SCM300 - Transportation lecture

Overview of Logistics in Transportation

• Focus on the transportation modes of trucks, trains, airplanes, and ships.

• Importance of understanding container shipping and the use of reefers.

Containers and Shipping Regulations

• Containers can be filled to their maximum capacity, but regulations may limit how much can be transported legally, especially in residential areas.

• Companies often do not own their containers; instead, they rent them to avoid deadheading (returning empty).

• Example: Fruit companies may rent reefers to transport goods from Florida to New York and avoid returning empty.

Reefer Containers

• Reefers (refrigerated containers) are critical for transporting perishable goods.

• Rental contracts are common to maximize efficiency and minimize costs of transportation back to origin.

Dimensions and Weight Distribution in Containers

• Standard container dimensions: 8 feet across, 8.5 feet high, and lengths of 20 or 40 feet.

• Internal dimensions are smaller due to walls, insulation, and flooring, which can affect packing strategies.

• Dunnage: Materials used to fill empty spaces in containers, preventing item movement during transit.

  • Examples include inflatable dunnage, cardboard fillers, and void fillers.

  • Importance of even weight distribution to prevent damage during transport.

Transportation Modes

Trucks

• Dominant form of transportation in the U.S. for containerized goods.

• TL (Truckload) vs. LTL (Less than Truckload):

  • TL involves full trucks dedicated to a single shipment, used when shipping large quantities.

  • LTL combines multiple small shipments into one truck (e.g., UPS and FedEx).

• Trucking is fast and reliable, but costly due to fuel price volatility and driver shortages.

• Major rolls of trucking during logistics operations, including delivery to various locations post-shipment.

Trains

• Rail transport tends to be slower and less reliable compared to trucks.

• Massive barrier to entry due to necessary capital investments in railcars and infrastructure.

• Well-suited for bulk goods or low-cost items over long distances but can suffer from vibration damage.

Airplanes

• Ideal for high-value-to-weight ratio items needing fast transport (e.g., medical equipment, luxury goods).

• Air transport is costly but essential for time-sensitive shipments.

• Companies like Amazon invested in air transport but later prioritized ground distribution centers in proximity to customers.

Ships

• Ship cargo can include containers, cars, and bulk materials.

• Many different types of ships: bulk carriers, tankers, and roll-on/roll-off vessels.

• TEU (Twenty-foot Equivalent Unit) is a standard measure of ship capacity.

• Capacity has grown with modern ships, leading to larger infrastructure requirements at ports.

Distribution Centers vs. Warehouses

• Warehouse: Long-term storage for large quantities of inventory (weeks to months).

• Distribution Center: Short-term inventory storage (1-2 days), rapidly processing goods for distribution.

• Importance of distribution centers being strategically located to ensure quick delivery times.

• Evolution of logistics driven by technological advancements in IT and inventory management systems (e.g., Walmart’s ERP system).

Key Logistics Concepts

• Cross Docking: Practice of moving goods directly from inbound to outbound trucks without long-term storage in the distribution center.

• Reverse logistics: Handling product returns in efficient ways, creating a separate industry for returned goods management.

Conclusion

• Understanding logistics and transportation management is vital for efficiency in supply chain processes.

• Companies must adapt to market changes and efficiently use transportation modes to stay competitive.