What is Transportation and Logistics Management?
According to Wikipedia, transportation is defined as the movement of people, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline and space. The field can be divided into infrastructure, vehicles and operations. Transportation is important since it enables trade between people, which in turn establishes civilizations. I find it an interesting point that transportation is an enabler of civilization, but this makes sense, as it enables the ability to trade and communicate.
According to the APICS dictionary, logistics is defined as 1) In an industrial context, the art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities. 2) In a military sense (where it has greater usage), its meaning can also include the movement of personnel.
The Council of Supply Chain Management Professionals (CSCMP) defines logistics as the process of planning, implementing, and controlling procedures for the efficient and effective transportation and storage of goods including services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. This definition includes inbound freight management, outbound, internal, and external movements.
After Asking “What is Transportation and Logistics Management?” Do you Think They are the Same Thing?
If you have read the above academic definitions, you will see that that after Asking “What is Transportation and Logistics Management” it seems rather easy to see the difference between the two.
Transportation is the driver of logistics, but logistics is the race car driver in the seat of transportation. In fact, it’s easy to see from that sentence alone, the pure difference. Logistics requires planning, transportation is just the mode to execute the planning, when getting freight from point A to point B. Clearly, they are not the same thing, but transportation is just simply a part of logistics. When it comes to logistics, logistics executives must make further decisions beyond the mode of transportation to include:
- Importing and Exporting Regulations
- Freight Claims Management
- Choosing the correct LTL freight classLTL freight class for your shipment
- Working & collaborating with other executives within the supply chain
- Managing vendors and partners
- Responsible for mitigating risk and mitigating expenditures
This is another reason it is vital within the logistics departments of both small and large businesses, that executives don’t see software, such as transportation management system software, as the end all be all of logistics management. TMS software is helpful, but as you can see, beyond transportation procurement and management via software, there are many things a logistics executive faces.
Often, outsourcing logistics to an expert provider, who can not only offer software, such as a transportation management system, but also integrated services to deal with accounting, claims, and building custom inbound freight programs will allow logistics executives to have more meaningful collaborations with others in the supply chain and company at large.
Importance of Transportation in Logistics Management
While it is much easier to connect companies and customers by means of e-commerce transactions and the Internet, still physical delivery relies on effective management of a transportation system. On average, transportation operation costs constitute 30% of logistics costs. Thus, the role of transportation in logistics systems is crucial. There is an apparent interconnectedness between transportation and logistics while performance of logistic activities is impossible without transportation management. Vice versa, proper logistics system enahcnes traffic environment and transportation development (Thompson and Taniguchi, 2001).
As such, the notion of supply chain management assumes planning and managing all logistics, sourcing, procurement, and conversion operations. Supply chain managers coordinate their actions and collaborate with channel partners, including intermediaries, suppliers, third-party service providers, and customers. In addition, the practice of supply chain management integrates supply-and-demand management among various companies. Thus, supply chain management assumes management of business relationships among a main company and all its outside supply chain partners (Krumwiede and Sheu, 2002).
Cost efficient and effective logistics management requires the establishment of an economical and responsive transportation network. It enables a company to reduce costs, implement strategic changes and advance customer service levels without disrupting an overall supply chain flow. End-to-end network visibility is an initial step in setting up a responsive transportation network. The point is that visibility enables companies to centralize their production operations to lower-cost areas without affecting customer service levels. Visibility enables transparent monitoring and appropriate management of all the uncertainties within the network and keeping inventory levels low. A primary task in setting up an economical transportation network is realizing an essential role of transportation. Rather than taking this component as a source of cost and risk, logistics managers should treat it as the largest component of the cost structure of within the entire logistics structure. According to Chang (1998), transport accounts for about 30% of the total spending on logistics operations, which equals to the amount of inventory and warehousing altogether.
TYPES OF TRANSPORTATION
These most common five modes of transport are: railways, roadways, airways, waterways and pipelines. Following is the brief account of each mode with reference to Indian conditions with relative merits and demerits.
Indian railway system has grown into Asia’s largest and the world’s fourth largest. It has route length of 72,000 kilo meters by the end of 1990. The daily run is 15,000 kilo meters with running of 12,000 trains carrying 7 lakh tons of goods. The average cost per ton kilo meter is 27 paise.
- Large carrying capacity:
Compared to other means of transport, railways are known for bulk carriage of goods over long distances.
- It is economical:
As the freight rates are telescopic and referential, it works cheaper particularly in case of heavy goods over long distances.
- It is all weather modes:
Railways provide all season protection to the products moved on uninterrupted basis.
- It has containerisation:
Indian railways have done a good job by containerising on major routes facilitating safe, uninterrupted and speedier movement of goods.
- It links international markets:
Railways are the main sources of connections with the markets outside the country moving goods from interior parts to the points of overseas supply and shipping.
- Costlier over short distances:
Railway transport works costlier over short distances because of tapering and differential tariff rates.
- Slower movement:
As compared to road and air transport, the speed of movement is slower.
- Inordinate delays:
In India we have three types of lines as broad, meter and narrow gauge resulting in frequent transhipments; again shortage of wagons and, therefore, space forces the business community to tolerate inordinate delays.
Indian road network is one of the largest in the world. It has a total road length of 18 lakh kilo meters of which 50 percent is surfaced. Of this, national highways account for 35,000 kilometers account for the 50 percent of total traffic. On this road length, 9 lakh vehicles ply carrying goods.
- Economical over short distances:
As compared railways, it is more economical. The studies have proved that it is cheaper by 25 percent.
- Speedier movement:
Road transport is speedier than the railways giving point to point service resulting in price stabilisation and consumer satisfaction. The business community needs not wait because of wagon shortage, transhipment because a truck has a smaller capacity and is flexible available 24 hours.
- Touching for-flung markets:
Much beyond the capacity of railways, the roadways are known for reaching impregnable market particularly hilly regions where railways cannot reach.
- Lesser conditions of service:
The roadways do not insist on strict packaging requirements because of least transhipments shocks to goods carried. Again, damage claims are settled faster.
- Uneconomical over long distances:
Long haulages work out much costlier because disproportionate rise in fuel and spare-parts expenses.
- It is fair weather friend:
Roadways are closed during monsoons and winters resulting in handicapped movement of goods.
- Not suitable for bulk transport:
Bulky and heavy goods to be moved particularly over longer distances need railway services than roadways as it has a major limitation of carrying capacity.
We cannot boast of airways in India as we do in case of railways and roadways because, it is underdeveloped and underutilised. It acts as a feeder or supporting transport means. Domestic capacity available is 115 lakh ton kilo meters but utilised only to the extent of 12 lakh ton kilometres in 1990.
International capacity corresponds to 218 lakh ton-kilo meters of which 175 lakh ton-kilo meters are used. India has 4 international airports, 92 aerodromes with 50 intermediate and 40 minor aerodromes.
- Fastest means of transport:
Air transport provides the speediest movement of cargo over the distant places by eliminating practically spatial barriers.
- All-weather friend:
It is known for its dependable service during the times of floods, wars, earth-quakes. It is all weather means, of transport though flights are cancelled due to bad weather conditions.
- Consumer satisfaction:
The level of consumer service and, hence satisfaction is of high order as it is known for immediacy, speed and least damage to cargo.
- Reduced inventory holdings:
As it provides fastest and uninterrupted service, capital investments in the form of stocks of goods is less. This is of particular importance in case of highly perishable items.
- It is costlier means of transport:
The cost of air transport is very high and there is limit of weight of cargo. Hence, it is suitable for light weight, high grade and costly items only.
- Limited coverage:
The planes cannot land at all the places of our choice. It connects metropolis and some important cities only.
- Limited cargo capacity:
The cargo capacity of a plane is much smaller because of its size as it works against the force of gravity.
Waterways of the nation provide other alternative means of transport. Unfortunately, in India, waterways are not fully developed though she has a great potentiality.
Though India has 7,000 kilo meters of navigable river waterways, only 2,500 kilometrers are used. Again, we have 4,800 kilo metres of canals of only 600 kilo metres are navigable but hardly 400 kilo meters are actually used.
It is cheaper means of transport:
Inland waterways tariffs are much lower and, therefore it works cheaper for both short and long distances.
Most suitable for heavy and fragile products:
The items which are bulky and heavy and which are fragile can be moved with ease.
Loading and unloading facilities:
The sender of cargo has the facilities of loading and unloading from boats and wharves on and from steamers and barges. Even the receiver has the similar facilities.
No problem of congestion:
Waterways provide an independent movement unlike road system where road is meant for all kinds of vehicles creating the problem of congestion.
- Slow speed:
The speed of the boats and steamers is badly limited in case of canals and rivers. Goods needing quick movement as perishable can be hardly transported.
Changing seasons create problems. Winter may freeze the rivers and canals and summer eats the depth of rivers and canals. Again, the rivers are known for changing their course of flow.
- Limited service:
The inland waterways are connecting the given places. Again, the cargo capacity is quite limited.
Pipe-lines are the specialized means of transportation designed to move the items like crude-oil, petroleum, chemicals, coal, lime-stone, iron-ore, copper concentrates and gas. India has made a late beginning in this regard unlike U.S.A., U.S.S.R. and Middle-East, and the development is undertaken only in case of oil refineries to move petrol and gas from sources to markets.
The total pipe length in India, at present is of the order of 8,000 kilo metres owned by private and public undertakings such as Oil India Limited, Indian Oil Corporation and Oil and Natural Gas Commission. Biggest Pipeline is planned between Iran and India.
Crude oil or coal and gas transported through the pipelines works out almost 1/4 of railways and roadways.
- Uninterrupted service:
Pipe-line transportation presents all weather system to move the products. Absolutely there is no any wastage of time as it works round the clock.
- No danger of wastage:
As there are no occasions of loading and unloading, there is no scope for spilling, evaporation, pilferage and so on.
The pipe-line usually underground and, hence, takes no additional space. What is more important is that it traverses through difficult terrain.
- Initial heavy investment:
Though operational and maintenance costs are minimal, the capital cost of pipe-line is rather much higher and that is why a county like India has minimum length.
- Danger of enemy attacks:
In the periods of war and political hegemony, pipe-lines are more prone to enemy attacks thus jeopardizing the veins of supply to the entire nation. The production activities are grinded to halt.