Transportation is an essential factor in Distribution management. Two distinct levels of transportation dealt with in this presentation are Primary and Secondary. Primary transportation involves rail, road, air ship and secondary transportation involves small truck booking etc. This is an in depth presentation about transportation by Welingkar’s Distance Learning Division. For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/DistMang Join us on Facebook: http://www.facebook.com/welearnindia Follow us on Twitter: https://twitter.com/WeLearnIndia Read our latest blog at: http://welearnindia.wordpress.com Subscribe to our Slideshare Channel: http://www.slideshare.net/welingkarDLP

1. Welingkar’s Distance Learning Division
CHAPTER-7
Transportation
We Learn – A Continuous Learning Forum

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

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

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..

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

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

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

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

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

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

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

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

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 Transportatio

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

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

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

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 Transportatio

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

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

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

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 Transportatio

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

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

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

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 Transportatio

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 Transportatio

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 Transportatio

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

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

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.

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 Transportatio

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 Transportatio

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

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

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

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

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

38. Major constitutes of the current IATA rates
• General Cargo Rates
– Normal rates for cargo transportation
Mumbai to
London
Air France
Alitalia
British
Airways
Rs.
Rs.
Rs.
1700
2200
2300
≤ 45 kg per kg 135
190
176
45-100 kg per 188
kg
180
144
100-250 kg
per kg
130
132
Minimum
139
Ch-07 Transportatio

39. Class Rates
• Are surcharged or discounted rates for certain
classified items e.g. valuable cargo, live
animals, commodities being freighted in bulk
etc.
Ch-07 Transportatio

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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