8

Transportation: The Backbone of Logistics

After reading the chapter, the students should be able to understand:

• Transportation modes and mix decision
• Factors influencing transportation cost
• Transportation network and route planning
• Containerization and its role in logistics

Transportation is an indicator which measures the economic, social and commercial progress of a country. It has transformed the entire world into one organization and greatly contributed to the evolution of civilization. Transportation is the most visible element of logistics operation. It has a significant share in overall logistical cost of the firm and needs a great deal of planning to control it. Transportation is the exciting and dynamic part of the supply chain and managing transportation presents both opportunities and challenges.

“Successful carrier firms have recognized that transportation is more than just moving goods from one point to another. It involves the delivery of trans-logistics services that meet the needs of the customers.… Some carriers have expanded their product offerings to include non-transportation services …”

—Stocks

8.1 EVOLUTION OF TRANSPORTATION SYSTEM

Transportation ensures movement of people as well as goods (manufactured or produced) from one place to another. So it helps in growth of trade and commerce of the country. A good transportation system is one of the pillars of industrial growth and commercial structure of the country.

Along with the growth of industry and commerce, the transportation system has helped in achieving many economic and social objectives. Modes of transportation are changing as per the needs of the time and it is keeping pace with the growth of science and technology across the world. However, the degree of sophistication in modes of transportation equipments in use varies with the level of economic condition and growth of a particular region or nation. The transition from subsistence farming to commercial farming and growth of manufacturing activities widened the scope of development of transportation modes.

In ancient times, various modes of transportation, such as human beings, camels, horses, donkeys, bullock carts, ships, were in use. An evidence of these modes is found in the histories of Roman, Greek, Persian, Harrapan and Mohanjodaro civilizations. But capacity and speed were the constraints for these modes. With the advent of industrial revolution in Europe, rapid changes occurred in the transportation system. The new system required easy transportation of workers to and from the factories and speedy movement of goods to the place of consumption.

The result was the development of four modes of transportation, that is, road, rail, air and water. Simultaneous upgradations of infrastructure took place to support the transportation modes for achieving faster movement. Even with the availability of sophisticated modes of transportation, the older modes still continued to serve the society (though on a smaller scale).

In India before independence, the transportation system mainly comprised roads and railways, which was developed for smooth administration by the then Government for communication. Major ports and cities were built keeping in view the administrative, strategic and trade imperatives of the ruling government. However, after the independence, the focus changed to the development of railways and road infrastructure for supporting the developmental needs of Indian economy and society. Then, slowly the seaports and airports were developed to facilitate industrialization in the country.

8.2 TRANSPORTATION INFRASTRUCTURE

In the movement of raw materials or products from place of production to the place of consumption, transportation is the most important component of the logistical system. It serves two purposes, one is product movement and the other is in-transit product storage. Movement of the product can be achieved through various modes, such as road, rail, air, and sea, subject to the availability of and access to the infrastructure. The other function of transportation, that is in-transit storage, is not cost-effective for a longer period. The guiding principle for choosing the transportation mode is, the least cost per unit weight/volume of the product moved over the unit distance. However, selection of a particular mode is dependent on the availability of transportation infrastructure in the region.

In India, 39 per cent of the total domestics cargo movement is done through road; followed by rails, which contributes to the extent of 35 per cent; balance shared by inland water, air and sea. Table 8.1 indicates the cargo handled through each mode.

 

Table 8.1 Cargo Movements (2006–07), Mode Comparison

Transport mode	Cargo handled (billion km/ton)	Cargo handled (million tones)
Road	768	450
Rail	481	728
Sea	—	464
Air	—	1.55
Pipelines	—	58.5

Road

Road transportation is one of the promising means for agricultural and industrial advancement of the country. It is suitable for short and medium distances where other means are unable to reach. It provides door-to-door service, which is not possible with other means. Road transportation provides the basic infrastructure to bring trade and commerce from remote rural areas to urban area or vice-versa and brings far off villages into the mainstream of national life ensuring connectivity. With manifold growth in industrial and agricultural activities and output, road transportation has assumed greater importance due to the growing demand for making the right product available at the place of consumption itself. Today road transportation is occupying predominant position in the transport network in the country. Road transportation offers a number of advantages such as:

• Door-to-door service
• Flexibility
• Reliability
• Reaching remote places
• Speed

As regards the trucking industry in the country, it is predominantly in the unorganized private sector and bulk of truck operators are single truck owners. The operators face many irritants, such as levy of multi-point octroi and traffic police checks, which impede the free flow of the goods traffic. Currently, 25 million trucks are plying on Indian roads. The Indian road conditions not being good, the average distance travelled by a truck is 250–300 kilometres per day as against 550–600 kilometres by their counterparts in developed countries. The average operating cost of the Indian truck is INR 15 per kilometre. Major domestic cargo traffic in the country is moved on national and state highways spreading over 34,850 and 1,37,120 kilometres, respectively. The national highways carry nearly 40 per cent of the total road traffic in India. Of the total national highways, 2 per cent are of four lanes, 34 per cent two lanes and 64 per cent single lane. The share of national and state highways in total roads in the country is 1.42 and 5.56 per cent respectively, which is grossly inadequate. However, India is better placed in per capita road availability amongst Brazil, Indonesia, China and Hungary. The road index computed by Cooper and Lybrand is as follows: India 0.58, Brazil 0.47, Indonesia 0.47, Hungary 0.41, China 0.29, and Mexico 0.27.

Railways

Railways are the principal carriers of men and material and play a major role in country’s trade and commerce activities. It is the main source of supplying essential commodities, transporting them through length and breath of the country. Across the world, railways have played an important role in industrialization and development of the nations. It has been the primary means for movement of raw material and the finished goods. All the countries have heavily relied on railways in the initial stages of industrialization and development.

Indian Railways (IR) is operating through a network of 6896 railway stations across 62,800 kilometres of route length with the route density of 138 kilometre per 1000 m² of area. Of this 44,200 kilometre is covered by broad gauge lines, which account for 85 per cent cargo movement by rail. The goods movement is done through 2,53,186 wagons having the total carrying capacity of 10.6 million tonnes. IR’s 96 per cent cargo consists of bulk items such as coal, iron ore, cement, fertilizers, raw materials for steel plants, finished steel products and petroleum. Bulk cargo is transported through railways because of cost advantage over other modes. In 2000–01, Indian railways handled 4,02 million tonnes of freight traffic on the above network. Figure 8.1 shows the contribution of various items in total cargo handled by railways in the year 2000–01.

To take care of both the increased domestic and international trade, IR introduced the container service and goods trains to carry the box containers way back in 1967. Today IR is handling two million tonnes equivalent units (TEU) of box container traffic. To increase the share of rail traffic, IR is tying up with national road carriers to provide door-to-door service to their strategic clients. The Konkan Railways has introduced a unique scheme of transporting a truck fully loaded with cargo to the destination. This will save precious fuel, which otherwise would have been used by a number of trucks carrying the trainload of cargo. This way, road traffic may be relieved to some extent and air pollution by those trucks will be curtailed.

Sea

The shipping industry is divided into several parts such as:

• Liner service
• Tramp shipping
• Industrial services
• Tanker operations

The shipping fleet across the world comprises tankers, dry bulk carriers, container ships and special vessels. The tanker fleet accounts for 33 per cent of the total fleet, while dry bulk carriers contribute 32 per cent of the total in terms of million gross registered tonnes (GRT).

India has 55 shipping companies, of which 19 are exclusively in coastal trade, 29 in overseas trade, while the remaining are in both. Indian shipping has very high dependence on international trade, with 95 per cent of overseas cargo by volume and 77 per cent by value moving by sea. Crude oil, oil products, iron ores, coal, food grains and steel are some major products transported through sea.

In shipping, India ranks 6th in Asia and 15 th in world merchant shipping trade. At present, the Indian shipping industry comprises 510 ships, of which 240 are overseas fleet and 270 are coastal ships including 70 offshore support vessels and about 25 supply vessels for offshore service and 12 dredges. The Indian shipping companies (SCI and Essar) are slowly moving from ‘carrying business’ to become a complete sea logistics solution providers, thereby maximizing shareholders’ wealth through focus on energy (oil) transportation business and moving upward in value chain by providing one stop integrated logistics solution and value addition by providing their client web-based logistics solutions.

In India, 11 major ports handle 95 per cent of international trade and 85 per cent of domestic sea trade. Indian ports handled around 272 million tonnes of both domestic and international cargo in 2000–01 through 11 major and 117 small ports. This sector will continue to play a major role in the Indian economy as India’s export is likely to grow by 15 per cent and imports by 14 per cent. There will be major imports of Petroleum Oil and Lubricants (POL), Liquified Natural Gas (LNG), and Liquified Petroleum Gas (LPG) in the near future and these will require better storage and handling facilities at the Indian ports (Figure 8.2).

Air

Compared to all other modes of transport, air transport is less hazardous in nature. Air transportation is a costly affair and it is used only for highly perishable commodities and items, whose life is short and value is high. Even though the cargo handled by air is growing at a rate of 15–16 per cent, it is insignificant as compared to cargo handled by other modes of transportation. The air cargo traffic is handled by eight international airports, 87 domestic airports and 28 civilian airports (shared with defence forces). After the domestic air services were liberalized in 1994, there was sudden increase in the number of air transport operators to seven scheduled private operators and 22 non-scheduled operators for passenger and cargo movement. Within two years of post liberalization phase, the market share of private operators went up to 40 per cent. However, the private operators could not sustain the competition and cost pressures. Subsequently, majority of the private operators closed their operations. The air cargo traffic is concentrated around the gateway airports such as Mumbai, Chennai, Delhi, Kolkatta and Bangalore. These airports handle 87 per cent of air cargo traffic in India. Due to prospects of increase in air cargo traffic in India, the government is inviting private participation in air transportation and the related infrastructure (airports) to take care of growing passenger and cargo traffic in future.

Inland Water Transportation

Inland water transportation (IWT) is an eco-friendly transportation mode. IWT can play a significant role in augmenting the country’s transportation infrastructure. India has a potential of 1,45,000 kilometres of IWT infrastructure comprising rivers, lakes and channel. It has recently started receiving attention from the government. IWT in many western countries has already emerged as an alternative mode of transportation. Cargo movement through IWT in India is meagre one per cent as against 10–12 per cent in UK, Europe and China.

With the globalization of Indian economy and implementation of WTO directives in India, there will be greater movement of goods to and fro. This will create heavy pressure on already burdened transportation system of rail and road in India. There is a limit to the expansion of road capacity because of limited availability of land, high input cost and environmental considerations. IWT is cost-effective as compared to road and rail infrastructure. A kilometre of highway construction costs INR 6 crores, while more than 100 kilometres waterways can be developed at the same cost at the current rate. As per the estimates, for every one rupee spent for IWT development, the corresponding cost for development of roadways and railways would be INR 2 and INR 5, respectively. In case of energy conservation, the ratio would be 1.5 and 4, respectively.

There are some hazardous commodities, which should not be allowed for transportation on road. In view of the above constraints and advantages, the development of IWT has become relevant in today’s context. The major advantage of IWT is doubling of load capacities for a small increase in depth and thereby providing flexibility and cost elasticity, which does not exist in other mode of transportation. Besides lower fuel consumption and construction cost, IWT has the advantage of suffering minimum human loss against the very frequent accidents occurring in case of road and railways.

Pipelines

Pipeline as a mode of transportation which was first developed in 1870 by Samuel Van Syckel for transporting petroleum. Twenty years later, Standard Oil Company changed the face of transportation. Though petroleum was the first product transported in this manner, the pipeline became useful for several other commodities such as coal in slurry form, iron ore fines in slurry form, chemicals, natural gas etc. The basic advantage of pipeline is that it reduces the operational cost, though the initial investment is high. In India, pipeline is used for oil transportation by all public and private sector petroleum refineries. For iron ore transportation, it is used by the Kudremukh Iron Ore Project to transport slurried iron ore fines over 67 kilometres distance along the difficult Western Ghats.

Pipeline is an eco-friendly transportation mode. The cost of moving oil by rail or road continues to rise over the years; however, pipeline heads towards downtrends. The transportation cost of moving oil is INR 1.15 per tonne per kilometre on a new pipeline, while it is INR 0.87 on a depreciated pipeline. At the current rate, transportation of oil by road costs INR 2.50 per tonne per kilometre and INR 2.00 per tonne per kilometre by rail. Although laying of pipeline costs INR 15 millions per kilometre, yet the lower operational costs make up for the initial higher investment.

Currently, 27 per cent of the petroleum products (petrol, kerosene and diesel) are moved by pipelines of 6350 kilometres length in India; while in the United States 59 per cent is moved via 180 pipelines and another 35 per cent via barges along Pacific and Atlantic coast. Presently in India, pipelines move 58.7 million tonnes of oil per annum, which is expected to rise to 80 million tonnes by the year 2010.

Ropeways

In India more than 16 per cent of the geographical area is hilly. Communication to such areas is a problem because of the long circuitous routes. The transportation of goods and essential commodities to the hilly areas is sometimes important because of their strategic location from the defence point of view. In view of oil shortages, ropeways can prove to be more economical and faster than road transport, particularly in hilly areas. The ropeways have the following advantages:

• Ropeways cause least damages to the ecology
• Inaccessible hilly areas can be reached with shortest distance
• Other modes of transportation are uneconomical
• Bulk material can be moved faster over short distance

This mode of transport is used in hilly areas in Sikkim, Meghalaya, Mizoram, Himachal Pradesh and Uttar Pradesh. Currently 175 kilometres of ropeways are in use in the above territories for transportation of both materials and human beings.

8.3 FREIGHT MANAGEMENT

The selection of transportation mode depends on the product characteristics and customer service requirements. For example, raw materials are invariably transported in bulk and through cheaper mode of transportation such as rail or sea. The unit value being less, the transportation cost, as percentage of the value of material being transported, is very high. Hence freight reduction through scale economics becomes necessary. However, in case of high-value items, the deliveries required are faster and in smaller consignment with reliability. In this case, with the unit product value being high, the transportation cost as percentage of the product value is not so significant. Hence, faster and costly modes of transportation such as road or air are preferred.

For the logistics manager, cost, speed and reliability are the most important factors to select from the available transportation options. Table 8.2 shows the operating characteristics of different transportation modes.

 

Speed and Availability of Service

Speed of the service is dependent on the time taken to move products from one facility to another and finally to the customer. Speed is often more important than the cost of the service. The slower modes of transportations involve lower transportation cost, and they result in lower service levels. The availability depends on the existing transportation infrastructure and the ability of the mode to serve the given pair of locations. This sometimes becomes a major constraint in speedy delivery and necessitates the usage of inter-modal transportation.

Reliability

Reliability means ability of the carrier to deliver the shipment in good condition, in the stipulated delivery time frame to the customer.

Capability

Capability is ability of the carrier to accommodate the cargo in size, weight and quantity for transportation to the destination. This is very important for transporting the odd-sized and heavy products over longer distances. In such cases, special trailers are required for product movement. The cost of transportation goes up in such cases. Along with transportation mode, the other considerations are availability of special material handling equipments.

Frequency

Frequency refers to the number of schedule movements of the carrier between pair of locations. Pipelines are preferred for movement of liquid products because of their continuous operations. However, for solid products road carrier is the best option.

Transportation decisions are dependent on a number of other factors, such as unit value of the product, predictability of demand, saving in transit time, cost of transport mode, its impact on inventory cost and the desired level of customer service. The selection of modes and the particular carrier is done on the basis of delivery time, delivery reliability, freight rate etc.

8.4 FACTORS INFLUENCING FREIGHT COST

The logistics manager has to achieve objectives of freight cost reduction, speed and reliability in delivery. However, the freight cost is influenced by the following factors.

Volumes

With the economies of scale, the cost of operations is distributed over large volumes resulting into lower per unit cost of cargo movement. For example, a 9-tonne loading capacity truck will have the same cost components of fuel consumption, loading and unloading charges, employee cost etc., for the distance covered, irrespective of whether the truck is fully or partially loaded.

Distance

The variable cost is directly proportional to the distance covered by the vehicle irrespective of the load carried. It includes fuel and maintenance cost. However, the relationship is not linear because of the fixed cost element such as employee wages, loading and unloading charges, which are irrespective of the distance travelled (Table 8.3).

 

Product Density

The freight cost depends on the weight per unit volume of the product. It includes two variables of weight and volume. A 2-axel 9-tonne capacity truck has a limitation on the volume for low-density products such as cotton bales, wood, plastics etc. In such cases the freight cost per unit weight is found to be relatively higher (Table 8.4).

 

Similarly for high-density products the limitations are on weights, which should not exceed the allowable payload of the vehicle. In such cases, the truck is partly loaded with respect to the available loading space on the vehicle.

Product Shape

The size and shape of the product pose difficulty in handling and also affect the speed of its movement. Very big and odd-sized products require special arrangements for loading, unloading and towing. For heavy payloads, vehicles with long trailer are deployed for movement. The operating charges for such special vehicles are obliviously much higher because of higher operating cost, slow movement of the vehicles, and in special cases the requirement of escorts to accompany them. The large size chemical processing steel vessels, heavy-duty electrical transformers, long and oddshaped steel products attract higher transportation charges.

Product Handling

For handling the heavy as well as odd-shaped cargo, special material handling equipments are deployed. These equipments are not available at loading or unloading points because of very low frequency (at the time of project installations only) of usage. Hence, these equipments have to be organized specially. This adds to unit transportation charges of the product.

Product Type

The products such as fruits, food items and certain pharmaceutical formulations require special temperature and humidity conditions for storage and transportation. These products need to be transported through refrigerated vehicles, costing double and having operating cost three to four times than that of a normal vehicle. The products susceptible to explosion, evaporation, damage or theft require special transportation arrangements such as specially constructed vans or box containers. These products attract additional transportation charges.

Market Dynamics

In Indian context, the goods transportation business is in the hands of transport agents. The rates are fixed by the agents and not by the truck owners, except in case of very large fleet owners who operate across the country through their marketing infrastructure. However, depending on demand and supply of trucks for cargo movement to a particular destination, the freight rates are fluctuating. If more vehicles are available, there is cutthroat competition amongst the truck operators to get the business. Also the rates charged are sometimes below cost level. For hazardous and problematic routes, the rates are on the higher side to cover the risk.

8.5 TRANSPORTATION NETWORKS

Movement of goods from the point of production to the point of consumption is done through various modes of transportation. Depending on the transportation load, number of delivery points, existing distribution centres, product value, frequency of deliver, urgency and the cost economics, different types of networks are used.

Point-to-Point Network

Point-to-point type of network is quite common for long distance hauls on the national highways. The points of origin and destinations are fixed. Complete truck loading is assured for both ways (Figure 8.5).

Multiple Delivery Points

Multiple delivery points network is used for round the trip operations, with multiple pickup and delivery points. For example, the delivery of filled bottles and pickup of empty bottles of soft drinks at multiple points (retailers) on the fixed route (i.e., starting and ending at bottling plant) is quite common (Figure 8.6).

Trans-Shipment Points

Trans-shipment points are two local area networks (across national and state highways) having a common point where loading and unloading takes place for freight consolidation or break bulk. Most of the national transporters maintain two types of fleet, that is vehicles dedicated for national long-distance haulage and other ones for catering to local network. The consignment from longdistance fleet is trans-shipped to local vehicles for distribution across the local area (Figure 8.7).

Nodal Network

These networks are used for multi-modal transportation system and include multi-stops and transshipment pickup and delivery stations. For example, a box container truck may have predetermined multi-point pickup stations for freight consolidation on its way to rail terminal from where the box container may be taken to port terminal for loading on the ship (Figure 8.8).

Hub and Spoke Network

Hub and spoke network arrangement is like a hub and spoke of the wheel. The hub acts like a central feeder point to the distribution centres, which are at the strategic locations spread across the geographical area. The high volume and high-speed shipment takes place from hub to distribution centres through the predetermined shortest routes called spokes. The trans-shipment of consignment is done at distribution centres for distribution across the local area (Figure 8.9).

This arrangement optimizes the number of distribution centres in the network and ensures reduction in inventory and improvement in customer service.

8.6 ROUTE PLANNING

For the conservation of precious fuel and saving the transportation time, route planning exercise is of utmost importance to the carrier owner. Route planning may be advisory or statutory. The advisory routes are those with less operational problems and shortest distance. The cost of operation of the truck on such routes is the lowest. These are basically national or state highways connected to the markets and traffic on such routes is also high. These are very attractive for the truckers because of the immense opportunities for the return freight business. The statutory routes are those, which legally prohibit the trucker to use the routes other than the designated ones. The statutory routes are designated for carrying the particular type of goods such as explosives, hazardous chemicals or inflammable materials. The other categories of routes are those used for high productivity vehicles, high-speed vehicles or extra-heavy vehicles. The statutory routes are common in developed countries and quite uncommon in India.

The main objective of route planning is to cover the distance between two points with the shortest distance, ensuring operating economy resulting into lowest transportation cost. To plan a route for a truck for multiple pickups and delivery points, spread over a vast geographical area, is a challenging task. The planning task becomes complicated in case of perishable commodity having short shelf life. Generating distance matrix, which is a one-time exercise, and generating the route matrix with nodes for pickups and delivery can solve the problem. The other factor is duration of travel in case of perishable products.

Transportation Model

Linear programming is one of the most frequently used techniques of management science and it helps the decision maker to achieve an objective, which is subject to certain restrictions. The linear programming technique derives its name from the fact that the functional relationships in the mathematical model are linear. A linear programming model consists of decision variables, an objective function and model constraints. Decision variables are mathematical symbols that represent level of activity. The objective function is a linear, mathematical relationship that describes the objective of the firm in terms of decision variables and will be of either maximizing or minimizing value. The model constraints are also linear in relationships with decision variables. They represent the restrictions placed on firm by the operating environments.

One of the most widely used forms of linear programming for logistics problem is network optimization. The distribution centres in the distribution channels are the nodes from where the goods are distributed using the transportation links across the network. The linear programming model is evolved considering, transportation cost, demand pattern and the inventory supply position.

8.7 CONTAINERIZATION

Containerization is making waves in the transportation of goods, ensuring manifold benefits to the users, transport companies and the country’s economy. A container can be defined as a transport device for moving solid or liquid material. It is a case or a tank with adequate strength to be repeatedly used for packing and transportation of the material. The container can be used on several transport modes without material being stuffed, destuffed or trans-shipped.

Today containerization is an accepted trend in shipping for international and domestic trade. Initially containers were used for sea transportation, but are now profusely used in inland transportation. It was Malcolm McLean, owner of a huge trucking company in the USA, who conceived the idea of containers in 1956. Containerization in shipping started in the 1960s; the first container shipping being ‘Hawaiian Citizen’. It defined the system of port management with vision and strategic planning and developed sophisticated handling facilities. Since then, the container traffic has grown in leaps and bounds, and more than 200 million TEU (of 20 ft container) were handled world over in 2000–01. This is expected to grow to 417–491 million TEUs by 2001–02, with largest growth being expected in Asia. Globally, containerization is expected to grow at 5 per cent in the next 10 years and in Asia at 8–10 per cent.

Ports and shipping industry world over has accepted that containerization is the future of shipping and initiated projects for keeping pace with the latest developments. The ship builders have already started building huge container carrier cargo ships having capacity of more than 6000 TEUs. The ports are also gearing up to meet these challenges. Some ports such as Heliex, Canada, have already taken action to deepen the container birth for maintaining the draft of at least 52 feet to receive ships with 8000 TEU or above. The containers used for movement of solid cargo are box type construction with side or top opening with twist locking system. These are normally water and air tight constructions using steel or aluminium alloy, and are built as per International Standard Organization (ISO) having common sizes as indicated in Table 8.5.

The factors that contributed to the growth of container traffic are:

• Integration of various modes of transportation—Possible Inter-modal transportation
• Elimination of cargo trans-shipment leading to speedier delivery service
• Possible door-to-door service to customers
• Reduced risk of transit damage and pilferage
• Substantial reduction in logistical packaging cost of the goods
• Reduction in distribution cost

Scope of Containerization: Some Highlights

1. India’s annual GDP growth is in double digits; logistics sector, being an integral part of the growth engine, and is expected to grow at 15–20 per cent over the next few years.
2. India’s exim trade had a growth of 24 per cent annually between 2002 and 2007, and the Indian government has targeted to raise India’s share in global trade from 0.8 to 1.6 per cent in the next five years.
3. Indian industry spends 12–13 per cent on logistics costs, and a large scope to rationalize this expenditure means more opportunities to containerization.
4. India’s container cargo has grown at 16–17 per cent annually for the past four years, and the growth is expected to continue because of surge in foreign trade and growing port capacities.
5. Globally, containers account for 80 per cent of cargo volumes, In India, penetration level of container is 45 per cent. India’s National Maritime Development programme predicts container traffic to grow 15 per cent annually between 2007 and 2014.
6. Container handling capacity at all Indian ports is expected to rise to 14.2 million TEUs in 2014 from 6 million TEUs in 2007.
7. The share of railways in container train movement is expected to rise from the current level of 30 to 40 per cent in FY14.

    

   Table 8.5 Sea Freight Container Dimensions

   20 ft Dry	Outside dimension : 6.045 × 2.438 × 2.438 m Inside dimensions : 5.918 × 2.337 × 2.2103 m Volume : 31 m3 (1079 ft3)
   20 ft Dry High Cube	Outside dimension : 6.045 × 2.438 × 2.591 m Inside dimensions : 5.918 × 2.337 × 2.413 m Volume : 33 m3 (1178 ft3)
   20 ft Refer (Refrigerated)	Outside dimension : 6.045 × 2.438 × 2.438 m Inside dimensions : 5.385 × 2.159 × 1.956 m Volume : 23 m3 (803 ft3)
   20 ft Open Top	Outside dimension : 6.045 × 2.438 × 2.438 m Inside dimensions : 5.918 × 2.337 × 2.286 m Volume : 32 m3 (1116 ft3)
   20 ft Flat Rack	Outside dimension : 6.045 × 2.438 × 2.438 m Inside dimensions : 5.639 × 2.413 × 2.311 m Volume : 32 m3 (1116 ft3)
   20 ft Open Side/Top	Outside dimension : 6.045 × 2.438 × 2.438 m Inside dimensions : 5.918 × 2.337 × 2.210 m Volume : 31 m3 (1079 ft3)
   40 ft Dry	Outside dimension : 12.192 × 2.438 × 2.591 m Inside dimensions : 12.040 × 2.337 × 2.338 m Volume : 67 m3 (2372 ft3)
   40 ft Dry High Cube	Outside dimension : 12.192 × 2.438 × 2.896 m Inside dimensions : 12.040 × 2.337 × 2.692 m Volume : 76 m3 (2675 ft3)
   40 ft Refer High Cube (Refrigerated)	Outside dimension : 12.192 × 2.438 × 2.743 m Inside dimensions : 12.040 × 2.235 × 2.311 m Volume : 62 m3 (2197 ft3)
   40 ft Refer (Refrigerated)	Outside dimension : 12.192 × 2.438 × 2.591 m Inside dimensions : 12.040 × 2.235 × 2.159 m Volume : 58 m3 (2053 ft3)
   40 ft Open Top	Outside dimension : 12.192 × 2.438 × 2.438 m Inside dimensions : 12.040 × 2.337 × 2.261 m Volume : 64 m3 (2246 ft3)
   40 ft Refer High Cube (Refrigerated)	Outside dimension : 12.192 × 2.438 × 2.896 m Inside dimensions : 12.040 × 2.286 × 2.489 m Volume : 69 m3 (2419 ft3)
   40 ft Dry High Cube	Outside dimension : 13.716 × 2.436 × 2.896 m Inside dimensions : 13.564 × 2.286 × 2.692 m Volume : 85 m3 (3014 ft3)

   Source: http://www.concorindia.com

    

8. Container traffic has grown at the rate of 11.6 per cent over the last six years. During 2006–07, container traffic was 14 per cent (11 per cent in 2000) of total cargo handled (649 million) at seaports.

The container services in India were started in 1966 and initially containers with payload of 5 tonnes were introduced. IR first started container service between Mumbai and Ahmedabad in 1968. However, slowly the railway rakes were developed to adopt the large size containers of 20 feet and 40 feet length. Till 1988, the growth of container traffic was very slow. However in 1988, Container Corporation of India (CONCOR) under the Ministry of Railways was formed to look after the container traffic in India (Table 8.6).

 

Table 8.6 Container Traffic Handled at Various Ports (2005–06)

Port	(Million) TEUs
Singapore	24.8
Shanghai	21.7
Hong kong	21.4
Rotterdam	9.7
Hamburg	8.8
Antwerp	7.0
JNPT	3.3
All Indian Ports	6.0a

 

This resulted in speedier development of container handling (cranes, trailers, reach stacker, heavy duty fork lifts, side loaders) and movement (special railway rakes, container trucks) facilities in the country at various locations. Growth rate during the last few years observed in container traffic in India was 18–20 per cent per annum. Last year, CONCOR handled 2.20 million TEUs (of 20 ft container) of container traffic. CONCOR has monopoly position in container handling with 60 per cent share in inland container traffic. It has a network of 17 Inland Container Depots (ICDs), 7 Container Freight Stations (CFSs), 5 Port Side Container Terminals (PSCTs), and 10 Domestic Container Terminals (DCTs) to handle the growing container traffic in the country. To take care of the container traffic, CONCOR has its own inventory of various sizes of containers, and in addition Indian Container Leasing Company in private sector is engaged in leasing containers to transporters and corporate.

SUMMARY

Transportation is an indicator that measures the economic, social and commercial progress of the country. It is the most visible element of logistics operation and has a significant share in overall logistical cost of the firm and needs a great deal of planning to control it. In the movement of raw materials or products from the place of production to the place of consumption, transportation is the most important component of the logistical system. The transportation infrastructure of the country plays a vital role in speedy movement of the goods within and outside the boundaries of the nation. The transportation modes, such as road, rail, inland water, sea, air and rope, play a major role in cargo movement and trade development of the country. The regulatory environment in the country should be supportive to the growth of the logistics industry and simultaneously enforce discipline amongst the industry operators. At micro level, the freight management is crucial for cost controls. For the logistics manager, transportation mode selection, carrier selection and route planning are the areas where proper decision results into overall efficiency and effectiveness in supply chain. Transportation documentation supports the movement of the goods to reach the right place. Containerization is making waves in the transportation of goods, ensuring manifold benefits to the users, transport companies and the country’s economy. It facilitates the usage of multi-modal transportation and safe door-to-door transportation of the cargo.

REVIEW QUESTIONS

1. What are the different modes of transportation? Discuss their characteristics.
2. Discuss the various factors affecting the transportation cost and also select the product to highlight the importance of each factor.
3. What are the different networks used for performing transportation services? Discuss their merits and demerits in context of the existing transportation infrastructure in India.
4. Discuss the role of containerization in logistics at macro and micro level.

INTERNET EXERCISES

1. Visit Texas Transportation Institute for more information on multimodal transportation, http://tti.tamu.edu
2. Study various facets of ‘Transportation Lifecycle Management’ and its role in ‘Supply Chain Solutions’ at http://www.manh.com
3. To understand the on-going trends in truck freight rates across various routes, lorry availability for a given period etc., in India visit http://www.tcil.com/irfi/index.asp

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