Delivery Systems

Overview• Why transport is important?• Types of delivery system• Factors to be considered when

choosing a delivery system • Modern developments in delivery

systems• Calculating delivery costs

Why is transport important?

A good transport system is important to business:

• To deliver raw materials to the manufacturer

• To deliver finished goods to retailers• To transport workers to their jobs• To transport goods abroad

Types of delivery systems• Road• Rail• Sea• Air• Pipeline • Canal

RoadAdvantages• Fast over short

distances• Door-to-door deliveries

(entire country is accessible)

• Minimum handling• Flexible, convenient and

cheap – operates 24 hours a day

Disadvantages• Congestion/poor roads

– delays• Bad weather – delays• Not suitable for bulky

goods• Slow over long

distances • Cost of drivers, tax and

insurance is high

RailAdvantages• Fast over long distances• Suitable for bulky goods• Reliable• Cheap for bulky goods• Can carry containers and

chemicals• Not affected by weather

and traffic congestion• Railways service the main

ports – important for firms that export

Disadvantages• Not flexible – fixed

timetable• Lot of handling – other

methods of transport to and from the station are needed

• Fixed routes• Expensive over short

distances • Not every city/town is

served by a railway station

Lack of integrated rail network

throughout the country

SeaAdvantages• Suitable for bulky goods• Large cargos can be

carried• Cheaper than air• Suitable for containers• Good facilities at ports• Modern ships – large

loads

Disadvantages• Slow over long

distances• Weather conditions –

delays• Not flexible – fixed

timetable• Must link with other

forms of transport• High insurance costs

Types of ship

• Cargo ships (LO-LO)

• Ferries (RO-RO)

• Tramp ships

Container ships

AirAdvantages:• Fast• Suitable for perishable

goods and goods needed urgently

• Good safety record• Less packing – reduced cost• Modern aircraft – large loads • Less likelihood of

damage/theft• Good network of regional

airports

Disadvantages• Expensive• Bad weather – delays• Must link with other forms

of transport• Not flexible – fixed

timetable• Not suitable for bulky

goods

http://upload.wikimedia.org/wikipedia/commons/e/e6/C5_galaxy.jpg

Pipeline

Advantages:• Safe• Cheap to

maintain

Disadvantages:• Expensive to

install• Suitable only for

liquids or gases

Canal

• Man-made waterway

• Not commonly used in Ireland, except as a tourist attraction

• Used extensively in Europe

• Famous canals: Amsterdam, Venice, Suez, Panama

• Ship canals may be used to link major cities with sea ports, e.g. Manchester linked with Liverpool

Suez CanalJoins the Red Sea and Mediterranean Sea in Egypt

Panama Canal• Connects the Caribbean Sea to the Pacific Ocean• 50 miles long

Factors affecting choice of delivery system• Cost

– Delivery adds to the selling price of goods

• Reliability– The system should be

punctual. A delay in delivery could cause a delay in production for “just-in-time”

• Convenience– Delivery should be

available when required

• Speed/Type of goods– Very important for

perishable goods (e.g. fresh fish) and urgently needed supplies (e.g. medicine)

• Distance – The distance between

the buyer and seller can mean a number of transport methods must be used

Modern Developments in Transport• Containers• Refrigeration• Tachograph• Euro Tunnel • Toll roads/toll bridges• Quality Bus Corridors (QBC)

Containers• Large metal boxes

of standard size• Minimum handling

of goods required once sealed in the container

• Small firms may share a container to reduce costs

Refrigeration

Refrigerated containers are used for transporting perishable goods, e.g. meat, fish, etc.

TachographAn instrument installed in the cab of a truck/lorry that measures the hours (and speed) driven as well as the breaks taken by the driver

Euro-Tunnel• The Euro-Tunnel

linking Folkestowe in England with Calais in France was opened in 1993

• This provides a regular, fast rail link between the UK and mainland Europe

Quality Bus Corridors• Special lanes that

buses can use to provide a quicker and more effective service

• Public transport becomes more attractive because it will be quicker and more punctual

Toll roads/Toll bridges

• Built by private firms who charge a fee for their use

RO-RO & LO-LO

Calculation of Delivery Cost

• Distance travelled each day is 740km

• The diesel van can travel 34km per litre

• The cost per litre of diesel is €1.05

• Mark Hennessy, the driver is paid €200 per day

• Employer’s PRSI is 12.5% of gross pay

• Annual motor tax is €1,300• Annual motor insurance is

€2,275• Annual motor repairs are

€1,300• Toll charges are €20 per day

Brady Ltd., a fruit and vegetable wholesaler which operates 325 days a year supplies the following information:

Calculate the total cost of transport for one day

SolutionFIXED COSTS € €

Annual motor tax 1,300

Annnual motor insurance 2,275

Annual motor repairs 1,300

Total fixed costs 4,875

Daily fixed costs 4,875/325 15

FUEL COSTS

Distance travelled per day 740

Divide by kilometres per litre 37

Daily fuel used 20

Cost per litre 20 x 1.05 21

OTHER VARIABLE COSTS

Driver's wages 200

Employer's PRSI (USC) 25

Toll charges 20 245

TOTAL COST FOR ONE DAY 281

Review and Recap• Why transport is important?• What are the different common types of

delivery system?• What factors need to be considered when

choosing a delivery system? • List and explain four modern developments in

delivery systems• Explain how a business calculates delivery

costs