1. TRANSPORTATION
Submitted ByMOHD KAMRAN YUSUF
Under the guidance of
Prof Mohd Khalid Azam

2. Content
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Meaning& definition
Imortance of transportation
Transportation functionality
Principles & methods of transportation
Types of transportation
Condition affecting transportation
Transportation costs
Pricing structure
Conclusion

3. MEANING AND DEFINITION
“The process of moving an item
from point A to point B.”
“Safe, efficient, reliable, and sustainable
movement of persons and goods over time
and space”

4. Importance of transportation:
1) Place Utility.
2) Industrial Development.
3) Employment Opportunities.
4) High Standard of Living.
5) Distribution of Perishable Goods.
6)Emergency Transportation.

5. TRANSPORTATION FUNCTIONALITY
Product Movement
Functions of
Transportation
Product Storage

6. Product Movement

Temporal:
- Product is locked up during transit, hence inaccessible.
- Positive amount of time is spent in transporting material.
- Time is a resource[Temporal Resource] expended in
Transportation .
- During the time product is locked up costs are incurred in
proportion of time.

Financial:
- Administration costs, Salaries, Maintenance costs are
expended.

Environmental:
- Fuel costs are high[Creates air pollution, congestion,
Noise pollution.

7. Product Storage:
It is a temporary storage in stationery vehicle. Product storage
is expensive in transport vehicle. In some situations Product is
done such as:
When the cost of unloading and reloading the product in the
Warehouse is more expensive.
When storage space is limited. Or,
At other times, temporary storage is used due to diversion. This
occurs when an original delivery destination is changed while
the inventory is in transit.

8. PRINCIPLES OF TRANSPORTATION
Economy
of Scale
Principles of
Transportation
Economy of
Distance

9. METHODS OF TRANSPORTATION
North West
Corner Rule
Methods of
Transportation
Intuitive Lowest
Cost
Stepping Stone

10. Types of Transportation
1.Road Transport.
2. Rail Transport.
3. Water Transport.
4. Air Transport.
5. Pipeline Transport.
6. Ropeway Transport.

11. Road Transport:
* Advantages;
1. Door to Door Service.
2. Economical over short distances.
3. Flexibility.
4.Limited Capital Expenditure.
* Disadvantages;
1. Irregular and Unreliable.
2. Unsuitable for Long Distances
3. No Uniformity in Rates.
4. Limited Speed.
5. Affected by Weather.

12. Rail Transport:
* Advantages;
1. High Speed.
2. Suitable for Long Distances.
3. Bulky Goods.
4. Protection.
5. Large Carrying Capacity.
* Disadvantages;
1. Huge Capital Expenditure.
2. High Overheads.
3. No Door to Door Service.
4. No Competition.
5. Inflexible Mode.

13. Air Transport:
* Advantages;
1. Flexible.
2. Quick service.
3. Natural Highways.
4. Protection.
5. High Speed.
* Disadvantages;
1. High Cost of Construction and Maintenance.
2. Costliest.
3. Limited Carrying Capacity.
4. International Restrictions.
5. Unsuitable for Bulky Goods.

14. Water Transport:
* Advantages;
1. Cheapest Mode of Transport.
2. Large Carrying Capacity.
3. Safety.
4. Protection to Goods.
5. Flexibility.
* Disadvantages;
1. Slow.
2. Huge Capital Expenditure.
3. High Cost of Maintenance.
4. No Door to Door Service.
5. Special Packing.

15. Pipeline Transport:
 Generally liquids like oils,
crude, petroleum products are
transported.
 More than 6350 KM of Pipeline
exits in India.
 Currently 27% of petroleum
products are moved by
pipelines in India.

16. Ropeway Transport:
 Ropeway Transport is used for
transporting materials in hilly areas.
 In India 16% of total area is hilly,
Currently in India nearly 178 Km rope
ways are used for transportation.

17. CONDITIONS AFFECTING TRANSPORTATION
Condition
Factor
Examples
Geography
Distance, physiography,
accessibility
Shipping between India and
banhaldesh vs. shipping
between India and US
Type of product
Packaging, weight,
perishable
Economies of scale
Shipment size
Trade imbalance
Empty travel
Infrastructure
Capacity, limitations,
operational conditions
The Interstate
Mode
Capacity, limitations,
operational conditions
A bus compared to a car
Competition and regulation
Tariffs, restrictions, safety,
ownership
The European Union, NAFTA
Shipping coal
Shipping flowers or wine
A 747 compared to 737
(passengers)
ULCC compared to a VLCC
(freight)
Trade between China and
the United States
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18. TRANSPORTATION COSTS
Product related
Market related
 density
 intramode/intermode competition
 location of markets
 stowability
 ease or difficulty of  nature and extent of regulation
 balance/imbalance of freight traffic
handling
 seasonality of product movements
 liability

domestic vs. international

19. TRANSPORTATION COST STRUCTURES
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Variable: costs vary with services or volume:
 line-haul costs of fuel, labor and maintenance
 handling
 pickup and delivery
Fixed: constant regardless of activity
 Facilities, equipment and administration
Joint: “hand-in-hand” costs -- unavoidable
 Example: the backhaul move
Common: shared costs (“overhead”)
 need for Activity-based costing

20. COST STRUCTURE FOR EACH MODULE:
Mode
Fixed Costs
Variable Costs
Rail
High- Equipments, Terminals
, Tracks ,etc
Low
Road
Low-Highway provided by
government
Medium-Fuel , Maintenance, etc
Water
Medium-Ships and
Equipment
Low-As capacity is huge
Pipeline
Highest-Right of the way ,
construction, Equipment for
control station and Pumping
capacity
Lowest-Insignificant labour costs
Air
Low-Aircraft and cargo
handling systems
High- Fuel, labour, Maintenance

21. FACTORS DRIVING COSTS
Distance
 Volume
 Density
 Stowability
 Handling
 Liability

21

22. FACTORS DRIVING COSTS

Distance
Cost
Distance
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23. FACTORS DRIVING COSTS

Volume
Cost per Tonne
Weight of the Shipment (tonnes)
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24. FACTORS DRIVING COSTS

Density
Cost per Tonne
Product density
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25. FACTORS DRIVING COSTS
Stowability- how product Dimensions can be
positioned.
 Handling- Load & Unload.
 Liability- product characteristics that can
result in damage & claims.

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26. PRICING STRUCTURES

Cost-of-service: “cost plus” method

Value-of-service: “market based” method

Combination: a middle of the road approach
using cost (minimum) and value (maximum)

Net Rate Pricing: All-inclusive prices specific
to customers’ needs (not discount-based)

27. FIXED AND OPERATING TRANSPORT COSTS
Mode
Fixed/Capital Costs
Operating Costs
Rail or
Highway
Pipeline
Land, Construction,
Rolling Stock
Land, Construction
Maintenance, Labor,
Fuel
Maintenance,
Energy
Air
Land, Field & Terminal
Construction, Aircraft
Land for Port Terminals,
Cargo Handling
Equipment, Ships
Maintenance, Fuel,
Labor
Maintenance, Labor,
Fuel
Maritime

28. COST VARIATIONS IN TRANSPORT
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Elasticity of Demand- goods of high unit value are
better able to bear costs of transport than low value
goods- “charge what traffic will bear”
Competition between Transport Modes
Example: Rail wishes to compete with trucks on
short haul must keep rates down
Other examples: Wine ship Angelo Petri

29. COST VARIATIONS IN TRANSPORT
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Differences in Cost of Services:
Loading characteristics- light, bulky goods demand
higher charges than heavy, compact articles
Size of Shipment- large, single consignments
permit economies in administration and terminal
costs
Susceptibility to Loss and Damage and Risk
Liability- a. fragile and/or perishable goods- b.
refrigerated, insulation and special packaging

30. CONCLUSION:
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Transportation and logistics systems have interdependent
relationships that logistics management needs
transportation to perform its activities and meanwhile, a
successful logistics system could help to improve traffic
environment and transportation development.
Since transportation contributes the highest cost among the
related elements in logistics systems, the improvement of
transport efficiency could change the overall performance of
a logistics system.