Posts Tagged With: Mode of transport

Transportation Management – Monitoring, Control and Evaluation

The mission of transport is to execute the movement at the right time, in the right quantity and condition, to the right place, at an acceptable cost. There has to be a structured approach to the selection and subsequent monitoring and control of the providers to achieve that mission.

Previously, we have seen the selection of transport mode is based on four key criteria and operational factors which very influential in this selection.

MNE

Movement of goods or materials raises a number of issues to be dealt with. Ideally movements should be managed by a dedicated staffs or unit.

Below are the tasks that must be executed by the staffs or the unit that monitors and controls during the movement:

  1. Track the progress of the goods/materials and update delivery times accordingly.
  2. Manage the staffs involved or required in the movement.
  3. Deal with any issues that arise.
  4. Produce the required documentation to cover the transit, responsible for collecting the required documents prior the dispatch.
  5. Where the movement of goods/material is to an area under the control of the local public authority or Customs, a clear understanding of the requirements covering movement of goods/material must be gained from the appropriate authority prior to initiating any movement.
  6. Maintain an information flow between all parties involved to ensure the safety and security of the goods/material and the adherence to service promise.
  7. Provide input to the management as soon as possible if there are urgent matters, for example, there must be a change of route or time of delivery.

In addition to monitoring and control of the above, it is also important to measure the performance of the transport providers / transporters to ensure that they are performing to the service requirements laid down in the contract/agreement. The source documentation usually from transporter consignment notes. Depending on the nature of the contract and the ability of the transporters to provide feedback, data may be provided by them to confirm that the contract level of performance is being met.

Performance data should be collected on an ongoing basis and presented weekly or monthly depending on the requirements of the company and the level of activity of the provider. Performance data will be both “hard” and “soft”. Hard data will relate to such things as on time delivery, in full delivery, damage and costs. It may be possible to gather some soft data related to the dispatching and receiving companies’ perception of the service provided by the transporter in terms of such attributes as driver attitude, condition of vehicles and flexibility.

The report produced will act as a basis for providing feedback to providers on their performance and service delivery level. Some transporters will also compile performance reports for clients. These reports should provide the basis for regular discussion and review between the provider and the company. It is important the feedback is given in a constructive way. If there are service failures often, these will have been dealt with at the time. Discussion at review should be attempted to identify common reasons for failures and to jointly agree what must be done to prevent re-occurrence in the future. This is best done in the spirit of supply chain partnership rather than the traditional, more confrontational supplier – customer relationship. The feedback should also highlight successes and things done well.

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Transportation Management – Decision Making

In the planning phase as previously, we know that there are four key criteria for selecting the mode of transport, i.e. speed, reliability, cost and flexibility. We have also seen that operational factors, terms and conditions as well as environmental, political, social and security factors will affect for decision making.

Transport pengambilan keputusan

Below are some examples of goods or materials to be transported, and we will see how the judgments made in taking a decision which mode of transport to be used.

1. A telecommunications company’s HQ in the city of A wants to send 5 device servers that are urgently needed by one of their branch office located in the city of B. Total weight of the goods to be delivered is 100kg and the distance from city A to city B is 3,000 km. City A and city B both have the airport facilities, railway lines and roads across the province are quite good. What mode of transport should be used?

For this case we will use air transport because the goods to be delivered urgently needed and total weight of the goods is suitable to be transported by air. Air transport is particularly suited to low weight and low volume of consignments, it is also good for perishable goods and in circumstances where the delivery requirement is urgent. Air transport also will be one of the best options for emergency situation. Currently there are a lot of major airlines and other global logistics service providers also an opportunity to ship consignment on passenger routes have made air transport a more cost effective option, particularly for international movement.

Back to the above case, first thing to do is we need to get quotations/offers from service providers such as DHL, UPS, TNT or others. Better to get at least three quotations/offers for comparison and transparency of the decision making process. If we will continue to send more items/goods by air transport, would be better if we issue a tender and enter into contract for a specified period of time with one of service provider.

Things to be arranged after a service provider has been selected:

  • Packaging and labeling. Transport by air (aircraft) will usually take place using some form of unit load device so it will reduce the need of packaging. The nature of goods will determine the precise nature of packaging. Labeling should include details of the sender and consignee, other relevant information and the package number.
  • Proof of delivery of goods, i.e. Air Waybill (AWB). Normally AWB and other regulations for air shipments should be in-line with IATA (International Air Transport Association) regulations. The AWB is the carrier’s receipt by air, evidence of the contract of carriage and is usually non-negotiable. Correct name and address of sender and consignee are very important for AWB.
  • Handling. It is important to note whether the goods must be handled with special care or not, for example for this case the goods categorized as fragile so it should not be slammed and so on.

 2. “Abadi” office will move from current location in city A to the new location in city B. Total distance from city A to city B approximately 700km. A number of office equipment such as desks, chairs and cabinets should be moved to city B. City A and city B both have the airport facilities, railway lines and roads across the province are quite good, however the environmental conditions across the provinces are less safe. What mode of transport should be used?

For this case, we can use rail as an option of transport mode because road condition across the two provinces are less secure. Rail offers effective method for bulk haulage, it is therefore suitable for the movement of large load size over longer distances in affordable cost. This is the major benefit of rail. If total delivery distance is not high, for example less than 500km, rail often be found to be an uneconomic option. In some cases, the size of the consignment will mean that the entire train movement. Significant quantities can be moved in one trainload. In certain circumstances, wagons can be built based on customer specifications but normally available on hire basis. Wagons come in all shapes and sizes, for example hoppers for transporting coal. However, the availability of locomotives to haul the train and the wagons will impact on the speed and reliability of this mode.

Back to the above case, first thing to do is to get three quotations/offers from transport companies. Then we should determine whether the goods need to be packaged or can be sent directly. Proof of delivery of goods, rail waybill can be also considered as a contract and usually non-negotiable. Correct name and address of sender and consignee are very important for rail waybill.

3. Supermarket “Jaya” in Jakarta, Indonesia wants to import 50 tons of instant noodles from factory in Singapore. Packaging of instant noodles is in carton box with weight per box is 5kg. So in total there will be 10,000 boxes to be imported. What mode of transport will be used?

For this case, the mode of transport is containerized by sea because goods to be imported is food and the packaging is in carton box and unavailability of transport by road.  Normally, selection of transport company for import of goods or materials will be done through tender process.

Analysis for all offers received should consider:

a. Transport rate from Singapore to Indonesia. Normally offers will be made in the basis of:

  • Door to door
  • Door to port
  • Port to port
  • Port to door

b. Rate of Customs clearance at port of origin and at port of destination.

c. Rate of Local Shipping Charges, e.g. Terminal Handling Cost, Delivery Order fee, Lift-on, lift-off, cleaning and other costs.

d. Other costs if any such as demurrage, detention etc.

After awarded the agent (transporter), we need to closely follow up the movement of the goods, from the origin factory/warehouse, loaded into containers until the vessel is sailed. As soon as possible after the vessel is sailed, proof of delivery of goods, i.e. Bill of Lading (B/L) to be issued. B/L is the main shipping document and has three roles:

  1. It is the carrier’s receipt for the carriage of goods by sea.
  2. It is evidence of the contract between the sender/consignor and the shipping line and details about the conditions of carriage.
  3.  As evidence for payment of goods transported.

The B/L usually issued in a set of three originals, signed on behalf of the ship owners by the captain or the person in command of a ship or the shipping agent acknowledging the receipt on board of specified goods. It stipulates the payment terms and details of consignor and consignee. Without an original B/L, the goods will not be released.

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Transportation Management – Planning

We know very well that the basic modes of transport are road, sea, air and rail. In general, a mode of transport is the means by which goods or materials are transfer from one point to another.

Manajemen transportasi

The criteria of speed, reliability and cost should be examined when considering the choice of mode. Different modes will have quite different characteristics, therefore, the appropriate mode must be carefully selected in order to match all the requirements. Multi-modal solutions may provide the most effective and efficient transport option.

The physical characteristics of certain goods and materials may determine a specific transport, however most of goods will be capable of being moved by variety modes.

It is important to fully recognize the operational characteristics of the modes, also necessary to consider the type of the vehicle or equipment that will be used within that mode.

So, in general, mode selection is influenced by:

I. Operational factors.

    Certain operational factors need to be considered when selecting appropriate mode:

1. The nature of the consignment to be moved. Factors to consider are:

  • the size, shape and weight of the goods or materials,
  • the value, requirement for security in transit and degree of fragility,
  • deterioration of the period,
  • the hazardous nature of goods.

2.  Aspects to be considered for customers features:

  • the geographical location and dispersion of customer to be serviced,
  • delivery time required by delivery point, for example within 24 hours and the regularity with which consignments are to be delivered must be known,
  • the features of the delivery point must be known in terms of physical access, weight restrictions and loading / unloading facilities,
  • the average consignment size.

3. Number of environmental factors, social-economic and politic conditions:

  • in some countries/cities environmental and legislative considerations, for example, vehicle and axle weight limits could substantially limit the choice of the most effective mode of transport,
  • the country/city transport infrastructure, in terms of the extent and quality of roads and railways, will define mode availability,
  • laws and taxation policies may offer incentives or restrictions on the use of particular modes of transport,
  • availability of labor and capital, specialist and technological knowledge,
  • weather conditions, for example, monsoon weather, can restrict the choice of mode.

II. Mode selection criteria

   Four key criteria can be used when comparing different transport modes, the parameters are:

  1. The speed which the mode exhibits – nature of a mode normally determines the speed at which goods can be moved. However, the nature of the modal infrastructure can have an impact on the relative speed of that mode.
  2. The reliability that the mode demonstrates in its ability to fulfill service requirements – the reliability of the transport service to deliver the correct goods, in the right condition at required time, every time, is a major aspect of customer expectation.
  3. The comparative unit costs, which the modes incur – the cost of a mode will often be expressed in terms of the unit cost for transporting the goods or materials, rather than an absolute figure. This could be expressed as a cost per sack, cost per tonne and cost per pallet or similar. The distance the goods have to travel must also be considered. Therefore, modal cost can also be expressed in terms of a value per tonne kilometer for example.
  4. The flexibility that the mode exhibits – flexibility relates to the scope for variation, which exists in a mode. The infrastructure within which a mode has to operate will affect the flexibility mode, due to the road infrastructure, which exists in most countries. Rail, for example, is less flexible, being constrained by the available fixed infrastructure.

So in conclusion we could say that all transportation needs to be carefully planned. It is important to understand the mode of transport for the benefit of both customer and transport companies or who managing the transportation.

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Transport

transportIn principal the missions of logistics are:

  1.  Getting the right goods,
  2.  at the right time,
  3.  with the right quantity,
  4.  in the good quality,
  5.  with a reasonable price.

Transport is the main component to achieve above missions. Good management is necessary to be able to make an efficient transportation system at an affordable cost. Managing the transportation is often complex due to the many variables that must be taken into account. Several factors are often overlooked when we arrange transport such as the political, social and economic condition in one region or country. Sometimes political decisions regarding transportation infrastructure often determine transportation routes and modes. As well as socio-economic condition could determine routes and security.

In general, there are four key process of transportation management:

1. Planning.

This process will define the most efficient transport mode according with the consideration of important parameters such as cost, type of the goods includes packaging and how to handle it, destination, expected time of arrival, avoid transit as much as possible to ensure quality, socio-economic-political situations in every area to be traversed, etc.

2. Decision-making.

This stage is the execution of the transport plan.

3. Follow-up.

Following any physical or administrative operation regarding transportation, such as the traceability event by event, Customs arrangements, need to send transport alerts (delay, unexpected stops, accidents, etc), bills to pay and so on.

4. Measurement.

Transporter performance and all condition during the transport events needs to be evaluated and the indicators of performance should be made in the planning stage.

Below are the transport modes:

1. Transport by air.

This kind of mode takes place mainly using cargo operators, e.g. couriers like UPS or Federal Express which usually carry parcels.

2. Transport by road.

Generally this mode of transport takes place by truck. Two important terms are FTL (Full Truck Load) and LTL (Less Truck Load). Primary transport vehicles usually send the goods to the warehouses. Secondary transport vehicles usually pick up customer orders for delivery, for example small box car from UPS or FedEx.

3. Transport by rail.

This mode of transport offers a low cost alternative for shipping products and usually not really focused on the speed factor.

4. Transport by sea / water.

This mode of transport offers another good alternative for shipping products which not really requiring speedy shipping. Transport by sea including bulk carriers and container vessels.  Containers often used for the delivery of food products to / from abroad.

This time we will only see outline for the modes of transportation, in the future we will see more details because each mode of transport has their own characteristics.

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