Chapter 2 transportation modalities (air road rail)

HO CHI MINH CITY UNIVERSITY OF TRANSPORT TRANSPORTATION MODALITIES PRESENTED BY: BICH HOAI, MSc Transport Chain Players Shipper Forwarder Hinterland transport Warehouser Customs Stevedore Compiled by: Bich Hoai, MSc Port, Carrier, Port Consignee Forwarder Hinterland transport Warehouser Customs Stevedore Sept 2014 Transport Chain Actions • Storage • Transhipment: loading / discharge • Movement of cargo: transport • Exchange of information Compiled by: Bich Hoai, MSc Sept 2014 Contents • Air • Road • Rail • Sea • Waterway • Multimodal transport Transport Modalities Air Transport: World Traffic Routes 7% US 28% 13% Europe 10% 7% Asia 11% Transport Modalities Air Transport: The Air Transport System Manufacturers design and sell planes Leasing companies buy and lease planes Governments - arrange landing rights - provide+enforce rules Source: Airports Carriers Airlines Shippers - provide cargo - have requirements - provide infrastructure - face congestion Traffic Control - ensure safety - face congestion Transport Modalities Air Transport: Characteristics Routes: • Mainly intercontinental, to utilize speed advantage • short distances are trucked, under air cargo conditions Requirements: • main port with extensive destinations / connections • efficient + fast airport handling facilities • air cargo forwarder with fast declaration possibilities • fast connecting road collection / distribution services Cargo: • urgent shipments • high value cargo (to save inventory costs, also floating stock) Competition Intermodal and Intramodal • Very limited intermodal competition for long distance (500+ miles) trips • Air has decided advantage in transport speed • Freight: rising competition from time-definite motor carrier service • Passengers: some limited competition from personal automobile travel, rail, and bus service • Intense intramodal competition • Creates cycles of new entrants, excess capacity, reduced fares, carriers exiting markets Competition Service Competition • Nature of passenger service competition • • • • • Flight frequency on given route Timing of flights Meals, in-flight communications, other services No-frills alternatives intensify competition Advertising used to differentiate carriers • Nature of competition for cargo, express traffic • Published schedules and rates • Door-to-door, time-definite service Operating and Service Characteristics Accessibility and Dependability • Air travel is generally highly reliable • Weather and congestion are the principal causes of schedule disruptions • Sophisticated navigation systems facilitate operation in poor weather conditions • Limited airport accessibility adds travel time and cost to air travel • Limited accessibility is the principal service disadvantage of air travel © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 10 Transport Modalities Rail Transport: Market share Rail Haulage Market Share 100% 80% 60% Other 40% Rail 20% 0% EU (15) Source: Trademco CEEC USA Central Asia Russia Operating and Service Characteristics Service Innovations • Piggyback service: intermodal service directed to nonbulk, manufactured products • Includes both container-on-flatcar (COFC) and trailer-on-flatcar (TOFC) services • Definitions, basic differences between COFC and TOFC • Accounts for second highest number of carloadings • Competes directly with truckload (TL) service • However, some TL carriers are also major customers of piggyback service 48 Operating and Service Characteristics Service Innovations • Competitive advantage piggyback service • Combines cost-efficiency of RR long haul with flexibility of truck pick-up and delivery • Principal disadvantage of piggyback service • Transit time and on-time delivery performance • To counter service disadvantage • RRs create dedicated intermodal trains • Trains run on regularly scheduled departures and priority operating schedules © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 49 Operating and Service Characteristics Service Innovations • Public benefits of piggyback vs TL services • Reduced fuel consumption • Reduced road congestion and road damage • Lower emissions • COFC: component of international trade • Land-bridge operations • Substitutes rail for portion of ocean voyage • Double-stack container trains • Greatly improves rail equipment and train productivity 50 Cost Structure Fixed Costs • Railroads have high % of indirect fixed costs in short run • Short run: means that capacity remains constant • Estimated 30% of costs not vary with volume due to high % of long-lived (durable) assets • RRs own and maintain networks (rights-of-way) and terminals (freight yards) • Geographically fixed, impedes responsiveness to changes in demand • Equipment: locomotives and rolling stock • $ billions in annual capital expenditures 51 Cost Structure Semi-Variable and Variable Costs • Semi-variable costs: over 40% of total costs • Includes maintenance of rights-of-way, structures and equipment • Often deferred during financially difficult periods • Variable costs • Labor: Largest component of variable costs • 26.4% of each revenue dollar • Unionized work force, 14 craft unions • Work rules: productivity challenges and issues • Fuel: 2nd largest component of variable costs • Locomotives: increasingly productive and fuel efficient 52 Transport Modalities Rail Transport: Application Favourable characteristics: • Long distances (> 50 km) • Full wagon loads • Bulk cargo • General cargo (if combined transport) Transport Modalities Rail Transport: Application Weaknesses: • Delays at border crossings (documentation, customs, formalities) • Different gauge widths and other technical / operational characteristics • Differences in tariff structure and liability conditions • Missing links and poor infrastructure / low commercial speeds • Absence of a direct consignment note between OTIF and OSJD spheres of influence 54 Transport Modalities Rail Transport: Rail Service Centres RSC Maasvlakte: containers from overseas; growth % per year RSC Eem/Waalhaven: containers from Europe (UK!) competition (Ferry, tunnel) 55 Transport Modalities Rail Transport: Rail Service Centres Rotterdam Maasvlakte 56 Transport Modalities Rail Transport: Rail Service Centres Rotterdam Eemhaven 57 Transport Modalities Rail Transport: Rail Service Centres Rotterdam Eemhaven 58 Transport Modalities Rail Transport: Development 59 Transport Modalities Rail Transport: Development VTL – Vertical Tandem Lifting Lifting two or more vertically connected containers as a single lift 60 THANK YOU 61 ... Transport Modalities Road Transport: Characteristics Congestion … 20 Transport Modalities Road Transport: Main Players in Europe Company mio € % Schenker 5.165 1,6 DHL Freight 3.646 1 ,2 DVS A/S... 3.430 1,1 Geodis 2. 343 0,7 Dachser 2. 240 0,7 Gefco 1.795 0,6 Kuehne & Nagel 1.791 0,6 Norbert Dentressangle 1.693 0,5 Willi Betz 1 .20 0 0,4 LKW Walter 1.030 0,3 Others 29 0.777 92, 3 Total 315.110... hazardous materials 23 Transport Modalities Road Transport: Equipment Distribution Van Truck + Trailer Chassis + Swap Body Tractor + Semi- Trailer 24 Transport Modalities Road Transport: Equipment