Dr.

Jiayao Hu

International Logistics
Lecture 7: Transportation and International Shipping
International Logistics – RECAP

1. What are the stages of an order cycle?

2. What are the possible benefits/drawbacks of ERP systems?

International Logistics – Overview

Learning Outcomes:

1) Recognise various modes of transport in logistics operations

2) Understand what criteria should be used when selecting a mode of transport
3) Comprehend the meaning of intermodal operations and its characteristics
International Logistics – Transport Modes

Transport Modes
International Logistics – Transport Modes

Mode Characteristics (Road)

• Door to door delivery and collection

• Fast, regular service, or one-off journeys
• Reduced need for double-handling, which reduces
packaging (except when moving small consignments)
• Can be used in combination with roll-on/roll-off ferry
services to cover transcontinental journeys
• Limited only by road infrastructure
• Full loads or consolidation of smaller consignment
International Logistics – Transport Modes

Mode Characteristics (Rail)

• Ideal for bulky or heavy consignments

• Railhead & track infrastructure can be limited
• Cheap, but often inflexible service
• Double handling which can cause damage
• Last mile has to be delivered by road
• Recent development in intermodal methods
have improved flexibility of services offered
International Logistics – Transport Modes

Mode Characteristics (Sea)

• Cost economies – ideal for bulk or low value goods

• Flexibility – many liner services & ships
• Availability – regular services and routes
• Speed – slow voyage time and turnaround at ports
• Double handling is unavoidable and costly
• Damage – caused by double handling
• Delay problems – the weather can be a factor
• Must have a port infrastructure to load and unload
International Logistics – Transport Modes

Mode Characteristics (Air)

• Ideal for small, valuable and light consignments

• Fast service over international distances
• Delays can occur at airports
• Less chance of damage - less packaging
• No door to door, last mile must be by road
• ‘Lead time economy’ due to speed
• Can use empty cargo space in passenger aircrafts
• Can be expensive, attract a premium price
International Logistics – Transport Modes

Mode Characteristics (Pipeline)

• Important transport system for crude, petroleum, natural

gas and etc.

• Can operate on a 24/7 basis, limited only by commodity

changeover and maintenance

• Highest fixed cost and lowest variable cost

• Fixed cost for pipelines, construction, control stations

and pumping capacity

• Less flexible and limited to gas, liquid or slurry

International Logistics – Criteria for Modal Selection

Mode Characteristics: Ranking from Best (1) to Worst (5)

Road Rail Water Air Pipeline

Cost 4 3 2 5 1
Speed 2 3 4 1 -
Availability 1 2 4 3 5
Reliability 2 3 4 5 1
Capability 3 2 1 4 5
Frequency 2 4 5 3 1
Loss/damage 2 4 5 3 1

Source: Adapted from Bowersox et al. (2013)

International Logistics – Criteria for Modal Selection

Modal Selection
• Logistics trade-offs between cost and service
• The final modal choice should consider operational considerations and
mode characteristics to pursue the most effective and efficient transport

Short Medium Long Very long

Distance Distance Distance Distance
Parcel Road Road/Air Road/Air Air
Pallet Road Road Road/Rail Air/Sea
20 TEU Road Road Road/Rail/Sea Rail/Sea
Containers

TEU stands for Twenty-Foot Equivalent Unit which can be used to measure a

ship's cargo carrying capacity.  Usually 9-11 pallets are able to fit in one TEU.

Source: Rushton et al. (2014)

International Logistics – Criteria for Modal Selection

Operational Considerations: Operational Considerations:

External Factors Mode Characteristics
• Infrastructure • Cost: price that a carrier charges to transport a
cargo
• Trade barriers / Export license
• Speed: elapsed transit time from pickup to
• Technology (vehicle and equipment) delivery
• Climate • Availability: ability to service any given pair of
• Legal considerations locations

• Political considerations • Reliability: consistency of delivery

• Capability: ability to handle any transport
• Road patterns
requirement
• Culture • Frequency: quantity of scheduled movement
• Loss/damage: the chance of cargo loss and/or
damage
International Logistics – Criteria for Modal Selection

Operational Considerations: Operational Considerations:

Customer Characteristics Product characteristics
• Geographical location • Weight
• Delivery point features
• Size and shape
• Time restrictions
• Fragile nature
• Size of order
• Perishability
• Product knowledge
• Obsolescence
• Service level requirements
• Type of sale and after-sales service • Danger
• Risk
International Logistics – Criteria for Modal Selection

Operational Considerations: Operational Considerations:

Company Characteristics Consignment/Route Factors
• Service level policy • Routeing and through transit
• Sales territories
• Type of cargo
• Warehouse locations
• Quantity (full, part, or small size)
• Manufacturing locations
• Distance and Unit load
• Financial policies
• Priority and Regular shipments
• Performance of competition
• Choice of service (3PL / 4PL)
• Commodity value
International Logistics – Criteria for Modal Selection

Modal Selection Process

Operational Mode Cost / Service

Considerations Characteristics Requirements

1) External 1) Cost
factors 2) Speed
2) Customer 3) Availability
characteristics Transport
4) Reliability
3) Product Modal
5) Capability
characteristics Selection
6) Frequency
4) Company
characteristics 7) Loss/Damage
5) Consignment
factors
Source: Adapted from Rushton et al. (2014)
International Logistics – Inter/Multimodal Transport
Example -
Autoparts

Routes
Route 1 Busan - (Sea) - Long Beach - (Rail) - Birmingham - (Road) - Luverne
Route 2 Busan - (Sea) - Long Beach - (Road) - Luverne
Route 3 Busan - (Sea) - Mobile - (Road) - Luverne
Route 4 Busan - (Sea) - Savannah - (Road) – Luverne
International Logistics – Inter/Multimodal Transport

Definition

Inter + Modal Multi + Modal

• Transport when using a container and other equipment that can be transferred
from one mode to another without the contents being reloaded or disturbed

• International Organisation for Standardisation (ISO) containers are suitable for

multiple transportation methods and are essential in intermodal transport
 18
International Logistics – Inter/Multimodal Transport
• Contract perspective:
1. In an Intermodal Shipment, the logistics provider has multiple contracts. For example,
one with a freight forwarder or ocean carrier, another with a trucker or rail carrier in origin
country and another with a trucker or trail carrier in the destination country.
2. In a Multimodal Shipment, the logistics provider has one contract of carriage, which
covers all modes of transport from origin to destination.

• Reloading/redistributing perspective:
1. Intermodal shipment: if the container transfers one mode to other mode without
content being reload or redistributed.
2. Multimodal Shipment: if the contents in the container box are unloaded and
redistributed.
International Logistics – Inter/Multimodal Transport
Benefits:

• ISO containers: reduce handling between modes – faster service

• Can offer consolidation services for small deliveries
• Uses economies of scale to offer value to customers

Drawbacks:
• Large capital cost of handling equipment and transfer locations
• Packaging and handling damage (commodity or products)
• Containers can leak and stowage can affect goods
• Complex documentation (Intermodal)
International Logistics – Questions
 International Logistics – Recommended Reading

• Rushton, A., Croucher, P., Baker, P. (2014) The Handbook of Logistics and Distribution
Management, 4th edition, Kogan Page Ltd: London. (Chapter 23, 24)
• Stopford, M. (2009) Maritime Economics, 3rd edition. Routledge: Abingdon.
• Levinson, M. (2006) The Box: How the Shipping Container Made the World Smaller and the
World Economy Bigger. Princeton University Press: Oxford.
• Bowersox, D. J., Closs D J. and Cooper M B. (2013) Supply Chain Logistics Management. New
York: McGraw-Hill. (Chapter 8)
• Murphy, P.R. and Knemeyer, A.M. (2015) Contemporary Logistics. 11th edition. Harlow: Pearson.
(Chapter 12)
Module Leader:
Dr Jiayao Hu ac5218@coventry.ac.uk