To part one Logistics services explained. Transport vs Forwarding vs Logistics >>>
Planning to ship goods from A to B, we need to decide what transport mode or modes we would use.
Road or rail transport are inland transport modes. Road transport is the most flexible one. It reaches everywhere. If we transport cargo with another mode, the last mile will be ultimately carried out by the road. Only if a railway siding is located on the premises cargo transported by rail will not have to be reloaded onto a truck at the last mile. It will reach the plant directly. Road transport better suits for transporting smaller shipments. Rail transport is predestined for bulk and other loads that we carry in large quantities. Therefore, road transport dominates in the handling of small consignments of highly processed goods in Europe. Just a few pallets would not be worth transporting by rail.
Sea transport or maritime shipping dominates in international transportation as per transported workload. Transport workload or performance is the product of tonnage and mileage. By sea, we transport the most loads and over the longest distances. Inland navigation or shipping uses regulated rivers and man-made canals. It is used to transport bulk and over-sized loads. It can also be used for feeder handling of containerized cargo that arrived at the seaport on a large container ship and was transferred to a container barge Due to the negative water balance prolonged drought periods caused by global warming, it is becoming less and less possible in many countries.
Air transport mainly serves passenger traffic. In comparison with other modes of transportation, with aircraft, we transport only small cargo quantities. This is usually very expensive and/or small cargo. This is due to the relatively low transport potential of cargo aircraft and high costs of transport by air. The international flow of postal and courier parcels is based on air transport. It may be also very expensive electronics or products that can quickly perish, for example, fresh seafood intended for restaurants. The latter must not be frozen. Therefore, they must be transported very, but very fast. Air transport is also used in emergency deliveries of components to factories operating in JIT and JIS systems.
Intermodal transport uses several modes of transportation in one transport process. The precondition is, however, that the cargo travels the whole route in one box. This can be a container, a swap body, or a semi-trailer. If during the transport process, we open the box and reload cargo to another load unit, it will not be regular intermodal transport. Intermodal transport is very convenient where we need to change the mode of transportation several times on the way from the place of origin to the place of its destination. Like when we import cargo from Asia to Europe, and by definition, we need to transfer cargo from sea to land transport. Using one box is very convenient for it facilitates and speeds up all transshipments.
Susceptibility of cargo to transport processes is decisive to our mode and means of transport choices. We distinguish the natural, technical, and economic susceptibility of goods to transport operations. The natural susceptibility of cargo to transportation depends on the physical and chemical properties of the cargo. It affects the choice of means of transport. The technical susceptibility of cargo to transportation is related to the dimensions and weight of the cargo. It specifies the techniques of reloading and the type of equipment necessary for moving and securing goods. Economic susceptibility to transport is understood as the ratio of the transport costs to the value of transported cargo. It is decisive not only to the choice of means of transportation but to the shipment transit time we can afford.
Let’s start with the technical susceptibility of cargo to transport. Theoretically, we could imagine coal that is carried by trucks, but in inland transport, we naturally decide to transport coal by rail. Why? Because it is easier to pour coal onto railway wagons. Coal transported from a mine or from a seaport to a power plant is usually carried in vast quantities. Therefore, we can fill the entire train. If we would like to transport coal with trucks, this one trains should be replaced with a dozen or even several dozen trucks. Here we also hook up the economic susceptibility of cargo to transport. If we decide to use road transport, we will have to cover the fuel costs separately for each truck, as well as pay a dozen or even several dozen drivers. In railway transport in principle, we pay one or two train drivers when performing rail transport. The electricity costs needed to pull such a train are much lower than the fuel costs for all trucks combined. In intercontinental transport, of course, when transporting coal, we decide to transport by sea. And indeed, no one would come up with the idea to transport coal by plane.
I mentioned already transporting seafood for restaurants. Here we refer to the natural susceptibility of cargo to transport. Loads that perish quickly are transported either by road or by air. We also need to ensure the control of transport temperature. So, we will be dealing with refrigerated transport. If these loads are relatively small, of course, we will carry them by air. If it is a larger amount, it will go by road. Nobody, however, will transport quickly perishable loads by rail as railways, at least in Europe, are considered a slow mode of transport. Maybe only except if the rail transport will take place in the refrigerated semi-trailer on an intermodal linear transport route, i.e., in intermodal trains, which are assigned a fixed and a fast journey route. At a distance of about 1000 km in European transport, it may happen that a train will reach the destination faster than a truck, even if there are two drivers in it and they will go in turns.
If we want to transport electronics from Asia to Europe, we can bring it either by plane, by rail, or by air. Air transport will last several hours, but it will be the most expensive form of transportation. Sea transport will last three to four weeks. Rail transport will take about a week to ten days. With the development of the New Silk Road it seems to be a reasonable alternative. The most popular solution is however sea transport. Here yet again, we hook up to the economic susceptibility of freight to transport. The cost calculation does not consider only the cost of transportation. We should ask ourselves here, whether we do not pay any additional costs associated with this transport. Many producers do not finance their production with cash, but with a credit line. So, we have to ask ourselves, how much do interest on this credit line cost us when the electronics are on the sea route from Asia to Europe and add these costs to the cost of transport by sea. If, after adding these costs to the costs of sea freight, it turns out that they exceed the costs of air transport, then it is more profitable for us to transport this electronics by air. These additional costs of a credit line incurred when a load travels from one continent to another are the so-called in-transit inventory costs. Air transport will be also more suitable for security reasons if the cargo is of utmost value.
We usually transport small cargo volumes by road. By rail, large loading volumes. But these low cargo volumes may be containerized. We may deal with many containers that are to be shipped from different shippers located in a specific region of Europe to some other distant area in Europe. Let us say we talk here around the thousand-kilometer route. If we could find so many loads that would fill one full train on this route, it would be more profitable to transport these loads by intermodal transport, on the primary way of transportation by rail. Similarly, it will be with other loads. If it was possible to find a sufficiently large number of loads to fill the entire train, it would be worthwhile to send the load by rail. Of course, provided that the transport time by rail is acceptable to shippers. The advantage of road transport over rail transport is travel time. Conventional railways are less competitive in this respect than road transport. Here yet again we tackle the economic susceptibility.
Large cargo volumes are usually transported by rail, but if the shipment is just a single wagon load, it makes sense to transfer it to a truck. The same happens when we have to carry bulk cargo in smaller quantities. We can imagine, for example, that someone buys a small amount of coal for their own use. Then, of course, we will transport it by road, especially since the destination is the recipient’s private home. It is for sure not equipped with a railway siding. So, naturally, this load must be transported by truck not only for economic reasons but also for technical reasons.
When talking about transport, we often aim at filling the entire cargo space of the vehicle. The more cargo in the vehicle’s cargo space, the lower the transport costs. Transport costs simply spread over a more significant number of shipments. The ability to fill the entire cargo space of vehicles determines the cost advantages of logistics operators and freight managers.
In road transport, when we can fill the entire truck loading space, we refer to as FTL (full-truckload). Partial loads, i.e., those that do not fill the whole vehicle loading space, are called LTLs (less-than-a-truck loads). In rail transport, we are talking about full-wagon and less-than-a-wagon loads as well as about full-train and less-than-a-train shipments. For example, if there are about 90 TEU in intermodal transport on an intermodal train, it will be a full-train transport, if only 50 TEU is on it, we will talk about less-than-a-train transportation. TEU stands for twenty-feet-equivalent-unit. This corresponds to a standard 20-feet container and is the primary measurement unit of containerized cargo. A 40-feet container will be referred to as 2 TEU or 1 FEU.
Palletized cargo that is less-than-a-truck load from one shipper may be combined with palletized cargo from other shippers. This way, full-truckloads are created. The process of creating full-truckloads from smaller shipments is called cargo consolidation.
However, not all loads are suitable for consolidation. Cargoes that are not necessarily suitable for consolidation are refrigerated loads. Consolidation of loads requiring different temperature levels will be possible when the vehicle used to transport such loads will be a multi-chamber vehicle. Then loads requiring different temperatures can be arranged in separate chambers, and thus create a full-truckload. An example of special transports is the transport of dangerous goods. These cargoes should not be mixed with each other.
A special kind of transport is the carriage of oversized goods. Here, of course, we are not talking about creating full truckloads, because, as the name suggests, oversized traffic is much larger than a standard load. An example of oversized cargo is wind farm equipment. It in
WHAT ELSE MAY WE EXPECT FROM A TRANSPORT COMPANY?
Now a few words about transport services, those that are considered standard services or those that are not offered as standard, but you can negotiate them with the carrier or logistics operator.
Track & trace is a standard service. It is ongoing tracking of the shipment status either at transshipment points or directly on the entire transport route. The fact that we have GPS and we can go to the logistic operator’s website, log in and see the current status of our shipments is clear and evident today. However, from the shippers’ perspective, an essential element of this service is that all shipments that are problematic in some way light up, say in red. Some companies have several dozen or several hundred trucks on the move daily. For them, it is essential to know which of them is delayed or something else happened while en route. It is critical for them that they can react appropriately and, for example, contact his or her customer, arrange for a modification of the delivery, or at least apologize for the delay. For people in customer service, it is essential that someone has already selected these problematic shipments, and they do not have to dig through all the shipments one by one. Of course, the carrier uses algorithms to identify those shipments. Nobody does it manually.
In domestic relations (Europe), we can also consider delivery within 24 hours as the standard one. This is counted from the registration of the shipment by the sender in the system or its pickup by the carrier from his or her premises to its delivery. In case of not full truckloads, these transports are not carried out directly from A to B. The transport process takes place through a network of terminals held by expresses carriers or cross-docking terminals. Shipments are consolidated and mixed on their way so that the total costs of transport for the carrier are at the lowest possible level.
In transports processes where we have to change the mode of transport, door-to-door delivery is a standard service as well. The carrier, which transports cargo on the primary route either by sea or rail or air, also provides for road transport at the last mile. We can make here one-stop-shopping. The carrier provides for the entire transport process door-door regardless of whether it performs it personally or not.
Among the services that you can deal with the carrier or logistics operator, you can additionally negotiate the collection of cargo or collection of parcels outside standard business hours. In fact, logistics operators and large carriers work 24 hours a day. Depending on the time of day, various activities are performed on the terminals. Some call it waves. You can arrange with the logistics operator that he or she departs from his typical schedule and will appear with us for shipment outside the standard schedule.
Finally, something I have already talked about – storage on trailers. Indeed, it may be that the customer does not have warehouse space on its premises. Or for some other reason simply needs to maintain a specific buffer stock, which could be on call immediately attached to the tractor unit and simply delivered quickly where it will be required. The storage service on a loading unit can also be negotiated with a logistics operator.
Photos by: Julius Silver, Valeria Boltneva, ELEVATE, Andrea Placquadio