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    What Is Transportation?

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    Geethu Parvathy
    Transportation is essential for the growth of civilization and economies. It allows for the effective utilization of resources by moving men, materials, and goods from their place of origin to where they are consumed. There are economic benefits like making products available to customers and facilitating production, as well as non-economic benefits like social, political, and cultural integration. Transportation costs include tariffs, transit time costs, deterioration costs, packaging costs, insurance costs, and miscellaneous costs. The major modes of transportation are airways, waterways, roadways, railways, and pipelines - each with their own advantages and roles to play in logistics and supply chain management.

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    What Is Transportation?

    Uploaded by

    Geethu Parvathy
    46 views7 pages
    Transportation is essential for the growth of civilization and economies. It allows for the effective utilization of resources by moving men, materials, and goods from their place of origin to where they are consumed. There are economic benefits like making products available to customers and facilitating production, as well as non-economic benefits like social, political, and cultural integration. Transportation costs include tariffs, transit time costs, deterioration costs, packaging costs, insurance costs, and miscellaneous costs. The major modes of transportation are airways, waterways, roadways, railways, and pipelines - each with their own advantages and roles to play in logistics and supply chain management.

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    Transportation is essential for the growth of civilization and economies. It allows for the effective utilization of resources by moving men, materials, and goods from their place of origin to where they are consumed. There are economic benefits like making products available to customers and facilitating production, as well as non-economic benefits like social, political, and cultural integration. Transportation costs include tariffs, transit time costs, deterioration costs, packaging costs, insurance costs, and miscellaneous costs. The major modes of transportation are airways, waterways, roadways, railways, and pipelines - each with their own advantages and roles to play in logistics and supply chain management.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    46 views7 pages

    What Is Transportation?

    Uploaded by

    Geethu Parvathy
    Transportation is essential for the growth of civilization and economies. It allows for the effective utilization of resources by moving men, materials, and goods from their place of origin to where they are consumed. There are economic benefits like making products available to customers and facilitating production, as well as non-economic benefits like social, political, and cultural integration. Transportation costs include tariffs, transit time costs, deterioration costs, packaging costs, insurance costs, and miscellaneous costs. The major modes of transportation are airways, waterways, roadways, railways, and pipelines - each with their own advantages and roles to play in logistics and supply chain management.

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    of 7

    What is transportation?

    Transportation doesn’t just confine to the mere movement of persons and goods from one place
    to another, it incorporates the overall growth and development of civilization in general and
    economy in particular. The essential perquisite for the rapid growth and development of any
    progressive economy is the presence of adequate infrastructure which generally incorporates
    energy, transport and communication. In other words, infrastructure is of greater importance.
    For example:
    Men and materials can be effectively utilised only if it is transported from the place of origin to
    the place of consumption.
    There are a lot of transport benefits to an economy, mainly divided into two broad categories:
    (a) Economic benefits
    (b) Non- economic benefits

    Economic benefits
    (a) Transportation makes products available to the final customers
    (b) It facilitates production by moving different factors of production
    (c) Regional economic disparities can be removed by way of transport
    (d) Transport provides ample opportunities for acceleration of employment and income

    Non- economic benefits


    Non-economic benefits of transport may be judged by its great contribution towards social,
    political as well as cultural integration of mass population of any country with different moods,
    languages, castes, creeds and traditions.

    ELEMENTS OF TRANSPORTATION COST


    Transportation is one of the most visible elements of logistics operations.Transportation
    provides two major functions namely product movement & product storage. The major
    objective is to move product from an origin location to a prescribed destination while
    minimizing temporal, financial and environmental resource costs.Loss and damage expenses
    must also be minimized.
    The major elements of transportation cost are;
    1. Tariff of Transport Mode
    This element of transportation refers to freight charges of various modes of transport to
    be paid for movement of goods from one location to another. Tariff of airways is higher,
    followed by roadways, railways, seaways and pipelines. Normally freight charges
    increases with the decrease in transit time i.e., higher the transit time lower the freight
    cost. Tariff of transport mode largely depends upon a large number of factors such as
    nature of product, distance to be covered, and volume/quantity to be shipped, density of
    the product etc.

    2. Transit Time Cost


    This cost of transportation deals with the cost of inventory in transit. From total logistics
    cost point of view, this element of transport costs is very significant. If the transit time of
    a particular mode of transport is longer, it means that the product of company remains in
    transit for a longer period of time leading to working capital blockage.

    3. Obsolescence and Deterioration Costs


    These elements of transport cost involve costs caused due to deterioration and
    obsolescence in the physical attributes of the product during transit. There are certain
    categories of product that are perishable and delicate in nature whose physical attribute
    deteriorate over a period of time,gradually resulting into devaluation of the product.

    4. Protective Packaging cost


    For specific products and modes of transport, there is requirement of specific protective
    packaging. Hence such a cost comes under total transport cost. For instance for a product
    shipped by railways require more protective packaging to protect goods from pilferages
    and breakages.

    5. Transit Insurance Cost


    It is the cost of insurance paid to insurance company to cover various types of risks.

    6. Miscellaneous Cost
    Local Taxes, Octroi Toll taxes etc.

    MODES OF TRANSPORTATION

    There are 5 basic modes of transportation. They are as follows:

    1) Airways
    2) Waterways
    3) Roadways
    4) Railways
    5) Pipelines

    AIR WATER SURFACE

    INLAND

    ROAD RAIL PIPELINES


    AIRWAYS

    When goods are transported by air, the mode of transportation is called airways. This
    mode of transport is the newest and least preferred mode, especially for domestic
    purposes. One of the significant advantages of the air transportation lies in the speed. It
    needs only a few hours for a shipment from one place to reach another, in contrast to the
    days required with any other modes. That is why it is a most preferred mode of
    transportation for perishable goods like flowers or for emergency services like supply of a
    spare part during the breakdown of a machine. In the present day’s considerable
    international trade and growing awareness about logistical services, the growth of this mode
    is gradually increasing .However; the freight of this mode is highest in comparison with
    other mode.

    WATERWAYS

    Waterways are the oldest mode of transportation. When goods are transported
    through the water medium by a ship it is called waterways transportation. Due to
    globalization of the world market, waterways have a large potential for foreign trade.
    Throughout the world, this mode has acquired a very high position due to its advantages
    like being the cheapest, having a large capacity and flexibility. However, the greatest
    drawback of this lies in terms of slow speed

    ROADWAYS

    With the growing popularity of logistics and supply chain management, the roadways
    have expanded rapidly since the last three decades. Most of the logistical operations of
    corporate enterprises largely depend on this mode of transportation. It is mainly due to its
    moderate contribution in between two extremes of airways and waterways as far as
    speed and cost are concern. It ensures flexibility in services for better customer
    responsiveness. The reliability and economy of this mode is gradually increasing due to
    continuous improvement in the quality of motor vehicles and the condition of the roads.
    These factors facilitate in the achievements of logistical objectives like lower transit time,
    lower total logistic cost, and improved customer services. Furthermore, increase in the
    services portfolio by road transport industry has further empowered and encouraged the
    corporate world to achieve its logistical objectives and expand its market and competitive
    advantage. That is why over the years it has attracted the corporate world significantly and
    eaten the business of railways.

    RAILWAYS

    Historically, railways had accounted for the largest percentage of freight cargo in most of
    the countries. The major advantage of railways is to efficiently transport large
    quantities of goods over longer distance. Given the high fixe4d cost and low variable cost
    of operations the tariff of railways is low, which encourages large shipments over a
    longer distance. That is why the bulk shipment of products like fertilizers, cement, food
    grains, petroleum products. etc. are normally through railways from the production
    plant to the bulk/central warehouse.

    PIPELINES

    This mode of transportation is a very significant one but with a very restricted scope.
    Pipeline is used primarily for the shipment of liquid and gas like crude petroleum, and
    refined and natural gas. The basic nature of this mode of transportation is unique in
    comparison to all other modes. It includes a significant initial fixed cost in setting up the
    pipeline and related infrastructure, lower variable cost, 80 to 90 per cent optimization of
    pipeline capacity utilization, 24 hour operation, and not being labour intensive.
    However, pipelines are not flexible and this scope is limited with respect to certain
    commodities.

    ROLE OF TRANSPORTATION IN LOGISTICS AND SUPPLY CHAIN MANAGEMENT

    Transportation is the important aspect of logistics and supply chain


    management. It refers to the movement of goods from one location to another. Transportation
    plays a significant role in supply chain provides because products are rarely produced and
    consumed in the same location. The mission of logistics and supply chain management is to
    make available the right quantity of the right quality goods at the right line and place at least
    cost.
    Normally the share of transportation cost is 40% of the total logistics cost.
    If the transportation cost has to be cut down needs efficient and effective utilization of
    transportation facilities. Prevailing global competitive environment scenario corporate entities
    are under pressure to reduce logistical cost and aims at improving the customer service by;
     Reducing transit time for minimizing inventory cost.
     Less damage, minimum insurance charges.
     To cut down the packaging cost.
     Point to point information regarding the status of the shipment.

    Transportation services is considered as important aspect in logistical


    approach for speedier and timely delivery of goods, minimizing the transportation cost
    and particularly the total logistical cost. The service portfolio of transport industry
    normally required by the corporate enterprises includes. Timely delivery, Multi modal
    transportation, Warehousing, Inventory management, Bar coding and EDI, Material
    handling, Total insurance and risk management, Emergency services. Transportation
    plays a significant role in the success of e-commerce supply chains.
    Transportation plays a very strategic role because:
     Speedier and timely movement of goods from point of inception to point of
    consumption.
     Protective packaging.
     Cost efficient better customer service.
    .

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