Foundations of Logistics Systems

Engineering
Dr. Evrim Ursavas

Logistics
Deals with the planning and control of :
Material flows
Related information

Mission is to get

The right materials

To the right place
At the right time

while optimizing a performance measure and

satisfying constraints

Logistics system
Includes not only all the functional activities
determining the flow of materials and
information, but also the infrastructures, means,
equipment and resources that are indispensable
to the execution of these activities;
- made up of facilities, where one or more
functional activities are carried out (e.g. storage
and distribution).

Distributors

Suppliers

Manufacturers

Flows of material
Flows of information

Customers

Example of a logistics system

 manufacturing process of the finished goods divided

into a transformation phase and an assembly phase,
performed in different centres;
- suppliers of materials and components which feed
the final manufacturing process;
- two-level distribution system with a tree structure;
- CDCs directly supplied by the production plants;
- each RDC connected to a single CDC which has the
task of serving the customer;
- customers: can also be dealers or retailers.

 At each facility the flow of materials is temporarily

interrupted, generally in order to change their
physical-chemical composition, ownership or
appearance;
- each logistic activity involves costs which affect the
value of the product, constantly adding to it as it
draws nearer the facilities closest to the final
customer;
- added value: spatial (following e.g. distribution
activities);
- added value: temporal (owing to storage activities).

Representation of logistics system

Directed (multi)graph G = (V,A):
> V: set of facilities;
> A: set of links existing among the facilities
used for the flow of materials .
- Several arcs between a pair of facilities
(alternative forms of transport services, different
routes, or different products).

Representation of a logistics system

system by a directed graph.

Ports in supply chains

What is a transportation network?

Customer

Different modalities:

Rails (Train)
Road (Truck)
Water (Ship)
Air (Plane)
Pipeline

In supply chains, loads can be

transported by one or more modes
of transport (intermodal transport)

Local transport
company
Terminal operator
Carrier
Terminal operator
Local transport
company

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Ports in transportation networks

Ports as a hub in a logistics network
Ports as a location for industrial settlement
Port authorities

Port life cycle model

throughput

Maturity

Growth

growth to private sector

Hinterland becomes important
Distribution and storage activities

Introduction

basic functions
No standardisation in freight
Hardly any suppliers and customers
Local focus

increase in the number of

terminals
International competition
Port authority
Vision on land sales
Hinterland network

time

Introduction: packaging of products

Containers are large boxes used to transport
goods from one destination to another.
Container creates a bulk unit out of the
individual pieces of freight.
Containerization: utilizing, grouping or
consolidating of multiple units into a larger
container for more efficient movement.
Advantages: less product packaging, less
damaging, standardization, higher productivity.

Introduction: containers
Dimensions of containers have been
standardized.
TEU (twenty-feet equivalent unit) is used to
refer to one container of twenty feet.
2 TEU: a container of 40 feet.
Reefer: container with electricity for products
that need cooling.
Containerized traffic introduced in the midfifties.

Container shipping
History

First containers ships in the 1950s

1960s container size standardized
Number of containers handled worldwide
1972: 6.3 million
2006: about 400 million
Current annual growth: about 10%

Capacity of ships has been extended from 400 TEU to about

12,000 TEUand now 18,000TEU
According to calculations by Ocean Shipping Consultants, the
cost per TEU of transport from Europe to the Far East is
about 13% less when using a ship with a capacity of 8,800
TEU instead of one with only 6,800 TEU.

Container handling
Containers are transported by ships, trucks or
trains.
Ports and terminals are used to transship
containers from one mode of transportation to
another.
Within ports, containers are transshipped with
material handling equipment like vehicles and
cranes.

Container fleet

The worlds biggest container ports

Shanghai

31.74

Singapore

29.94

Hong Kong

24.38

Shenzhen

22.57

Busan

16.17

Ningbo-Zhoushan

14.72

Guangzhou

14.26

Qingdao

13.02

Jebel Ali, Dubai

13.01

Rotterdam

11.88
Figures of 2011
(in million TEU)

http://www.worldshipping.org/about-the-industry/global-trade/top-50-world-container-ports

Trends noticed so far

Ships and ports have strongly increased in size

Number of containers transshipped continuously grows
Competition between ports increases
Focus more and more on customers service
Result: docking time at ports should be as short as
possible
Can be achieved by organizing logistics processes at
terminals well

Arrival
of the ship

import containers

load plan

Unloading plan

An overview of logistics processes

(Un)loading
of the ship

Transportation of
containers

export containers
Stack

Internal
Transport

other modalities

Flow of containers
ROTTERDAM

Flow of containers

Designing a container terminal

choice of layout of the terminal.
choice of material handling equipment used (e.g.
manned or automated).
determination of which ways of operation are
used.
development of planning and control concepts
for material handling equipment.
Logistics processes can be addressed separately
or integrated.

and the other modes

Modes of transport
-

Train;
road vehicle (e.g. truck);
aircraft;
ship (for transport on oceans, seas, lakes, canals and
rivers);
- pipeline.
Differ with respect to cost and transit time.
Intermodal transport
- some modes of transport do not allow a door-to-door
connection between any origin and destination and should
be used jointly with other modes;
- the commodities can be stored temporarily and then
consolidated into different bins.
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Rail transport
- Inexpensive (especially for long-distance movements),
relatively slow, quite unreliable.
- Reasons:
> convoys transporting freight have low priority compared
to trains transporting passengers;
> direct train connections are quite rare;
> a convoy includes tens of cars to be worth operating.
- Consequences:
> railroad is a slow mover of raw materials (coal,
chemicals etc.) and of low-value finished products
(steel, paper, sugar, tinned food etc.);
> with the aim of reducing the transfer cost, it is preferred
to ship multiple loads of the wagon capacity (carload
transfers, or CL).

6 Managing freight transport

Introduction

Road transport (1/3)

-

Realized by using trucks;

semi-finished and finished products;
truckload (TL) or less-than-truckload (LTL);
main inconvenience: limited capacity of the trucks.

TL
- TL service moves a full load directly from its origin to its
destination in a single trip (see Figure 2).
LTL
- if shipments add up to much less than the vehicle capacity,
it is more convenient to resort to several trucking services in
conjunction with cross-docking terminals (see Figure 3);
- LTL trucking is slower than TL trucking.

6 Managing freight transport

Introduction

Road transport (2/3)

Redding

Phoenix

Figure 2: Example of TL transport.

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6 Managing freight transport

Introduction

Road transport (3/3)

Reno
Redding
Line E
Line C
Line B
Stockton

Palm Springs

Line D

San Diego

Line A

Phoenix

Figure 3: Example of LTL transport.

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6 Managing freight transport

Introduction

Air transport
- Often used along with road transport in order to provide
door-to-door services;
- very fast in principle (the cruise speed of commercial flights
is from 0.75 to 0.86 Mach);
- slowed down in practice by freight handling at airports;
- not competitive for short- and medium-haul shipments;
- quite popular for the transport of high-value products over
long distances (about 20%, in value, of the world trade uses
air as the mode of transport);
- capacity (in terms of both weight and volume) of the
aircrafts is relatively limited, compared to that of trains and
ships.

6 Managing freight transport

Introduction

Water transport

- Used mainly in international trade to send bulk materials

(cereals, petroleum, coal; 99% (in weight) and 50% (in
value) of international trade);
- significantly less costly than air transport for
transcontinental shipping.

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6 Managing freight transport

Introduction

Pipeline transport

- Used only for transporting some specific categories of

goods (petroleum, its derivatives and gas);
- slowness of the transport (56 km/h);
- possibility of continuous provision (24 hours a day);
- reliability of the pipelines and pumps.

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6 Managing freight transport

Introduction

Intermodal transport
- Moving freight with more than one mode of transport;
- hybrid services, with a reasonable trade-off between cost
and transit time;
- only few combinations of the five basic modes of transport
are convenient;
- most frequent intermodal services: aircraft-truck
(birdyback ) transport, train-truck (piggyback )
transport, ship-truck (fishyback ) transport;
- containers are the most common load units in intermodal
transport and can be moved in two ways:
> loaded on a truck and the truck is then loaded onto a
train, a ship or an aircraft (trailer-on-flatcar );
> loaded directly on a train, a ship or an aircraft
(container-on-flatcar ).
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