Thursday, March 02, 2006

Transportation Network

The 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, a number of delivery points, existing distribution centers, product value, frequency of delivery, urgency and cost economics, the different types of networks in use are:

Point to point network: This type of network is quite common for long distance hauls on national highways. The point of origin and destination are fixed. Full truck loading is assured on both runs.

Point to point network

Multiple delivery points: This network is used for round trip operations, with multiple pickup and delivery points. For example, the delivery of filled bottles and pick up of empty bottle of soft drinks at multiple points (retailers) on a fixed route (i.e staring and ending at the bottling plant) is quite common.

Multiple Delivery Points

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

Trans-shipment points

Nodal Network: These networks are used for a multi modal transportation system and include multiple trans-shipment, pick up and delivery points. For example, a box container truck may have predetermined multi point pick up stations for freight consolidation on its way to the rail terminal from where it may be taken to the port terminal for loading onto a ship.

Nodal Network

Hub and Spoke Network: This network arrangement is like a hub with the spokes of a wheel. The hub acts like a central feeder point to distribution centers that are at strategic locations spread across a particular geographical area. High volume and high-speed shipments take place from the hub to the distribution centers through predetermined short routes called spokes. Trans-shipment of the consignment is done at the distribution centres for distribution across the local area.

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

Hub and Spoke network

AFL, an integrated logistics service provider has commissioned a state-of-art Trans-shipment Logistics Hub at Nagpur to develop Nagpur as a global air cargo hub. Nagpur has a strategic advantage in supply chain management since it is located at the geographical center of India which is logical and ideal location for a cargo hub. The government of Maharastra is developing a multimodal International Hub Airport at Nagpur to cater to the needs of global and domestic cargo movements.

Transport economics

 Derived demand
 d = f (p, y, pr, t)
 government regulation
 supply of service is heterogeneous
 capacity of service is indivisible

Pricing of transportation service

 Under perfect competition
 Monopoly
 Monopolistic market
 Differentiated oligopoly

Business scenario – post liberalisation

Reduction in the role of government in managing economy – disinvestment of public sector holdings.
Opening up several sectors to private companies
•Air lines
Encouraging fdi in most sectors to expedite economic growth.
Reduction in import tariffs progressively to force local companies to compete against international players

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