Slide 1

Report
Sorbonne-Paris IV
4th May 2007
Lecture
“INTERNATIONAL LOGISTICS &
TRANSPORTATION”
By
Dr L. Boukersi
Principal Lecture in International Marketing
London South Bank University
INTERNATIONAL LOGISTICS &
TRANSPORTATION
SECTION # 1:
TRANSPORT IN CONTEXT
SECTION # 2:
DIMENSIONS OF TRANSPORT
SECTION # 3:
STRATEGIC ASPECTS OF
INTERNATIONAL
TRANSPORT
SECTION # 1
TRANSPORT IN CONTEXT
Marketing Mix
Product
Price
MARKETING
MIX
Promotion
Distribution
Transport
Channel
Strategy
Logistics
Strategy
Inventory
Location
International supply chain
Store
Move
Use/consume
Move
Make
Market
(Europe)
Plant
(China)
Information flow
Move
Move
Store
Warehouse
Transport
Mine (India)
• “Logistics is the process of planning, implementing
and controlling the efficient and cost-effective
flow/movement and storage of raw materials, inprocess inventory, finished goods and related
information from point of origin to point of
consumption for the purpose of meeting customer
service requirements.
• Logistics management is more specifically focused
on providing product:


punctuality
through physical move transport
availability
through storage
inventory
 Advances in transportation and telecommunications technologies have
contributed to the rapid growth of international trade and helped to overcome
the resistance of space and time.
1500-1850
Average speed
of sailing ship was
10mph (16 km/h)
1850-1930
Average speed
of steam locomotive
was 65mph and
steamship 36mph
(58 km/h)
1950s
Average speed
of propeller
aircraft
300-400mph
(480-640 km/h)
1960s-to date
Large jet Aircraft
average speed
500-700 mph
(800-1120Km/h)
 A country’s Logistics Cost reflects its Economic Development
Agriculture
Logistics Costs / GNP
Argentina Brazil
Kenya
Mining
Industry
Services
Information
Poland
Ukraine
Belgium
Canada
Japan
Singapore United States
Economic Development
Ten Largest Global Logistics Service
Providers, 1998
Deutsche Post Fracht
Employees (thousands)
Revenue (Billion $US)
Panalpina
Maersk Moeller
Danzas
Kuhne & Nagel
NFC/Exel
Deutsche Bahn Cargo
TNT Post Group
Schenker
GEODIS
0
5
10
15
20
25
30
35
40
45
50
SECTION # 2
DIMENSIONS OF TRANSPORT
.
(i)
(ii)
The Way
(or Mode)
The Vehicle
The terminal
a) Natural
. Water (seas
& rivers)
. Ship/Vessel
. Barge
.Seaport
. Air
. Aircraft
. Airport
b) Man-Made
. Road
. Rail
. Pipeline
c) Hybrid
. Canal
. Road trailer
. Locomotive
(iii)
. Distribution
Centre
(i) International Air Transport
 The youngest and the most rapidly growing.
 Accounts for around 1% in volume and
20-30% in value of total world trade
 Rapid growth, requires high capital investment.
 Divided in 3 sectors
- Express (FedEx, TNT, UPS, DHL)
- Special commodities (perishables, live animals,
hazardous products…)
- Traditional Air Cargo (moving in containers or pallets)
 High speed, quick transits, reliable and low risk of
damage for sensitive items
 Limited capacity, very costly, subject to competition
not suitable for all goods and vulnerable to climatic
conditions
Frankfurt is the largest air freight transshipment site in Europe
• 25 780 m² freight shipment Hall (Lufthansa Cargo
Centre)
• Handles 700 000 tonnes per year
• 6000 shipment per day
•Operated by Lufthansa
(ii) International Sea Transport
 High-capital investment
 Low-cost mode because of large capacity shipment
 Accounts for 98% of world trade in volume and 10%
in value.
 Types of ships:
- Liners (scheduled regular services between ports)
- Tramps (operate in all parts of the world in primarily bulk
cargo: coal, grain, timber, sugar, fertilizers...)
- Specialised Vessels ( 22 types)
 Can ship large volume at low cost and offer more
opportunities for consolidation.
 Very slow, routes and timetables not usually flexible
Port of Rotterdam
 The port & industrial area stretches over a length of 40km and covers
10,000 hectares
 More than 500 scheduled services link Rotterdam with over 1000 ports
 Around 370 million tonnes handled in 2005
 The European market is accessible from Rotterdam via all modes of transport;
 Rotterdam is an excellent hub for multimodal shipping; hence its name “gateway”
to Europe.
 The 5 largest oil firms (Shell, BP, Esso, Kuwait Petroleum & Texaco) have
refineries there).
(iii) International Rail Transport
 One of the oldest modes that acted as a catalyst to
economic development in industrialised countries
 Experienced rapid growth in the last 20 years.
 Efficient way to move goods inland
 Provides fast links, safe and environmentally friendly
 Dependent on available fixed routes and timetables; hence,
not flexible.
 Subject to mechanical breakdowns and industrial actions
(iv) International Road Transport
 Requires low-capital investment as it can be provided inhouse
 Experienced tremendous growth in the last 2 decades
 Relatively low cost and efficient transit time
 Provides door-to- door delivery
 Very flexible as suitable alternative routes can be found, if
need be.
 Very competitive within certain distance bands
 Low capacity as only small consignments can be moved.
 Time consuming on long distance bands
 Subject to high toll charges, restrictive regulations and
traffic congestions in some countries
 Accounts for almost 70% of cargo shipped within Europe.
(v) Canals and Inland Water Transport
 Low-cost mode of transport but slow
 Europe possesses 36,000 km of waterways
 In Europe, only 6% of freight traffic are carried out by inland
whereas 12% in the US.
 40% of Netherland freight traffic is carried by inland
waterways shipping
 Though it can accommodate high freight capacity, this mode
is not yet fully exploited in Europe.
 The completion of the canal joining the Rhine and the
Danube (RMD), in 1992, opened up a 3500km cheap inland
waterways route between the North Sea and the Black Sea
(vi) MULTIMODAL TRANSPORTATION
 There are 10 inter-modal service combinations of which the
mostly used are:
- rail-truck (piggyback),
- truck-water (fishback) and
- sea-air (international transport).
 For example Sea-Air concept refers to transferring cargo
from ship’s deck to aircraft take-off (in less than 5 hours).
 The purpose of multimodal combination is to reduce cost
and achieve speedy delivery on long distance hauls.
 Piggyback or trailer on flatcat (TOFC) offers convenience
and flexibility of trucking with long-haul cost efficiency of rail.
This form is the most widely used between the UK and the
continental Europe; especially after the completion of the
Channel Tunnel.
 The desire to achieve the dual objectives of cost reduction
and speedy delivery has also spurred on the construction of
multimodal hubs, with significant infrastructure investments,
in some strategic locations such as Dubai, Hong Kong,
Seattle, Amsterdam, Frankfurt .
 For example, in Dubai, the integration of the airport and
seaport has enabled a volume of more than 100,000 tonnes to
be converted annually from sea to air transport.
 Amsterdam Airport Schiphol is a true gateway to Europe as
most of the European cities are within 300-mile radius and 95%
of Europe can be reached by road (truck) within 24 hours.
 Amsterdam Airport is a unique multimodal hub as it provides a
combination of air, road, rail and water links.
 The Port of Amsterdam is the 5th largest in North Western
Europe in terms of transhipment tonnage, is located within a 40
mile radius from Schiphol.
Hong Kong International Airport Multimodal Hub and
Gateway to China & Far East
 Airport & seaport fully integrated; hence, its position as the world’s premier hub
 World’s busiest international air cargo with 3.4 million tonnes of cargo handled
through it annually.
 40 million passengers passed through it in 2005
 Its core values: Safety, security, efficiency and excellence
Lille as Regional Multimodal Hub
• Road transport : over 550 kilometres of highways linked directly into
the pan-European road system
• France’s densest rail network, offering an efficient freight and
passenger-transport alternative with 1,512 km of rail track and 122
local freight stations
• High-speed rail service: Lille is at the heart of the TGV network
serving Northern Europe
• Direct rail link to the UK via the Channel Tunnel
• High-performance inland waterway network serving Northern
Europe (680 km / 422 miles of canals).
• Seven seaports in the immediate vicinity: Rotterdam, Antwerp,
Felixstowe, Le Havre, Dunkirk, Calais and Boulogne sur mer
• Rail and waterways links with main ports in Northern Europe;
complete forwarding service combining inland transport by barge
and the shipping feeder
Market Share by Freight Transport Mode, 1980-2000
United States (tonnes-mile)
Europe (tonnes-km)
100%
100%
90%
90%
80%
80%
70%
70%
Water
Truck
Rail
60%
50%
40%
60%
50%
40%
30%
30%
20%
20%
10%
10%
0%
0%
1980
1985
1990
1995
1999
1980
1985
1990
1995
2000
2002
SECTION # 3
STRATEGIC ASPECTS OF
INTERNATIONAL TRANSPORT
Transport Decisions
Yi
Xi
- Mode selection
- Vehicle Routing
Transport
Decisions
-Vehicle scheduling
- Shipment
consolidation
(i) Mode selection
Efficiency
(cost)
Mode
Selection
Depends
Responsiveness
(Speed & Reliability)
The mode selection is determined by the fundamental trade-off between
the cost of transporting a given product (efficiency) and the speed/reliability with
which the product is transported (responsiveness).
 Fast modes are costly but very responsive and slower modes are less costly but
not responsive.
 If no competitive mode is identified, the relative cost of inventory is taken into
consideration as fast modes incur less inventory costs and slower modes high
inventory costs
Total Logistics Costs Trade-off
Costs
Total Logistics Costs
Transport Costs
Inventory Costs
Sea
Road
Rail
speed/reliability
Air
Changes in the Relative Importance of Logistical
Functions in Distribution Systems
Responsiveness
Demand Driven
Inventory
Transport System
Information System
Supply Driven
Cost reduction
0%
20%
40%
60%
80%
100%
(ii) Vehicle Routing
This refers to finding the best paths that a vehicle should follow (e.g.
a network of roads, rail lines, shipping lanes, air navigational routes)
in order to minimise time or distance
(iii) Vehicle scheduling
Vehicle scheduling is a very complex extension of the vehicle routing,
which is subject to a large number of regulatory restrictions.
(iv) Shipment consolidation
 With transportation, it costs less on per-weight basis to move larger
quantities because of the existence of fixed costs which remain the
same irrespective of shipment sizes.
 Traffic managers always try to consolidate large numbers of small
shipments into a small number of large shipments.
SHIPMENT CONSOLIDATION
Small Shipments
Large Shipments
Destinations
London & Glasgow
Oslo & Stockholm
Small number
Large number
Conclusion
The two major benefits of international
transportation are:
(i) Enhance business competitiveness
Progress in transportation has contributing to the
separation between markets and production sites. As a
result, international transportation enabled production to
exploit location advantages; hence competitiveness
enhancement
(iii) Better living standards
Rapid international shipments at reasonable prices have
place seasonal products in markets that would have not
otherwise been available; hence better consumer choice
at lower prices
Thank you
for your kind attention

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