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Transportation Infrastructure
and Management
Transport functionality
1. Product movement is the movement of
inventory to specified destinations
Transportation consumes time, financial, and
environmental resources
Transportation is +60% of the cost of logistics
Impacts traffic congestion, noise and air pollution
Transport Principles
1. Economy of scale is the cost per unit weight
decreases as the size of the shipment increases
Cost decreases because the fixed cost of the carrier
is allocated over a larger weight of shipment
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Transportation regulation
Transportasi Darat
Transportasi Laut
Transportasi Udara
Transportasi Perkeretaapian
Penunjang
source: http://jdih.dephub.go.id/
high
low
bulk food, mining,
heavy mfg
low
medium consumer goods,
medium/light mfg
medium low
bulk food, mining,
chemicals
low
high
high-value goods,
rush shipments
high
low
petroleum, chemicals,
mineral slurry
Pipe
Infrastructure in crisis
2004-2013 panjang jalan nasional Indonesia hanya
bertambah 4.400 kilometer
Panjang Rel KA th 2010 = 5.018km, target th 2013 =
5.209km
Kualitas infrastruktur Indonesia (2011-2012)
peringkat ke-82 sedangkan Malaysia posisi ke-23
Biaya logistik di Indonesia = 24% dari total PDB
(Rp1.820 T/th) terdiri dari biaya penyimpanan =
Rp546 T, biaya transportasi = Rp1.092T, biaya
administrasi = Rp182 T (Malaysia =15% dr PDB, AS
dan Jepang = 10% dr PDB)
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Transportation service
1. Traditional carriers are firms that provide service using
only one of the five basic transport modes
2. Package service uses intermodal transportation (ground
and air) to handle small shipments or parcel deliveries
Ground package, air package
A. Transportation Costs
1.
2.
3.
4.
5.
6.
7.
Distance
Weight
Density
Stowability
Handling
Liability
Market
1. Distance
Directly contributes to
variable expenses
Labor, fuel, and maintenance
2. Weight
Cost per pound
decreases as weight
increases until the carrier
vehicle is full
Relationship starts again
for the next vehicle load
3. Density
Volume is important
because vehicles are
typically constrained
more by cubic capacity
than by weight loaded
Cost per unit of weight
declines as product
density increases
Higher density products
allowed fixed transport
costs to be spread over
more weight
4. Stowability
Stowability is how product
dimensions fit into
transportation equipment
Items with rectangular
shapes are easier to stow
Nesting refers to ability of
product to be placed in itself
or collapsed for better
stowability
5. Handling
Special equipment may be
needed to load and unload
trucks, railcars, or ships
How products are grouped
together in boxes or pallets
will also impact handling cost
6. Liability
Carriers must pay for
liability insurance or
accept financial
responsibility
Shippers can reduce
their risk by
Improved packaging
and loading
Reducing susceptibility
to loss or damage
7. Market factors
Transport lane refers to
movements between origin
and destination points
Carriers must find a
backhaul load or vehicle is
returned empty
Imbalances in volume
between shipping points
can result in higher
transport costs
B. Cost Structure
Variable Costs
Fixed Costs
Joint Costs
Common Costs
1. Variable costs
The variable category includes direct carrier cost
associated with movement of each load (labor,
fuel, and maintenance)
Measured as a cost per unit of weight per mile.
Represents the minimum amount a carrier must
charge to pay its day-to-day bills.
2. Fixed costs
Fixed costs are not influenced by shipment
volume
Includes vehicles, terminals, rights-of-way,
information systems, & support equipment
Must be covered by contribution above
variable costs on a per shipment basis
3. Joint costs
Typical example is the implicit decision to incur
a joint cost for a backhaul from a destination
Significant impact on charges
Carrier quotations must include implied joint
costs based on assessment of back-haul
recovery
4. Common costs
Terminal or management expenses are typical
examples (overhead cost)
Usually allocated to shippers based on level of
activity for that customer
E.g. number of shipments
Cost-of-service strategy
Value-of-service strategy
Combination pricing strategy
Net-rate pricing strategy
1. Cost-of-service strategy
Cost-of-service is similar to
cost-plus pricing strategy for
manufacturing
Carrier estimates cost of
providing service then adds on
a percent profit margin
Commonly used for pricing
transport of low value goods or
in highly competitive situations
2. Value-of-service strategy
Value-of-service price is based
on value as perceived by the
shipper rather than the carrier
Depends on the value of the
goods being shipped
Electronics vs coal
Used for high value goods or
when limited competition exists
Transportation administration
1.
2.
3.
4.
5.
Operational Management
Consolidation
Negotiation
Control
Auditing and claims
administration
6. Logistical integration
1. Operational management
Equipment scheduling
Load planning
Routing
Carrier administration
(selection, integration,
evaluation)
2. Consolidation
Freight consolidation techniques can be grouped
as reactive and proactive.
Reactive approach does not attempt to influence
composition and timing of transportation movements,
but reacts to shipments as they come
Proactive approach includes preorder planning of
quantity and timing with the shipper to facilitate
consolidated freight movement
3. Negotiation
Seeking win-win
agreements where both
shippers and carriers share
transportation consolidation
and productivity gains
Both parties seek the lowest
total logistical cost
consistent with the shippers
needed service level (i.e.
delivery time)
4. Control responsibilities
Tracing is procedure to
locate lost or late shipments
with RFID and GPS systems
6. Logistical integration
Integration is finding the best
combination of packaging,
selection of carrier, mode and
consolidation for lowest total
logistical cost consistent with
the shippers service needs