customers demands

Role of transportation in logistics

Transportation is necessary for successful marketing efforts the availability, adequacy, and cost of transportation

Role of transportation in logistics

Transportation related service elements:
Speed Availability Dependability Flexibility TimeTime-inin-transit Accessible to customers when they want it Pick-up and delivery time variability Adjustment to shipper's needs

Transportation selection decision

A number of factors are considered in carrier selection decision:
Structure Cost

Product

Service

Transportation selection decision

(a) Structure Most transportation points towards a centralized transportation management structure. Centralization gives an enough size and scale to be able to leverage in rates, volumes and contract term negotiation. This is the benefit of centralizing the transportation management process. Companies invest in high-tech solutions to manage the execution of their transportation strategies.

Transportation selection decision

(b) Cost Keeping costs at a minimum is still the main priority. To stay competitive in the industry, a business must always remain focused on increasing profitability. Companies in this current slump will be looking for every avenue to cut costs, and as always transportation will be one of the first functional areas where companies look for dollars (Supply Chain Digest, 2009 pp.6).

Transportation selection decision

(c) Product

In terms of carrier selection, product characteristics also play an important part if the product has a special trait, such as temperature, hazardous materials or special handling requirements

Transportation selection decision

(d) Service Measures of service such as transit time and transit time variability should rank ahead in carrier selection. If the mode does not meet a given level of service required by the company for a particular product, this mode simply will not be considered as an option.

Basic modes of transport

Land transport Pipeline transport Water transport Air transport Intermodal

Basic modes of transport

Land Transport: Transport Land transport refers to activities of physical movement of goods and passengers on land. This land transport movement takes place on motor (truck) or rail.

Basic modes of transport

Advantages of motor transport Cheaper mode of transport Perishable goods can be transported at a faster speed It provides door-to-door service. Able to connect places which are not connected by other means of transport like hilly areas.

Basic mode of transport

Limitations of motor transport Due to limited carrying capacity road transport is not economical for long distance transportation of goods. Transportation of heavy goods or goods in bulk by road involves high cost. It is affected by adverse weather conditions. Floods, rain, landslide, etc.

Basic mode of transport

Advantages of Rail transport It is a convenient mode of transport for travelling long distances. It is relatively faster than road transport. It is suitable for carrying heavy goods in large quantities over long distances.

Basic mode of transport

Limitations of Rail transport It is relatively expensive for short distances. It is not available in remote parts of the country. It provides service according to fixed time schedule. Not flexible for loading or unloading of goods at any place.

Basic mode of transport

Pipelines transport Pipelines are used to transport water, crude petroleum, refined petroleum and natural gas This is the most convenient and economical mode of transport for petroleum as well as natural gas in comparison to road and rail transport.

Basic mode of transport

Advantages of pipeline transport Losses and damages are extremely rare. Climatic conditions have minimal effects on products moving in pipeline. Pipelines are not labor-intensive.

Basic mode of transport

Limitations of pipeline transport Significant initial cost is incurred in setting up the pipeline and related infrastructure

Basic mode of transport

Water transport
Movement of goods and passengers by using boats, steamers, ships. Water transport, by its nature, is limited to certain areas. Water transportation can be broken down into several categories: (i) Inland waterway, such as river and canals (ii) Lakes (iii) Coastal and inter-coastal ocean (iv) International deep sea

Basic modes of transport

Advantages of water transport Economical mode of transport for bulky and heavy goods. The cost of maintaining and constructing routes is very low as most of them are naturally made. It promotes international trade.

Basic modes of transport

Limitations of water transport The depth and navigability of rivers and canals vary and thus, affect operations of different transport vessels. It is a slow moving mode of transport and therefore not suitable for transport of perishable goods.

Basic modes of transport

Air transport It carries goods and passengers by using passenger aircraft, cargo aircraft, helicopters, etc. Air transport provides frequent and reliable service and rapid time-in-transit. Air transport can be grouped as domestic and international air transport.

Basic modes of transport

Advantages of air transport It is the fastest mode of transport It is the most convenient mode of transport during natural calamities. It provides vital support to the national security and defense.

Basic modes of transport

Limitations of air transport Expensive mode of transport. Not suitable for transporting heavy and bulky goods. Affected by adverse weather conditions. In case of accidents, it results in heavy losses of goods, property and life.

Basic modes of transport

Intermodal Use of more than one mode of transport to move a shipment to its destination Though various type of intermodal combinations are possible, the most common being use is truck/rail. The rise of global trade has also increase the truck/water/rail intermodal combination.

Basic modes of transport

Advantages of intermodal transport For global trade, intermodal is often the only option because the factories and markets may not be next to ports Intermodal system offers the benefit of lower cost

Basic modes of transport

Limitations of intermodal transport The exchange of information between different modes often involve delays.