Chapter 8 Examines Logistics Transportation Roles

CHAPTER 8
Transportation

24/01/13 Strategic Logistic Management - 1
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Chapter Objectives
• To examine transportation’s role in logistics and
its relationship to the marketing activities of an
organization.
• To identify various modes, intermodal
combinations, and other transportation enities
available for distributing products to customers.
• To summarize transportation regulation and
deregulation, and their effects on shippers and
carriers.
• To examine global aspects of transportation.

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Transportation

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Introduction

In United State, transportation expenditures constitute approximately 6.0%
of gross domestic product (GDP). In 1999, transportation costs amounted
to $554 billion (Delaney, 2000).
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Introduction

The rate of growth in the amount spend on freight transportation has been
slower since 1980-81 due to economic deregulation of transportation, introduction
of new technologies, and implementation of many leading-edge practices and
management philosophies.
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Transportation infrastructure supports the flow
of our nations economy
Table 8.1 The Nations’ Freight Bill ($ billions)

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Transport functionality primarily
consists of product movement services
• Product movement is the movement of
inventory to specified destinations
– Restrictive element—in-transit inventory is “captive”,
usually inaccessible during transportation
– Flexible element—inventory can be diverted during
shipment to a new destination
• Transportation consumes time, financial, and
environmental resources
– Transportation is more than 60% of the cost of
logistics
– One of largest consumers of oil and gas in US
– Impacts traffic congestion, noise and air pollution
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Transport participants
• Shipper
• Consignee (Receiver)
• Carrier and Agents
• Government
• Internet
• Public

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Role and perspective of
participants
• Shipper and consignee have a common interest in
moving goods from origin to destination within a given
time at the lowest cost
• Carriers desire to maximize their revenue for movement
while minimizing associated costs
• Agents (brokers and freight forwarders) facilitate carrier
and customer matching
• Government desires a stable and efficient transportation
environment to support economic growth
• Public is concerned with transportation accessibility,
expense, and standards for security, safety and the
environment

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Role of the Internet in
transportation
• The Internet now provides the vital
communications links between the transactional
participants (shipper-carrier-consignee)
– Replacing phone and fax technologies
• Web-based enterprises provide information
marketplaces
– Freight matching
– Fuel, equipment, parts and supplies purchases

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Time dan Place Utility
• Logistics mencakup pergerakan produk (materials, parts,
supplies & finished goods) mulai dari titik asal ke titik
konsumsi.
• Transportasilah yang menyebabkan terjadinya pergerakan
produk, ada 3 aspek transportasi: availability, adequacy,
dan cost (AAC)
• Transportasi mencipta:
 Place utility
 Time utility (Note: warehousing dan storage utamanya
mencipta time utility)
Transportasi menentukan seberapa cepat dan seberapa
konsisten produk bergerak dari satu titik ke titik lainnya.
Kedua faktor ini disebut time-in-transit dan consistency
of service. Jika produk tidak tepat waktu, bisa berakibat
lost sales, customer dissatisfaction dan production
downtime.
United Parcel Service (UPS), Federal Express (FedEx),
DHL, Roadway Package Express (RPS) can increase the
time & place utility through fast & consistent delivery.
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Transportation – Logistics –
Marketing Interfaces
• Availability, Adequacy dan Cost (AAC) dari transportasi
sangat penting dalam mencipta place utility dan memberi
kontribusi pada time utility.
• Products: produk apa yang dibuat dan kesulitan
pengangkutannya, biaya transportasi, ketersediaan alat
transportasi dan kapasitas alat angkut sangat memengaruhi
pengambilan keputusan produk.
• Pricing: inefisiensi dan biaya berlebihan dalam transportasi
akan mendorong harga semakin tinggi
• Target market: kemampuan melayani berbagai pasar
bergantung pada banyak faktor, antara lain availability of
adequate transportation, cost of transport, dan ability of
transportation option sehingga penyerahan produk tepat
waktu.
• Purchasing/procurement: availability, adequacy dan cost
of transportation memengaruhi what, when dan where dari
purchasing dan procurement.
• Facility location: availability, adequacy dan cost dari
transportasi menentukan lokasi pabrik, gudang, retail, dsb.

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Factors Influencing
Transportation Costs
• Product-related • Market-related factors
factors  Degree of competition
 Density  Location of markets
 Stowability  Government regulation
 Ease or difficulty of  Balance or imbalance of
handling freight traffic
 Liability  Seasonality
 Domestic versus
international movement

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McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Product – Related Factors
• Density: menunjuk product’s weight-to-volume ratio
low density (low weight-to-volume ratio) cenderung
lebih mahal dibanding dengan high-density product.
• Stowability (cube utilization): derajad sejauh mana
suatu produk dapat mengisi space tersedia pada sebuah
sarana angkatan.
Stowability sebuah produk tergantung pada size, shape
dan fragility.
• Ease atau Difficulty in handling: produk yang sulit
ditangani biasanya lebih mahal untuk diangkut. Produk
yang uniform dalam size atau shape, atau produk yang
dapat dimanipulasi lebih murah.
• Liability: memiliki high-value-to-weight ratio, mudah
rusak, risiko dicuri, biasanya dikenakan biaya
transportasi mahal. Begitu juga kategori produk yang
tergolong berbahaya, biaya angkutnya mahal.

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Transportation Cost dan Pricing
• Products – Related • Market – Related
Factors Factors

Menentukan pilihan
antara 2 basic pricing strategies of carriers:

•Cost–of-service pricing
•Value-of-service pricing

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Market – Related Factors
Keenam faktor market-related ini
memengaruhi:
Cost dan pricing of transportation
Transportation carrier menggunakan:
Cost of service, atau
Value of service, atau
Jenis strategi penetapan harga lainnya.

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Terms of Sale and Corresponding Buyer
and Seller Responsibilities

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Strategi Cost of Service Pricing
Strategi pricing ini menentukan transportation rates
pada aras yang bisa menutup fixed costs dan
variable cost ditambah profit margin.
Ada beberapa kesulitan:
 Perusahaan harus bisa identifikasi FC dan VC.
 FC dialokasi ke setiap pergerakan angkutan
(pengiriman barang). FC/unit bisa berubah-ubah
tergantung besar/kecil pergerakan angkutan.
• Transportation costs dapat berubah-ubah dalam
strategi pricing ini karena 2 faktor:
 Distance - semakin jauh, transportation rate naik.
 Volume - terjadi economies of scale ketika jumlah
angkutan semakin besar.

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Strategy Value-of-Service Pricing

 Transportation rates pada dasarnya ditetapkan
sesuai kesanggupan pasar membayar dan
didasarkan pada market demand terhadap jasa
transportasi dan situasi kompetitif Upper limit
rates; yaitu rate yang akan maximize perbedaan
antara revenue diterima dan variable cost untuk
mengangkut.
 Dibedakan :
 FOB (Free On Board) Pricing
 Delivered Pricing pembeli diberi harga yang
mencakup delivery produk tersebut.
Dua Macam : - zone pricing
- basing point pricing

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 Zone pricing : area geografis dikategori menurut zone.
Setiap zone mempunyai delivery cost sendiri–sendiri.
 Basing – point pricing : penjual menentukan satu atau
lebih lokasi sebagai point-of-origin. Pembeli membayar
delivery costs dari point-of-origin terkait.
 Quantity discount (cumulative atau noncumulative)
 Cumulative quantity discounts: pengurangan harga diberi
pada pembeli berdasarkan jumlah pembelian selama
periode waktu tertentu yang ditetapkan.
 Non cumulative quantity discounts: pengurangan harga
dikenakan pada setiap pesanan dan tidak berakumulasi
selama periode waktu tertentu.
 Allowances: kerap kali penjual memberi
pengurangan harga pada pembeli karena yang
bersangkutan melakukan sendiri fungsi delivery.


 Pricing & negotiation
 Categories of Rates Line-haul rates
(charges for the movement of goods between
two points) & accessorial charges (transporting,
handling & servicing a shipment). Consists of
class rates; exception rate; commodity rate;
and miscellaneous rate.
 Rate Bureaus
 Transportation Service Characteristics :
consistency, time-in-transit, market coverage
(door-to-door), flexibility, loss & damage
performance, and ability more than just basic
service.


Value-of-service Pricing :
•Market demand
•Situasi competitive

Transportation
Rates

Cost of Service Pricing:
•FC
•VC
•Profit margin

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Variable costs change in a predictable, direct manner in
relation to some level of activity

• Variable costs in
transportation are only
incurred if you operate the
vehicle
• Transport rates must cover
these at the very least!
• Generally measured per
mile or unit weight or both
– E.g. per ton-miles

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Fixed costs must be paid even when the
company is not operating
• Fixed costs are not
influenced by shipment
volume
– Includes vehicles,
terminals, rights-of-
way, information
systems, and support
equipment
• Must be covered by
contribution above
variable costs on a per
shipment basis
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Transportation structure
• Consists of rights-of-way,
vehicles, and carriers
operating within five basic
modes
• A mode identifies basic
transportation method or
form
– Rail
– Highway
– Water
– Pipeline
– Air
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Rail mode has historically handled the largest
number of ton-miles within continental US
• Track mileage has declined by
over half since 1970
• Traffic shifted from broad
range of commodities to
hauling specific freight in traffic
segments
– Carload
– Intermodal
– Container
• New technologies include
articulated cars, unit trains and
double-stack cars

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Truck mode has expanded rapidly since
the end of World War II
• Nearly 1 million miles of
highways in U.S.
• Key benefits include
– Speed of transit
– Ability to operate door-to-
door
• More efficient than rail for small
shipments over short distances
• Dominate freight moves under
500 miles and from
manufacturing to wholesalers to
retailers
• Many companies run their own
truck fleets as well (e.g.
WalMart)

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Water mode is the oldest form of US transport
dating back to the birth of our nation
• Percentage of ton-
miles has stayed
between 19 and 30%
since 1960’s
• Ranks between rail
and truck in fixed cost
• Right of way (canals
and rivers)
maintained by
Federal government

Pipeline mode accounts for about 68 percent of all
crude and petroleum ton-mile movements in US

• Have the highest fixed
cost and lowest variable
cost of all modes
• Unique transportation
mode
– Can operate 24 hours
a day, 7 days a week
– No emissions
– No empty container or
vehicle to return
• Not flexible, and limited to
liquids and gases

Air mode is the newest and least utilized
transport mode for freight
• Accounts for only 1% of
intercity ton-miles
• Fastest of all the
modes
• Fixed cost is 2nd lowest
but variable costs are
extremely high
• Most products air-
shipped have high
value, high priority or
extreme perishability

Transportation Carrier
Characteristics
 Selain kelima moda transportasi, terjadi juga
kombinasi antara moda: rail-motor; motor-water;
motor-air; dan rail-water.
 Kombinasi antar moda menyediakan layanan
khusus (dan kerap kali biaya lebih murah)
ketimbang menggunakan moda transportasi
tunggal.
 Opsi lain transportasi tersedia pula: indirect,
special carrier; nonoperating third parties seperti
freight forwarder, shipper cooperatives, parcel
post, UPS, FedEX, DHL, dsb.
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Bentuk Transportasi yang
 Ditetapkan Secara Legal sarana
Transportasi umum (Common Carrier):
angkutan umum menyediakan jasanya ke pengirim
barang dengan menetapkan rate yang umum ke tempat
tujuan.
 Sarana angkutan kontrak (Contract Carrier): sarana
angkutan yang dapat disewa oleh pengirim barang
tertentu berdasarkan kesepakatan kontraktual tertentu.
 Sarana angkutan khusus (Exempt Carrier): sarana
angkutan yang dapat disewa untuk mengangkut produk
tertentu.
 Sarana angutan milik sendiri (Private Carrier): sarana
angkutan ini tidak untuk disewakan; perusahaan
menyediakan sarana angkutannya sendiri untuk
transportasi produknya.


Economic drivers influence rates

 Distance
 Weight
 Density
 Stowability
 Handling
 Liability
 Market


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Growth of Intermodal
Transportation

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Highway transport is appealing partly due
to its relative ranking across
characteristics
Table 8.5 Relative Operating Characteristics by Mode

Lowest rank is best

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Intermodal Combinations
 Intermodal Combinations yang umumnya
tersedia bagi pengirim-barang (shipper):
∼ Trailer-on-flatcar (TOFC/piggyback)
∼ Container-on-flatcar(COFC)
∼ Road railers

Lihat Figure 8-4 [p.331]


Selected Form of Intermodal Transportation


Piggyback is an intermodal transport
that integrates rail and motor service
 Most widely used
systems are
 Trailer on a flatcar (TOFC)
 Container on a flatcar
(COFC)
 Trailer or container is
hauled by truck at origin
and destination
 Railcar hauls for portion of
intercity travel
 A variety of coordinated
service plans have been
developed

Containerships are oldest form of
intermodal transport
 Loads a truck trailer, railcar or
container onto barge or ship
for the line-haul movement on
inland waterways
 Land bridge concept moves
containers in a combination of
sea and rail transport
 Common for containers
moving from Europe to Pacific
Rim
 Transfer of freight between
modes often requires handling
containers and imposition of
duties
 Function of ports is to make
this seamless and fast
 Port throughput is big concern
for supply chain managers

Coordinated air-truck is commonly
used to provide premium package
services
 Many smaller cities
lack airfreight
services
 Costs can leveraged
with delivery time by
linking the modes


Non-operating intermediaries do
not own their own equipment
 Freight forwarders —
businesses that consolidate small
shipments from various customers
into bulk shipment for a common
carrier for transport
 Shipper associations and
agents —groups of shippers who
employ an agent to consolidate
purchases and shipments for them
 E.g. garment industry in New
York
 Brokers —intermediaries that
coordinate transportation
arrangements for shipper,
consignees and carriers, operating
on a commission basis

Sampling of Non-operating Intermediaries
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Nonoperating Third Parties
• Freight forwarders
• Shippers’ associations or cooperatives
• Transportation brokers
• Intermodal marketing companies or
shippers’ agents
• Third-party logistics service providers
(Ryder Logistics, ROLS (Caliber),
Schneider Logistics, Customized
Transportation, and Menlo Logistics.

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• Freight Forwarders (FF): menjadi alternatif
pengangkutan handal. Freight Forwarders membeli jasa
transportasi dari satu atau lebih moda dan melakukan
konsolidasi pengiriman-pengiriman kecil dari sejumlah
shipper sehingga menjadi pengiriman besar serta biaya
angkut lebih rendah.
FF bisa domestik atau internasional. Dapat pula melalui
laut dan/atau udara.
• Shippers’ association atau Cooperatives : yaitu
kelompok shipper melakukan konsolidasi atau distribusi
muatan atas dasar nirlaba untuk para anggota dari
kelompok demi menjamin tercapainya volume angkutan
atau kontrak layanan.

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8-6b

• Transportation Broker : mengatur pengangkutan produk
dan mengenakan fee untuk jasa itu. Broker melakukan
pengaturan angkutan dan partisipasi dalam negosiasi
biaya. Kesepakatan lasimnya dibuat antara broker dengan
carrier dimana carrier menunjuk broker tersebut sebagai
agennya.
Broker berperan mengusahakan muatan agar perjalanan
pergi-pulang senantiasa terisi penuh. Broker juga berperan
penting jika shipper akan melakukan negosiasi tentang
rate, mengawasi pengiriman, dsb.
• Intermodal Marketing Companies atau Shippers’
agent : mirip shippers’ association atau cooperatives
kecuali perusahaan mengkhususkan diri pada
TOFC/COFC.
• Third-party Logistics Service Providers : pihak ketiga
menyediakan layanan logistik (transportasi) untuk
perusahaan tertentu.
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Small Package Carriers
• US Portal Service
• UPS (United Parcel Service)
• FedEx
• Many E-Commerce Companies Use Air
Express (Amazom.com, Borders Books,
and Barnes & Noble).
• Competition: Airborne Express, DHL
Airways, Emery Worldwide, FedEX, and
UPS.
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Major U.S. Agencies
Regulating Transportation
• Surface Transportation Board
• Department of Transportation
• Federal Maritime Commission
• Federal Energy Regulatory Commission

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International Distribution
Shipping Options

Source: Adapted from David L. Anderson. “International Logistics Strategies for the Eighties, “Proceedings of the Twenty Secong Annual Conference
of the National Council of Physical Distribution Management,1984, p.363. Used by permission of the Council of Logistics Management.

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McGraw-Hill/Irwin

Landbridge, Minilandbridge,
Microbridge
• Landbridge : suatu layanan dimana kargo dari luar
negeri melintas suatu negara dalam perjalanan ke
negara lain.
• Minilandbridge (minibridge) : kargo dari luar negeri
bermula atau berakhir pada satu titik di dalam negara
tertentu (port-to-port transportation).
• Microbridge : layanan ini menyediakan transportasi
door-to-door di dalam suatu negara
• Dengan semakin menguatnya blok perdagangan bebas
(misal AFTA, NAFTA) berbagai implikasinya terhadap
transportasi antar negara anggota perlu dicermati
mencakup availability dari moda transportasi, rates,
regulatory, restriction, service level dan aspek-aspek lain
dari transportation mix.


Global Aspects of Transportation
• Pengelola transportasi yang terlibat dalam pasar
internasional harus menyadari & memperhatikan
layanan, biaya, dan ketersediaan moda transportasi di
dalam dan antar negara-negara.
• Umumnya opsi yang tersedia adalah transportasi udara
dan air, kecuali negara-negara tersebut berada dalam
satu benua yang terhubung satu dengan lainnya
sehingga dimungkinkan angkutan darat.
• Perbedaan antara moda-moda transportasi disebabkan
oleh pajak, subsidi, regulasi, carrier milik pemerintah,
geografi dan faktor lainnya.
• Transportasi intermoda lebih sering terjadi dalam
pergerakan produk secara internasional.
• Biaya transportasi internasional biasanya merupakan
presentasi lebih tinggi dari nilai merchandise itu sendiri.


Thank U 4 Listening 2 Me 


Chapter 8 Examines Logistics Transportation Roles

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