Transportation Management
Transportation Management
Transportation Management
MANAGEMENT
Product Movement
Product Storage
Government
Modes of Transportation
* 1 = best; 5 = worst
** 1 = highest cost; 5 = lowest cost
Carrier Types
1. Common carriers – transportation companies that
provide service to the public
2. Contract carriers – carriers that have specific contracts
with a limited number of shippers
3. Private carriers – companies that own and operate
transportation equipment to transport their own
products
Transportation Economics
• Consolidation is one of the strategy used by logistics
management to reduce transportation cost by
combining small orders or shipments into one larger
shipment.
1. Market Area Consolidation – combining several small
shipments from one shipper that are going to the same
market area into one shipment
2. Pooled Delivery Consolidation – combines small
shipments from different shippers that are going to the
same market area; normally handled by independent
transportation companies
3. Scheduled Delivery Consolidation – establishing specific
times when deliveries will be made to customers
Transportation Economics
Influenced by the following elements:
• Example :
Ajib’s glass store needs to ship an order of five chandeliers to a builder
about 1000 miles away. The chandeliers cost about RM5,000 each, and Ajib
will be paid upon delivery. Ajib plans to ship the order by truck at a cost of
RM250. the delivery will take 5 days. Ajib uses a 20% annual inventory
carrying charge with an operating schedule of 365 days per year. What will
be the approximate total shipping and transit inventory cost of the
shipment?
Transportation Economics
Solution:
In-Transit Inventory Holding Cost
= (no. of days in transit / 365) x shipment value x annual inventory
carrying cost percentage
= (5 days / 365) x RM25,000 x (0.2)
= RM 68.49