TRANSPORTATION

the bull whip effect in the supply chain: There were long time intervals between
orders, the members of the supply chain were faced with uncertainty about the
level and the potential pattern of demand, which usually resulted in higher
inventory (safety stock) or stock out costs.
The demand for transportation is usually measured in weight-distance units for
freight and passenger-distance units for people. For freight, the usual demand
metric is the ton-mile, and for people, the unit is the passenger-mile.
Aggregate demand for transportation is inelastic.

Motor Carrier
TYPES OF VEHICLES
Line-Haul Vehicles The line-haul vehicle is usually a tractor–trailer combination
of three or more axles. The cargo-carrying capacity of these vehicles depends on
the size (length) and the federal/state maximum weight limits. A tractor–trailer
combination with five axles (tandem-axle tractor and trailer) is permitted on the
interstate system to haul a maximum of 80,000 pounds gross vehicle weight
City Straight Trucks City vehicles, or “straight trucks,” are normally smaller than
line-haul vehicles and are single units. The city truck has the cargo and power unit
combined in one vehicle. The typical city truck is approximately 20 to 25 feet long
with a cargo unit 15 to 20 feet long. However, there is growing use of small trailers
(28 feet) to pick up and deliver freight in the city. Since these trailers can also be
used for line-haul, this practice can increase the efficiency (shipments can be
“loaded to ride,” meaning they will not require handling at the origin terminal).
Dry van: Standard trailer or straight truck with all sides enclosed
Open top: Trailer top is open to permit loading of odd-sized freight through the
top
Flatbed: Trailer has no top or sides; used extensively to haul steel
Tank trailer: Used to haul liquids such as petroleum products
Refrigerated vehicles: Cargo unit has controlled temperature
High cube: Cargo unit has drop-frame design or is higher than normal to increase
cubic capacity
At the maximum, a driver facing an 11-hour run with a 10-hour layover and an 11-
hour return trip will return to the domicile within 32 hours of the original
departure. Sometimes, however, a return load is not immediately available, which
will delay the driver’s return

TERMINALS
Some motor carrier operations, namely TL operations, might not require terminals
for the movement of freight. But LTL operations, on the other hand, require
terminals, and they use terminals for different purposes (such as loading and
consolidation) than TL operations
Hub and spoke operation: https://gosmartlog.com/mo-hinh-hub-and-spoke-phat-
kien-da-chuyen-doi-hoan-toan-nganh-van-tai-va-phan-phoi/
Types of Terminals in LTL operations
Pickup and Delivery Terminals (PUD) These are also called satellite or end-of-
the-line (EOL) terminals. The PUD terminal serves a local area and provides
direct contact with both shippers and receivers. The basic transportation service
provided at this terminal is the pickup and/or delivery of freight on peddle runs.
A peddle run (sometimes called milk run) is a route that is driven daily out of the
PUD terminal for the purpose of collecting freight for outbound moves or
delivering freight from inbound moves. There are two elements of a peddle run,
one called stem time and the other called peddle time:
Stem time is the time that elapses from when the driver leaves the terminal until
the driver makes the first pickup or delivery; it is also the time that elapses from
when the driver makes the last pickup or delivery until returning to the terminal.
This is nonrevenue-producing time because no shipments are handled. A carrier
would want to locate PUD terminals in such a way that this nonrevenue-producing
travel time is minimized.
Peddle time is the time during which the driver is actively involved in the pickup
and delivery of freight. This is revenue-producing time because it occurs when
shipments are handled. Obviously, carriers want to maximize the amount of time a
driver would spend performing these activities.
Break-Bulk Terminals: This facility performs both consolidation and dispersion
(or break-bulk) services. The main purpose of this terminal is to provide an
intermediate point where freight with common destinations from the PUD
terminals is combined in a single trailer for movement to the delivering PUD
terminal.
Relay terminals: are necessitated by the maximum hours of service regulation that
is imposed on drivers. Under DOT enforcement, drivers were permitted to drive a
maximum of 11 hours after 10 consecutive hours off duty. At the relay terminal,
one driver substitutes for another who has accumulated the maximum hours of
service. (The term slip seat also has been used to describe the relay terminal
operation.)
An alternative to the relay terminal is the use of a sleeper team - two drivers (this
is often called team driving, too). While one driver accumulates the off-duty time
in the sleeper berth of the tractor, the other driver is driving. The sleeper team has
been most successful for long trips with many destinations.

Terminal Management Decisions

Number of Terminals: “How many terminals should we have?”
First, the degree of market penetration and customer service desired by the carrier
will help determine the number of terminals to establish.
Second, the dilemma of small terminal versus long peddle must be addressed.
Locations of Terminals
First, the DOT limits the amount of time a driver can continuously operate a
vehicle before a rest period is required. Currently, this limit is 11 hours, so
optimally PUD terminals should be located no more than 11 hours away from a
break-bulk.
Second, market penetration and potential will help determine terminal location.
Finally, accessibility to major highways and other transportation modes (airports,
rail yards, etc.) must be considered to reduce unnecessary vehicle miles and to
facilitate speedy intermodal freight transfers.
Recent trends in the LTL sector have seen significant reductions in the number of
terminals as these carriers strive to provide overnight and second-day delivery to
more and more customers.

Fuel Management
Fuel is crucial for motor carriers for two reasons. First, since the fuel cost accounts
for a significant proportion of the motor carriers’ total operating cost. Second,
being the largest source of carbon emissions in the transportation sector, motor
carriers are responsible for controlling their operations to protect our environment
(minimize pollutants emission)
Fuel Surcharge: Fuel surcharge is commonly used by motor carriers to offset the
impact of rising fuel cost on their operations. The basic idea is to pass the
increased cost of fuel price to shippers, at least partially.
Although an effective method, fuel surcharges do not entirely protect motor
carriers. It is known that motor carriers are typically able to recover only 60 to 70
percent of the increased cost of fuel through fuel surcharges, because some
shippers will negotiate and play games with carriers (for example, it is hard for
motor carriers to pass on the entire cost of increased fuel prices to large shippers
like Walmart, because they will then say “We will go with another carrier”)
Off-peak delivery: simply means shifting delivery times of some customers from
normal business (daytime) hours to offpeak hours (for example, nighttime
delivery). There are at least two benefits of using this strategy for carriers:
First, carriers will experience reduced fuel consumption (and thereby reduced
carbon emissions) because of the favorable traffic conditions during off-peak hours
(trucks will have shorter travel times and reduced idling time due to low traffic
congestion).
Second, nighttime truck operations will result in lower pollution levels than
daytime operations.
Engine Idling Time
While there are certain idling times that cannot be controlled by carriers (such as
those that take place during traffic congestion), there are idling times that can be
reduced or eliminated by carriers. Typically, the largest amount of idling time for
TL carriers comes from drivers’ rest times. This rest time usually takes place in the
sleeper berth of a truck, and most drivers choose to idle engines while taking rest
(because they need air conditioning during hot season or heating during cold
season while sleeping).
Several attempts have been made to reduce or eliminate such idling times.
One is the use of an APU (auxiliary power unit). This is a small, economical
engine attached to each truck, which is not powerful enough to move a truck but
has sufficient power to run air conditioners.
Another is the use of electric power outlets at truck stops. Most drivers prefer to
take the (overnight) rest break at the parking lot of truck stops.
Many truck stops now offer electric power outlets for trucks during rest time for a
small charge. Trucks can use these power sources to run their air conditioners
and/or heaters.
Road Speed: It is known that there exists an optimal speed for each vehicle that
attains the most economical fuel consumption rate. However, it is, often difficult to
do so because many truck drivers are not happy driving at 55 mph and in the TL
industry truck drivers are paid by miles driven, and not by the hour
Motor carriers are using at least two approaches to slow down the average
cruising speed:
The first approach is to convince and/or reward drivers to drive slower. Many
carriers are conducting periodical seminars for their drivers and attempting to
convince them that driving at slower speeds is “safer” than driving at higher
speeds. Some carriers also provide monetary rewards to those who agree to drive at
slower speeds.
The second approach is to mechanically control the maximum speed of trucks.
Some carriers are using a device in their trucks that automatically controls the
maximum speed.
Out-of-Route Miles: Motor carriers want to make sure that drivers strictly follow
the shortest routes. Often, however, drivers do deviate from the shortest routes for
personal reasons
Motor carriers are using several approaches to minimize such “out-of-route
miles.”
First, many carriers are installing GPS devices to their vehicles.
Second, some carriers that have many terminals across the nation allow drivers to
go to “off-the-route” locations for personal reasons, but they ask drivers to first
stop at one of their terminals near the (off-the-route) locations they wish to go to,
and then use the company cars (small economical cars available at the terminals) to
drive to their locations.
Third, some carriers are trying to convince drivers to follow the shortest route by
telling them that they can maximize their income by staying on the shortest route
(minimizing the time to finish the load).
Network Truck Stops Many motor carriers make contracts with a limited number
of truck stop chains to reduce their fuel procurement costs. The basic approach
here is to make a contract with a specific truck stop, such that a carrier commits to
a certain (minimum) amount of fuel purchases within a given time periodfrom the
chain, and receives a price discount in exchange.
There are three methods of setting price discounts with truck stop chains.
The first is the “retail minus” method. This method gives discount to carriers by
subtracting a predetermined amount from the normal retail price (for example,
“retail minus five” means that a carrier’s purchase price is five cents less than the
normal retail price at the pump).
The second is the “cost plus” method. Under this method, the discounted price is
computed by first estimating the truck stop’s cost of fuel, and then adding the
profit margin of the truck stop. For example, “cost plus three” means that the
discounted price is the truck stop’s cost of fuel plus three cents.
The third is the “best of ” method, which is a hybrid of the above two methods,
such that the discount price is determined by choosing the lower of the two prices.
Bulk Purchasing: These terminals typically have fuel pumps so that their trucks
can refuel at these terminals. Since these terminals refuel many trucks, they buy
large amounts of fuel from fuel suppliers on a daily basis, meaning that they can
receive sizable quantity discounts from suppliers.
Some carriers claim that if their trucks refuel at these terminals rather than at truck
stop chains, their fuel cost can become considerably lower, because this will allow
them to avoid paying “profits” for truck stop chains.
Equipment Adjustments: These adjustments will improve fuel consumption rates
of trucks via enhancing air drags and low rolling resistance. Such adjustments
include the use of trailer and cab roof fairings, trailer side skirts, aerodynamic side
mirrors, and SmartWay certified tires.
Large Fuel Tank: Some motor carriers, however, are installing even larger tanks
to their vehicles to save fuel costs. This is because many carriers believe that
having large tanks would help them reduce fuel procurement costs.
Recent studies have shown that a truck with more fuel in its tank (thus with more
fuel weight) will require more fuel burns. As such, the net benefit of this approach
may be relatively small.
Prevent Out-of-Fuel: Occasions Sometimes, trucks run out of fuel on the road for
multiple reasons.
Many motor carriers are creating company policies and guidelines for truck drivers
that specify when they have to stop to purchase fuel. Some carriers have installed
“engine monitors” to their vehicles, which allow managers to monitor trucks’
engine conditions, including fuel level, from the headquarters at all times.
Prevent Fuel Leakage and Theft: Motor carriers lose fuel because of fuel leakage
and drivers’ fuel theft.
They are attempting to minimize fuel leakage from tanks by performing frequent
preventive maintenance of their vehicles, and minimize driver theft by performing
driver education and fuel monitoring.
Fuel Optimizer: Fuel optimizers are software products widely used by TL carriers
to reduce the fuel procurement cost of their fleet at the point of purchase. It is well
known that fuel prices vary (often substantially) from one truck stop to another,
even within the same region. The basic concept of the fuel-optimizer products is to
take advantage of such price variances across locations (truck stops) to reduce the
cost of buying fuel.

Cost Structure
Fixed Versus Variable Cost Components: The cost structure of the motor carrier
industry consists of high levels of variable costs and relatively low fixed costs.
Approximately 70 to 90 percent of the costs are variable, and 10 to 30 percent are
fixed. The two categories with the largest share of the variable costs are labor and
fuel.
Labor: Labor costs (wages plus fringe benefits) usually absorb about 25 to 30
percent of a carrier’s revenue dollar. That is, 25 to 30 cents out of every dollar in
revenue goes
Fuel: Included in the price of the diesel fuel is a highway user tax imposed by both
the federal and state governments. The fuel tax plus other taxes for highway use
are payments made by the carrier to the government for the construction,
maintenance, and control of the highways. to labor.
Economies of Scale
Operating Ratio: A measure of operating efficiency used by motor carriers is the
operating ratio. The operating ratio measures the percent of operating expenses to
operating revenue.
The more indicative of the possible need to raise rates to increase total revenues. In
today’s market, however, a rate increase might not be a feasible solution. Carriers
are more likely to seek supply chain solutions with shippers, consignees, and 3PLs
to reduce operating expenses, thus increasing operating margin.
Funding: Highway users - motor carrier vehicle and automobile operators - pay
for the construction, maintenance, and policing of highways through highway user
taxes. The total amount of taxes paid depends on the use of the highway. The
motor carrier incurs a cost for the use of the highway that is related to its amount of
use. This situation contributes to the high variable cost structure of the motor
carrier.

Current Issues
Safety
Deficiencies in safety can translate into decreased profitability because of
expensive claims for lost or damaged goods, increased insurance premiums,
accidents, fines, and so on. These consequences are not unique to the motor carrier
industry; in fact, they apply to the entire transportation industry.
Many shippers seek safety fitness information as part of their selection process, so
there is considerable pressure on carriers to operate safely. Many transportation
contracts contain clauses that permit the shipper to cancel the contract if the
carrier’s safety rating is Unsatisfactory.
A major related concern is that of alcohol and drug abuse. Drug and alcohol rules
require motor carriers to have an anti-drug program, as well as drug testing that
includes random and postaccident testing.
Other areas of safety concerns are drivers’ hours of service and fatigue issues.
Under a complex formula of allowed driving and required rest periods, a driver can
be on duty for no more than 60 hours in 7 days or 70 hours in 8 days.
Another safety issue receiving attention deals with vehicle size and weight.
Technology
The use of satellite technology has a major impact on the motor carrier industry.
As discussed earlier, global positioning systems (GPS) are being used to track
vehicles throughout their movement from origin to destination.
One area where satellite communication has had a very positive effect is in the
movement of hazardous materials.
Electronic on-board recorders (EOBR) is an automatic on-board recording
device capable of recording drivers work status information accurately as required
by the Hours-of-Service rule. Many EOBRs also measure engine use, road speed,
miles driven, idle time, fuel consumption, and a host of other vehicle operating
data that allow carriers to be more productive and save fuel.
Driver Turnover
As briefly discussed earlier, one of the challenges the trucking industry, especially
the TL segment, is facing is the high driver turnover rates. The driver turnover rate
of a carrier is the percentage of drivers who quit (exit) the carrier within a specified
period of time (typically a year).
The industry (TL segment) average driver turnover rate has been over 100 percent
for decades, which means that the TL carriers are collectively paying over $7
billion per year just to replace drivers.
There are two reasons why we have high driver turnover rates in the trucking
industry.
The first is the driver shortage. One of the main reasons why we have a shortage of
drivers is the challenging working environment of drivers. Truck driving,
especially over-the-road driving, requires drivers to be away from home for up to
three weeks.
Other challenging points of truck driving include, but are not limited to, the
following: (1) it is a dangerous job and (2) it receives little respect from people,
and (3) it is often difficult to get quality sleep.
The second reason is drivers’ job-hop behavior; that is, they switch jobs within the
same industry very often. Because of driver shortage, motor carriers are always
looking for drivers to hire. This means that it is very easy for drivers to find
another job (carrier) to work with at any time.
Increasing wages or fringe benefits may only induce more “game playing” by truck
drivers. Motor carriers will need to find a better way to attract and retain drivers
than providing good pay and fringe benefits
Green and Sustainable Operations
The trucking industry must work closely with relevant stakeholders, such as
shippers, consignees, EPA (Environmental Protection Agency), and the U.S.
Department of Transportation, to reduce or minimize the amount of greenhouse
gas emissions while sustaining the level of transportation activities currently
performed.
Financial Stability
The operating ratios of many motor carriers have been in excess of 95 percent, and
some companies have operating ratios of over 100. The high operating ratios are a
clear indicator of the financial plight of many motor carriers and an indication of
the low competitive rates.
 Third party logistics
Intermodal Transport: Vận tải kết hợp
Là hoạt động vận chuyển hàng hóa từ điểm lấy hàng đến điểm trả hàng bằng nhiều
phương thức vận chuyển khác nhau (đường bộ, đường biển, đường không…). Mỗi
phương thức có một nhà cung cấp dịch vụ vận chuyển khác nhau, với các hợp đồng
cung cấp dịch vụ vận chuyển riêng lẻ → Nhiều bên cung cấp dịch vụ vận chuyển
tham gia vào quá trình giao nhận lô hàng.

Multimodal Transport: Vận tải đa phương thức

Là hoạt động vận chuyển hàng hóa từ điểm lấy hàng đến điểm trả hàng bằng nhiều
phương thức vận chuyển khác nhau (đường bộ, đường biển, đường không…). Mỗi
phương thức có một hoặc nhiều nhà cung cấp dịch vụ vận chuyển khác nhau nhưng
chỉ có duy nhất một (01) hợp đồng dịch vụ vận chuyển đứng tên duy nhất một
Người chuyên chở trong suốt quá trình giao nhận lô hàng.

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