Transportation is classified into two levels: one is the primary level wherein it covers movement to that point in the chain from where the product can be sold to outside parties. The secondary level is the transportation which many a times is picked up by the seller. Road, rail air and ship are primary levels of transport used while the secondary level of transport includes small truck booking. Railways meanwhile cater to the bulk commodity traffic. Transportation in different forms has distinct benefits. Air transport helps in bringing new distant market within reach. Sea cargo provides economic option for international transportation and pipeline is the ideal mode of transporting large quantities of liquid, gases or slurry types of cargos of long distances. Inland waterways are a mode of transport in the eastern parts of the country as well as Kerala. However, they need to be substantially developed. Products can be moved in difficult to navigate terrain such as hills for example through ropeways.

1. Chapter-07
Transportation

2. Transportation
1. Primary Level
– Which covers movement to that point in the chain
wherefrom the product will be sold to out side
parties
2. Secondary level
– The transportation there after, which many a times
may be borne by the seller e.g. company picks up
the transportation charges from the C&FA to the
distributor point
Ch-07 Transportati

3. Primary Level Transport
• Road Transport
– Which is by and large the most preferred
• Rail
– Which even in spite of certain limitations such as fixed
terminals, is very economical when it comes to
carrying in bulk
• Air
– Particularly useful for very high value items, of
delicate and extremely perishable nature
Ch-07 Transportati

4. Primary Level Transport
• Ship
– Advantage of bulk transportation over long
distances particularly across countries at a
lower cost
• Pipe line
– For bulk movement of materials in fluid form
or semi fluid slurry form, safe and low variable
cost mode of transport..
Ch-07 Transportati

5. Secondary level transport
• By and large road is the medium
• Also uses 4 wheeler vans, 3 wheeler vans,
2 wheelers, cycles, cycle rickshaws, hand
carts, bag in hand, couriers
• Ropeways are used in hilly areas
Ch-07 Transportati

6. Road Transport
• The trucking industry is about Rs. 80000 crores
per annum.
• The Indian roadways network is
• National Highways 58112 km
• State Highways 137119 km
• Major District Roads 470000 km
• Village and other roads 2650000 km
• Total length 33153231 km
Ch-07 Transportati

7. Trucking Industry
• By and large not very organized
• Total heavy duty commercial vehicles are
about 14 lacks of which 55 % having
national permit
• Ownership pattern is fragmented
• 77% of truckers are single vehicle owners,
who rely on agents to get them loads
Ch-07 Transportati

8. Trucking Industry
• Traditional vehicle plying in the market are 18 to
20 feet in length, 7 ft wide.
• Rules prohibit loading vehicles beyond 11 ft in
height form the road level
• Vehicles with tall sides reaching 5 to 6 ft from
the platform base are known as Punjab body
trucks, and those with shorter sides about 3 to 4
ft from the platform base are known as half body
trucks
Ch-07 Transportati

9. Trucking Industry
• These trucks are allowed to carry 9 metric
tons of load
• Market is shifting towards vehicles which
are 23 ft in length, the breadth and height
dimensions remaining more or less same
but capable of carrying 16 tons of load
Ch-07 Transportati

10. Consignment Note/Lorry
Receipt
• Transporter’s name and address
• Date of the consignment note
• Consignment note serial number
• Name and address of the consignor
• Total units or number of packages
• Brief description of materials being carried
Ch-07 Transportati

11. Consignment Note/Lorry
Receipt
• The freight amount, plus any other charges to be
paid
• Whether the freight is paid, or to be paid, or to be
billed
• Whether the consignment is consigned to the
consignee or ‘selves’
• Whether the consignment is insured by owner or
transporter
• Whether the cargo is for door delivery or to e
cleared by the consignee from the transporter’
godown Ch-07 Transportati

12. Important considerations
• From the legal aspect one should not
that the carrier responsibility for the
goods tendered for dispatch is that of a
“bailee” which is like that of a
warehouseman.
• Being a bailee the transporter cannot
claim any ownership rights on the
cargo, even in case his freight has not
been paid Ch-07 Transportati

13. Important considerations
• During the entire period of transit the
responsibility of the transporter is of a common
carrier, and hence he is fully responsible for
loss, deterioration, damage except when such
loss or damage or deterioration occurs due to
an act of God/nature, an act of public enemy,
civil restraint, default on the part of the consignor
or consignee or deterioration
Ch-07 Transportati

14. Important considerations
• To protect the cargo against risk while the
goods are in transit, insurance covers are
taken
• At times the goods cab be booked at the
carrier’s risk in which case the transporter
may charge a little extra
Ch-07 Transportati

15. Transport Insurance
• At the point of delivery any apparent
damages to the cargo, thereafter a claim
must be filled on the transporter in writing
within seven days
• In case of accident carrier must lodge FIR
in the police station, who in turn will inform
his insures by regd. Post AD
Ch-07 Transportati

16. Transport Insurance
• Thereafter the insurance company will send it’s
surveyor to make an on the spot inspection, and
the consignor may be offered compensation on
the bases on survey report, and value insured.
• If the carrier refuses to entertain the claim, then
a suit must be filed in an appropriate court within
a reasonable time but not beyond six months
from the date of refusal
Ch-07 Transportati

17. Self Insurance
• Sometimes organizations negotiate with
transporters that instead of going in for
transit insurance for the consignments
they may have an arrangement where
under the transporters will settle the
consignor’s claims at the above basis,
follow-ups, survey formalities etc. this
procedure generally goes by the name of
self insurance.
Ch-07 Transportati

18. Selecting transporter contractors
• Constitution of the carrier’s firm
• The carrier’s business turn over
• The carrier’s area of operation
• The carrier’s branch offices or associates’
offices
• Number of trucks owned by the transporter
Ch-07 Transportati

19. Selecting transporter contractors
• Existing clients of carrier, experience with
transporter
• Check with existing customers the track
records of the transporter as regards
settlement of claims
• The transit time quoted by the carrier
• Type and load of traffic to be handled
Ch-07 Transportati

20. Selecting transporter contractors
• Transporters usually tender rates destination
wise, depending upon their total business on
those sectors
• During times of high market rates, transporters
resort to delaying tactics to place vehicles, it is
advisable to incorporate a clause regarding risk
purchase , under which the company can
requisition of a truck from the open market and
debit the difference to the regular transporter if
he fails to place a truck as per requirement
Ch-07 Transportati

21. Transshipment
• The cargo is transferred from one vehicle to
another en route.
• It may happen due to mechanical failure of the
vehicle, or it may so happen that the truck
procured form the market was not having permit
to ply from the originating point to the
destination, and hence a vehicle shifting is made
en route.
Ch-07 Transportati

22. Service Level Agreement
• Under which the user and the provider come to
conclusions on the extent of continuity of
service, loading and transit times, fulfilling peaks
and troughs for truck demand etc.
• Appliance companies may have scope to use
these concepts to some extent, because in most
of the cases the source of materials and
components may not match with centers of high
demand for the finished goods
Ch-07 Transportati

23. Rail Transport
• Indian railways network as per 2002-03 figures
are 63122 km
Corridor Length km 4-landed km
Delhi-Kolkata 1453 322
Kolkata-Chennai 1684 146
Chennai-Mumbai 1290 197
Mumbai-Delhi 1419 494
Ch-07 Transportati

24. Use of Railways
• Metro network comprises only 15% of
network, carries about 65% of the network
• Caters to the movement of bulk
commodity traffic, namely coal, iron ore,
minerals, grains, cement, and even oil in
tankers
Ch-07 Transportati

25. Railways Rates
• Wagon Load Rates
– Which are a bit lower can be availed of if the
commodities are offered in full wagon
quantitative.
• Small Rates
– Which are at a higher level than wagon rates
are applicable to bookings in smaller lots
Ch-07 Transportati

26. Railways Rates
• Train Load Rates
– For certain commodities which are cheaper
than wagon load rates
• At times organizations depending upon the
volume of traffic can negotiate with the
railways for station to station rates
Ch-07 Transportati

27. Quick Transit Service
• At an additional charge railways book
consignments whether in wagon loads or
in smalls between pairs of stations within a
targeted transit time under what is called
quick transit service
• Disadvantage with railways
– Root rigidity
Ch-07 Transportati

28. Container Service
• Initiated in 1967
• Are door to door integrated services and avoid
multiple handling
• About 5 ton capacity and loaded on flat wagon
• Safe & Fast
• CONCOR is sole provider of containerized
goods transport by rail in the country
Ch-07 Transportati

29. Container Service
• CONCOR has 31% share of the exim Cargo
• Freight Forwarder Scheme
– Under which road transporter collects
goods from the consignors for the same
destination, and then transport the
consignments in a wagon load to the
common destination, where after clearing
from the wagon they deliver the
consignments to the consignees as road
delivery Ch-07 Transportati

30. Special Cargo Trains
• Railways have introduced few cargo trains
on selected routes such as Kurla-
Guwahati, Kurla -Hyderabad, etc.
• This train takes about 4 to 6 days between
Kurla and Guwahati, against 18 days for a
truck to normally cover that distance.
Ch-07 Transportati

31. RORO
• Konkan Railways have a service known as
RORO-roll on roll off- where in, the train
service carries trucks on rail flats.
• A daily service between Goa and Mumbai
is available
• The detention of vehicles at terminals for
loading and or unloading is minimal, as
trucks have only to roll on or roll off
Ch-07 Transportati

32. Advantage of RORO
• In rail ride, average speed is around 60 to
70 km per hour against 20 to 25 it makes
on the road
• Saving on fuel
• Saving on wear and tear
• Win-win for the Konkan Railways,
individual truckers, and the consigners.
Ch-07 Transportati

33. Air Transport
• Extremely costly on a rate basis vis a vis
other mediums of travel, air transport has
a few distinct advantages
• Helps in bringing new distant market within
reach
• In new markets enables servicing without
opening storage location with high
investments
Ch-07 Transportati

34. Air Transport
• Helps in tacking sudden demand hike
• Security, regularity, reliability and flexibility
• Fixed outlays in warehouse inventory etc.
may be comparatively much less
Ch-07 Transportati

35. Trade Offs between Cost levels
VAR costlier mode
Change Point
VAR cheaper mode
Cost >
Fixed cheaper mode
Fixed costlier mode
Tonnages Moved > Ch-07 Transportati

36. Change Point
• Fixed and variable costs of distributions of
air would be less than by rail or road,
where after the air mode would be more
costly
• This point is known as the change point is
calculate as per formulate
Ch-07 Transportati

37. Change Point
• Change Point = F2-F1/ v1-v2
Where,
F1= Transporting by air
v1=variable component when transporting
by air
F2 = Transporting by rail/road
v2 =variable component when transporting
by rail/road
Ch-07 Transportati

38. Major constitutes of the current
IATA rates
• General Cargo Rates
– Normal rates for cargo transportation
Mumbai to Air France Alitalia British
London Airways
Rs. Rs. Rs.
Minimum 1700 2200 2300
≤ 45 kg per kg 135 190 176
45-100 kg per 188 180 144
kg
100-250 kg 139 130 132
per kg
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39. Class Rates
• Are surcharged or discounted rates for
certain classified items e.g. valuable
cargo, live animals, commodities being
freighted in bulk etc.
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40. Specified Commodity Rates
• Heavily discounted rates applicable in
particular route between two points
• Market oriented rate, take into account
actual demand requirements, as well as
the user’ freight cost threshold i.e. ability to
pay
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41. Freight All Kind
• Is an extension to the specified commodity
rates in as much as under these rates the
restriction to a particular commodity is
waived, and the consigner can send any
commodity specially approved by IATA
carriers under the same rate between
those stations
• Government may influence rates
Ch-07 Transportati

42. Sea Transport
• International trade through the sea route is
governed by LINEAR CONFERENCES
which is an agreement between tow or
more vessel operators plying on a
particular or specified routes to provide
uniform rates and other conditions for
transportation on those routes
Ch-07 Transportati

43. Conference rates factors
• Character of the cargo
• Volume of cargo
• Susceptibility to damage
• Susceptibility to pilferage
• Packing and store requirements
• Ratio of weight to measurements
• Heavy lifts or extra length
• Competition with goods from other sources
Ch-07 Transportati

44. Conference rates factors
• Cargo via competitive ports
• Competition from other carriers
• Actual cost of operations
• Distances
• Cost of handlings at ports
• Port facilities
• Port charges
• Possibility of return loads
Ch-07 Transportati

45. Important terms in Sea Route
• Tramp vessels
– Individual ships may be chartered on
time/voyage or demise basis
• Voyage charter
– Ships are chartered for a particular voyage
• Time charter
– Ships are chartered for a particular period of
time
Ch-07 Transportati

46. Important terms in Sea Route
• Demise Charter
– Bare ship is chartered for a particular period
of time i.e. without any floating personnel,
fuel, or provisions.
– The charterer has to equip the ship with
every thing necessary for operating the ship
Ch-07 Transportati

47. Types of Cargo
• General cargoes are materials packed in some
form of packaging and are normally finished
goods
• Dry bulk cargoes would be raw materials such
as ore, food grains, or other commodities that
can be transported in loose condition
• Liquid bulk cargoes such as crude, oil, etc are
another set of cargoes
Ch-07 Transportati

48. Containers
• General cargoes are mainly transported by
containers
Container Size Dimensions
20 ft Length 5830 mm x width 2347 mm x
height 2380 mm
40 ft Length 11975mm x width 2352mm x
height 2380mm
20 ft refrigerated Length 5385mm x width 2159 mm x
height 1956 mm
40 ft refrigerated Length 12040mm x width 2235 mm x
height 2311 mm
Ch-07 Transportati

49. TEU
• TEUs are twenty foot equivalent units of
containers.
• As for instance in 2003 the total TEUs
handled in the country was 5 lakh TEUs.
• Concor handled about 90% of this volume
• Many ships are totally containerized
Ch-07 Transportati

50. Freight Brokers & Clearing and
forwarding agents
• Freight brokers who are normally formed
in association , operate at ports, keep a
track of shipping space, obtain
requirements of shippers and assist in
booking shipping space. Normally the
freight broker get his commission from
shipping company
Ch-07 Transportati

51. Activities of Clearing and
forwarding agents
• Assisting in customs documents processing
• Paying the export/import duties on behalf of the
customer
• Obtaining carting order
• Deliver goods to the shipping company and
obtain mate’s receipt, which after payment of
port charges he exchanges for a Bill of Lading
Ch-07 Transportati

52. Bill of Lading
• Similar to lorry receipt, it is the document of title
to the cargo, it has
– The name of the ship
– The name of the shipping company
– The shipper's name
– The destination port
– To whom shipped
– Marks on packages
– Description of goods
– Freight
– The bill of lading has number and date
Ch-07 Transportati

53. Pipe Line
• It is the ideal mode of transporting large
quantities of liquid, gaseous, or slurry
types of cargoes of long distances
• In the case of pipelines it is the cargo that
does the movement the medium remaining
stationary
• Used in water supply and savage disposal
Ch-07 Transportati

54. Advantages of Pipeline
• All weather means of transport
• Low energy consumption, may work on
gravity
• Low operating cost
• Easier to run through difficult terrain
• Transit losses unless deliberate sabotage,
is minimal
• However, pipeline is a costly option
Ch-07 Transportati

55. Rope Ways
• The advantages of ropeways in certain terrains
is its ability to connect two places with large
altitudinal differentials with relative ease
• Eco friendly
• Movement of products over locations separated
by hills and valleys or other difficult to navigate
terrain, to vantage points where they can link up
with regular road ways
Ch-07 Transportati

56. Inland Waterways
• In the eastern, parts of over country, as
well as in the Kerala back water inland
waterways do exist but the same can be
developed substantially
• Cost wise this medium is extremely cheap
• Country has 14500 km of navigable
waterways
Ch-07 Transportati

57. Inland Waterways Government
Declaration
• The Ganges from Haldia to Allahabad as
National Waterway No.1
• The Brahmaputra from Dhubri to Sadiya as
National waterway no 2
• The west coast canal from Kottapuram to Kollam
along with the Udyogmadnal and Chanpakara
canal as N.W. No.3
• Planning to develop three more national
waterways
Ch-07 Transportati

58. Other modes of transport
• Hand carts, cycles, cycle rickshaws, cycle
vans, head loads, to animal driven
• There can be several mediums which can
be used depending upon
– Type of cargo
– Specific terrain condition
– Cost/delivery option
Ch-07 Transportati

59. Summary
• We have to look at transportation at tow distinct
levels 1. Primary 2. Secondary
• Primary level transport used are rail, road, air,
ship and pipeline
• At the secondary level small truck booking etc.
are used
• Railways caters to the movement of bulk
commodity traffic, namely coal, iron ore,
minerals, grains, cement, and even oil in tankers
Ch-07 Transportati

60. Summary
• Air transport helps in bringing new distant
market within reach
• Sea Cargo provides economic option for
international transportation
• Pipe line is the ideal mode of transporting
large quantities of liquid, gaseous, or
slurry types of cargoes of long distances
Ch-07 Transportati

61. Summary
• In the eastern, parts of over country, as
well as in the Kerala back water inland
waterways do exist but the same can be
developed substantially
• Movement of products over locations
separated by hills and valleys or other
difficult to navigate terrain is possible with
ropeways
Ch-07 Transportati