Modes and Networks Transportation Logistics Spring 2008.

Modes and Networks Transportation Logistics

Spring 2008

Distribution systems

• One to one

• One to many

• Many to one

• Many to many

1-1 Distribution Examples

• Port to rail head drayage

• Small in scale and/or scope

• Decisions: – Shipment frequency– Route (this is typically a function of the

network and travel times)– Shipment times

1-1 Distribution

• Constant demand

• Trade-off inventory and transportation cost:

z=minv{(ch/D’)v+cf/v}, s.t. v<vmax

• cf: fixed transportation cost

• ch: holding cost

• v*=sqrt{cfD’/ch}

EOQ (economic order quantity)

• z=minv{Av+B/v+C}• v*=sqrt{B/A}• z*=2sqrt{AB}• If v*>vmax use v=vmax

• v* makes both of the terms in the objective function equal (motion cost = holding cost)

• Why should these be equal?

Lot Size problem with Variable Demand

• D(t) gives cumulative number of items demanded between 0 and t

• D’(t) is variable demand rate• Seek the set of times when shipments are to be

received and the shipment sizes that will minimize sum of motion plus holding costs over some time period

• With an infinite time horizon and constant demand this is the EOQ problem just discussed

When holding cost close to rent

• Variable demand• Inventory cost negligible (big, cheap items)• Increases with maximum inventory accumulation• Recall motion cost independent of shipment

sizes and times (only dependent on total amount moved or average)

• Thus we want to choose times and sizes to minimize holding cost

• v*= D(tmax)/n, all equal minimizes cost• cost/time=crD(tmax)/n+cfn/tmax, find n by

minimizing

When rent is negligible

• Small, expensive items

• Simple expression cannot be obtained unless D(t) varies slowly with t (CA method)

• Use numerical solution (e.g. dynamic programming)

One to Many Distribution

• Movement of containers from the port to landside destinations

• Delivery systems

• Decisions:– Network structure– Fleet size (VRP and TSP)– Shipment frequency– Use of an intermediate facility (minimizing logistics

cost)

Many to one distribution

• Export containers being delivered to a marine port

• Collection systems• The same analytical methods can be used as

with one to many distribution

• Decisions:– Network structure– Fleet size– Shipment frequency– Use of an intermediate facility

Many to Many Distribution

• Global distribution of marine containers

• Collection and distribution systems

• Decisions:– Network structure– Coordination of inbound

and outbound shipments

Many to many distribution

• The problem can often, and should often, be broken down into pieces – Inbound logistics (many to one)– Outbound logistics (one to many)– Be mindful of who is responsible for cost

within the supply chain– Most supply chains are not operated by the

same entity– Use terminals to consolidate some of the flow

Transportation Modes

• Rail• Air• Road• Pipeline• Water

• Package Carrier• Multi-modal

Relative Mode Volumes

Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use.

Load of the Global Transport System by Mode

Tons Tons-km Revenue (2004)

Road ? 6,000 to 8,500 billion tons-km

$796 billion

Rail 8,930 million tons 7,773 billion tons-km $330 billion

Maritime 6,758 million tons (loaded)6,787 million tons (unloaded)

44,474 billion tons-km

$484 billion


Barge

Hopper car

100 car train unit

Semi-trailer truck

1500 Tons52,500 Bushels453,600 Gallons

100 Tons3,500 Bushels30,240 Gallons

10,000 Tons350,000 Bushels3,024,000 Gallons

26 Tons; 910 Bushels7,865 Gallons9,000 for a tanker truck

124 tons

CapacityCapacity

5

57.7(865.4 for 15 barges in tow)

Truck EquivalencyTruck EquivalencyVehicleVehicle

3.8

384.6

1

Post-panamax containership5,000 TEU 2,116

9,330VLCC

300,000 tons2 million barrels of oil

747-400F


Comparison of the Relative Efficiencies of Rail and Trucking in the United States

Mode Fuel Consumption

Infrastructure Capacity

Costs Safety

Railroad 455 ton-miles per gallon

216 million tons per mainline per year

2.7 cents per ton-mile

0.61 fatalities per billion ton-miles; 12.4 incidents per billion ton-miles

Trucking 105 ton-miles per gallon

37.8 million tons per lane per year

5.0 cents per ton-mile

1.45 fatalities per billion ton-miles; 36.4 incidents per billion ton-miles

Rail

• high fixed costs (land, tracks)

• low variable costs (operating costs, e.g., labor, fuel)

• slow, but inexpensive way to transport heavy freight that doesn’t require special handling, long distances

•two choices in the PNW

•historically not a market driven industry


Geographical Settings of Rail Lines

Penetration LinesPenetration Lines Local / Regional NetworksLocal / Regional NetworksTranscontinental LinesTranscontinental Lines

Nation A

Nation B

Type Function Examples

Short distance (within a gateway / hub)

Modal shift, improved capacity and throughput.

Switch carrying, Alameda, “Agile Port”, Panama

Hinterland access (between a gateway and its vicinity)

Expand market area, reduce distribution costs & congestion

Rail shuttles, PIDN, Virginia Inland port

Landbridge (between gateways)

Long distance container flows, continuity of global commodity chains

North American landbridge

Circum-hemispheric (between gateways with a maritime segment)

Integrated global transport chains

Northern East-West Corridor

Ownership of Major North American Rail Lines, 2005



Capital Expenditures as % of Revenue

0 2 4 6 8 10 12 14 16 18 20

Food

Transportation equipment

Petroleum and coal products

Wood products

Fabricated metal products

Average (manufacturing)

Chemicals

Paper

Non-metallic minerals

Electric utilities

Class I Rail


Class I Ton-Miles per Route-Mile

0

2

4

6

8

10

12

14

16

18

20

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Mill

ions

Highway

• low fixed costs (government builds, maintains highways)

• medium-high variable costs (operating costs, e.g., labor, fuel)

• most accessible mode (more highways than railroads, waterways, pipelines); best for transporting medium to high value products short to moderate distances

Highway

• LTL – less than truckload

• TL – truckload

• Specialty

•Often the only choice for segments of a trip

•Competitiveness depends on pricing (managing loads and schedules)


Length of the Interstate Highway System, 1959-2006 (in miles)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005


Cost Structure of Trucking, United States, 2006

26.6%

22.4%

3.4%5.7%

29.1%

3.8%

9.0%

Wages & Benefits

Fuel & Maintenance

Insurance

Depreciation

Rent & Purchase

Other

Profit

Water

• moderate fixed costs (ships and freight handling equipment)

• low variable costs (operating costs, e.g., labor, fuel)

• very slow, but inexpensive way to transport large, heavy freight over long distances (e.g., oceans, rivers, inland waterways, lakes)

• late deregulation

•Intermodal productivity important


Domains of Maritime Circulation

Nile

East / Southeast Asia

Mississippi / Great Lakes / St. Lawrence

Amazon

Rhine / Danube

SuezHormuz

Panama

Malacca

Bosporus

Magellan

Good Hope

Gibraltar

Bab el-Mandab


Types of Maritime Routes

Port-to-Port Pendulum Round-the-World


Pendulum Services and Cabotage

A

B

C

D

E

F

Cabotage

Country 1

Country 2

Pendulum Service


Length of the Major Inland Waterway Systems, 2000

0 20,000 40,000 60,000 80,000 100,000

120,000

140,000

Russia

China

United States

Western EuropeLess than 2.75 m

More than 2.75 m


Ton-miles Shipped by Maritime Transportation, 1970-2005 (in billions)

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

1970

1980

1985

1990

1995

2000

2005

Oil

Iron Ore

Coal

Grain

Containers and other


Registered World Fleet, 1914-2000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

0

1

2

3

4

5

6

7

Ave

rag

e T

on

nag

e (in

1,0

00 to

ns)

Number of ships

Total gross tonnage (1,000s)

Average tonnage


Operating Costs of Panamax and Post-panamax Containerships (in USD)

$0

$2

$4

$6

$8

$10

$12

$14

$16

Panamax (4,000TEU)

Post-Panamax(6,000 TEU)

Post-PanamaxPlus (10,000

TEU)

Mill

ions

Port chargesFuelAdministrationStores and lubesInsuranceRepair and maintenanceManning

Air

• low fixed costs (aircraft and freight handling equipment)

• highest variable costs (e.g., labor, fuel, maintenance)

• very fast; used for transporting high value and/or high perishability product over short to medium distances.

• competitiveness depends on operational skill

Pipeline

• highest fixed costs (right of way & construction costs of equipment)

• lowest variable costs (no significant labor or fuel costs)

• slow, but dependable (e.g., no weather, traffic disruptions); no flexibility with regard to types of products that can be transported – must be liquid (e.g., petroleum)

• single origin

• stable, large flows


Oil and Gas Pipelines Mileage in the United States, 1960-2004

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Oil pipeline

Gas pipeline

Multimodal Carrier

• Good intermodal connections• All modes• Emerged as package delivery, e-business now

3PL providers• Consolidation important• Many are service rather than cost oriented

– Have been leaders in developing IT solutions

• Deregulation

Modes and Networks Transportation Logistics Spring 2008.

Documents

Transcript of Modes and Networks Transportation Logistics Spring 2008.