Operations and Supply Chain Management The Core

LOCATION, LOGISTICS, AND DISTRIBUTION chapter 14 457
Transportation Modes
A key decision area is deciding how material will be transported. The Logistics-System
Design Matrix shown in Exhibit 14.1 depicts the basic alternatives. There are six widely
recognized modes of transportation: highway (trucks), water (ships), air (aircraft), rail
(trains), pipelines, and hand delivery. Each mode is uniquely suited to handle certain types
of products, as described next:
∙ Highway (truck). Actually, few products are moved without some highway transportation.
The highway offers great flexibility for moving goods to virtually any
location not separated by water. Size of the product, weight, and liquid or bulk can
all be accommodated with this mode.
∙ Water (ship). Ships have very high capacity, and operating costs relative to this
capacity are very low, but transit times are slow, and large areas of the world are not
directly accessible to water carriers. This mode is especially useful for bulk items
such as oil, coal, and chemical products.
∙ Air. Planes are fast but very expensive to operate. Small, light, expensive items are
most appropriate for this mode of transportation.
∙ Rail (trains). This is a fairly low-cost alternative, but transit times can be long and
may be subject to variability. The suitability of rail can vary depending on the rail
infrastructure. The European infrastructure is highly developed, making this an
attractive alternative compared to trucks, while in the United States, the infrastructure
has declined over the last 50 years, making it less attractive.
∙ Pipelines. This is highly specialized and limited to liquids, gases, and solids in
slurry forms. No packaging is needed and the costs per mile are low. The initial cost
to build a pipeline is very high.
∙ Hand Delivery. This is the last step in many supply chains. Getting the product in
the customer’s hand is often a slow and costly activity due to the high labor content.
Logistics-System Design Matrix: Framework Describing Logistics Processes
exhibit 14.1
High
Low
Water
Rail
Pipeline
Volume
Highway
Cost
Hand
delivery
Air
Low
High
Slow Speed of delivery Fast