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(e.g. UPS)
Makes investment decisions regarding transportation modes and maximizes return from these Vehicle related cost type? quantity? Fixed operating cost terminal facilities Trip related cost labour and fuel
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Transportation Modes
Trucks
TL LTL
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Truckload (TL)
Lower operating costs Door-to-door shipment and shorter delivery time Economies of scale No transfer required between pickup and delivery Major Issues
Utilization (Idle time) Inconsistent service Backhauls
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Rail
Higher operating costs Ideal for very large, heavy, lesser value products over long distances Key issues:
Longer delivery time Scheduling to minimize delays / improve service Delays (at pickup and delivery end) Yard operations
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Air
Fast, reliable but expensive High operating costs aircrafts, supporting infrastructure, fuel, pilots Key issues:
Location/number of hubs Schedule optimization Fleet assignment Crew scheduling Yield management maximize daily flying time and revenue generated per trip
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Package Carriers
Companies like FedEx, UPS, USPS, that carry small packages ranging from letters to shipments of about 70 kg Expensive Rapid and reliable delivery use combination of air, truck and rail Small and time-sensitive shipments Preferred mode for e-businesses (e.g. Amazon, Dell) Consolidation of shipments (especially important for package carriers that use air as a primary method of transport)
Compare the transportation networks of FedEx and UPS
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Water
Ocean, inland waterway system, coastal waters Very large loads at very low cost Slowest in movement, as well as delays at ports, customs, security Dominant in global trade (automobiles, grain, apparel etc.)
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Pipeline
High fixed cost Primarily for crude petroleum, natural gas Best for large and predictable demand Would be used for getting crude oil to a port or refinery but not for getting refined gasoline to a gasoline station (why?)
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Intermodal
Use of more than one mode of transportation to move a shipment to its destination Common examples: rail & truck ; water & rail & truck ; water & truck More convenient for shippers (one entity provides the complete service) Key issue is delay in transfers between modes increasing delivery time
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DC
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DC
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Tailored Transportation
Suitable or Customized combination of cross-docking, milk runs and various transportation modes are used based on customer and product characteristics Factors affecting tailored transport:
Customer distance and density Number of customers Product demand and value
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