Transportation.

Transportation involves the physical movement or flow of goods. The transportation system is the physical link that connects customers, raw material suppliers, plants, warehouses and channel members. These are the fixed points in a logistics supply chain.

The basic modes of transportation are water, rail, motor carrier, air and pipeline. Water being the slowest mode with rail, motor carrier, and air following in order of speed of delivery. Generally, the order is reversed when looking at costs.

Selection of the appropriate carrier has several steps. First the firm selects a transportation mode. The shipper must compare the service desired with the rate or cost of service. Service usually means transit time or the time that elapses from the time the consignor makes the goods available for dispatch until the carrier delivers to the consignee. Pickup and delivery, terminal handling and movement between origin and destination account for the time involved in transporting goods.

The firm must balance the "need for speed" with the costs inherent in the mode of transport. This includes the rate charged for the service, minimum weight requirements, loading and unloading facilities, packaging, possible damage in transit, and any special services that may be desired or required. If next day delivery is imperative, the shipper will utilize an air freight carrier but will pay a premium price for such rapid service. If time is not a particularly critical element the shipper may elect to use rail or a motor carrier, or may even utilize a water carrier if time is inconsequential. Water-based modes of transportation are the least expensive and are used for commodity type products such as grain, coal, and ore. Some firms even utilize more than one mode of transportation, called intermodal transport, to move their goods.

Once a mode is selected, the shipper must decide the legal classification or type of carrier they wish to utilize: common, regulated, contract, exempt or private.

Common carriers serve the general public at reasonable prices and without discrimination. They cannot refuse to carry a particular commodity or refuse to serve a particular point with the scope of the carrier's operation. Common carriers are liable for all goods lost, damaged, or delayed unless caused by an act of God, an act of a public enemy, an act of public authority, an act of the shipper, or some defect within the good itself.

Regulated carriers are required to provide safe and adequate service and facilities upon reasonable request and are liable for damage up to limits established by the carrier. Regulated carriers can be motor carriers or water carriers and are subject to minimal federal controls.

A contract carrier does not serve the general public, but, rather serves one or a limited number of contracted customers. They have no legal service obligation. They often provide a specialized service and usually have lower rates than common or regulated carriers.

Exempt carriers are exempt from regulation regarding rates and services. Exempt status comes from the type commodity hauled or the nature of the carrier's operation. Exempt motor carriers are usually local and typically transport such items as agricultural goods, newspapers, livestock, and fish. Exempt water carriers transport bulk commodities such as coal, ore, grain, and liquid. Exempt rail carriers transport piggy-back shipments and exempt air carriers haul cargo.

A firm's own transportation is termed a private carrier. Private carriers are not "for-hire" and not subject to the same federal regulations as other types of transport. However, the carrier's primary business must be something other than transportation.

Once the mode and type of carrier is determined a final decision can be made based on other factors. Accessibility is one such factor. Some firms have geographic limits to their routing network. Others may not possess physical access to needed facilities or have the ability to provide the equipment and facilities that movement of a particular commodity may require. Reliability, the consistency of the transit time a carrier provides, is also a key factor. Finally, convenience and communication are other important considerations when selecting a carrier.

Measures that a transportation firm would use to judge its performance include: orders shipped on time, orders shipped complete, order preparation time, product availability, and transit time. From the customer perspective performance can be gauged from orders received on time, orders received complete, orders received damage free, orders filled accurately, and orders billed accurately.

Transportation plays a connective role among the several steps that result in the conversion of

resources into useful goods in the name of the ultimate consumer. It is the planning of all

these functions and sub-functions into a system of goods movement in order to minimize cost

maximize service to the customers that constitutes the concept of business logistics. The

system, once put in place, must be effectively managed. (Fair et al., 1981)

Traditionally these steps involved separate companies for production, storage, transportation,

wholesaling, and retail sale, however basically, production/manufacturing plants, warehousing

services, merchandising establishments are all about doing transportation. Production or

manufacturing plants required the assembly of materials, components, and supplies, with or

without storage, processing and material handling within the plant and plant inventory.

Proceedings of the Eastern Asia Society for Transportation Studies, Vol. 5, pp. 1657 - 1672, 2005