Transcript Center for Logistics, Trade and Transportation Intermodal Transportation Curriculum for Secondary Education – Pilot Study Students’ Project Discussions WORKSHOP October 22 & 23, 2012 -

Center for Logistics, Trade and Transportation
Intermodal Transportation Curriculum for
Secondary Education – Pilot Study
Students’ Project Discussions
WORKSHOP
October 22 & 23, 2012 - Trent Lott Center, University of Southern Mississippi
Prepared By:
Dr. Tulio Sulbaran, Dr. Mohammad Rahman, Dr. MD Sarder, & Dr. Chad Miller
Center for Logistics, Trade, and Transportation (CLTT) - The University of Southern Mississippi
Under the Supervision of:
Dr. Lemond Irvin & Mr. Brad Skelton
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Center for Logistics, Trade and Transportation
Learning Outcomes
Big Idea: Instigate
students’
interests and
promote critical
thinking thru
hands on project.
Provide guidance
for maximized
learning.
Lecture Duration:
Embed with
appropriate
modules.
At the completion of this module students
should be able to:
– Understand the objectives and needs of these hands
on projects
– Identify the problems and formulate the problems
associated with the project (s)
– Identify the constraints, resources, and mechanisms
to solve the project problem (s)
– Deduce the appropriate assumptions, apply right
solution processes, derive and interpret results
– Produce acceptable project deliverables
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Project 1: Decision Regarding Hub Use
Company “A” is a retail distributor who operates its business from Hattiesburg,
MS. Most of its customers are in Mississippi and most of the time they orders LTL of
products. This company has limited trucks for delivery but has synergetic
partnership with several hubs in the state. It ships all customer orders from its
Hattiesburg warehousing facility.
Company “A” received a total of 5 orders today from its customers who are
located in Natchez, Vicksburg, Greenwood, Greenville, and Starkville. All these
orders are due by tomorrow. This company can either directly ship those orders
from its warehouse to individual customers or can use a hub facility in Jackson for a
fee and deliver from there. Should company “A” use the hub facility or directly ship
from its warehouse?
Following information is provided by the company;
Total demand for 5 customers = 2TL delivery and none of the order requires a TL delivery
Average distance between origin & destination = 500 miles
Average distance from origin to hub or hub to destination = 250 miles
Cost for transportation = $200 handling + 1 $/mile
Cost for using hub = $100/day
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Project 1: Problem Dissection
Identify the Problem to be solved: Should company “A” use the hub facility or
directly ship from its warehouse?
Formulate the Problem: Calculate the value of each option depending on the
performance factors. For example: if cost is the issue, calculate the total cost of
shipments for all available options.
Identify constraints, resources, and mechanisms: What is given/available and
what is the limiting factor that dictates the solution?
This company has limited trucks for delivery
It received a total of 5 orders
Total demand for 5 customers = 2TL delivery and none of the order requires a TL
delivery
Average distance between origin & destination = 200 miles
Average distance from origin to hub or hub to destination = 100 miles
Cost for transportation = $50handling + 1 $/mile
Cost for using hub = $100/day
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Project 1: Problem Dissection
Deduce the assumptions:
 Consolidated delivery is not an option
Each delivery route is unique and can not be shared
Company has at least 5 trucks and 5 drivers
Solutions:
Comprehend the problem (may visualize the case)
Identify available alternatives
Calculate results based on performance factor(s)
Interpret results
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 Problem
Comprehension
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Project 1: Performance Criteria
 Number of trucks
Number of trips
Shipment cost
Frequency of service
Customer satisfaction
 Example Case
Pick the option that has the least cost of shipment
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Project 1: Calculations
 Example Case: Direct Shipment
Total no. of shipments = 5
Total handling cost = 5 X $50 = $250
Total shipment cost = 5 X ($1 X 200) = $1000
Total cost = $250 + $1000 = $1250
Level/frequency of customer service?
 Example Case: Via Hub Shipment
Total no. of shipments = 2 + 5 = 7
Total handling cost = 7 X $50 = $350
Total shipment cost = 7 X ($1 X 100) = $700
Hub cost = $100
Total cost = $350 + $700 + $100 = $1150
Level/frequency of customer service?
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Project 1: Interpretation
 Based on the assumptions and current requirements,
calculation shows that Company “A” should use the hub
system to deliver its orders to its customers. In this case
the company will be able to save $100 over the direct
shipments.
Any changes in assumptions or requirements may alter
the savings and may lead to different decision.
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Project 1: Critical Thinking
 What if the Company “A” has only 4 truck drivers
available for that day?
What if the hub cost goes up to $200 per day?
What if a customer want to expedite the delivery?
What if a customer orders a TL of delivery?
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Project 2: Modal Selection
Selection of freight transport services is a twofold process, which covers
modal choice and carrier choice. Modal choice could be either a specific mode
or intermodal transportation. The shipper chooses a particular mode and also
chooses between similar services within the chosen route-mode.
As mentioned earlier that modal selection is not like a cherry picking
process, it ensures the efficient movement of goods while considering the
performance factors.
Performance factors may include the following;
Transportation cost
Transit time
Reliability and competency
Flexibility and Customization
Emissions
Energy consumptions, etc.
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Project 2: Modal Selection Criteria
There is a relationship between transport costs, distance and modal choice
that has for long been observed. It enables to understand why road transport
is usually used for short distances (from 500 to 750 km), railway transport for
average distances and maritime transport for long distances (about 750 km).
Distance, Modal Choice
and Transport Cost
D1 = 500 -750 KM
D2 = Near 1500 KM
Source: Photo: Dr. Jean-Paul Rodrigue
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Project 2: Modal Selection Criteria
The concept of economies of scale applies particularly well to container
shipping.
It is thus not surprising that maritime shipping companies have introduced
larger and larger containerships, particularly over long distance routes.
Average Cost per TEU by Containership
Capacity and By Route, 1997
Source: Cullinane, K. and M. Khanna
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Project 2: Modal Selection Criteria
While maritime container shipping companies have been pressing for larger
ships, transshipment and inland distribution systems have tried to cope with
increased quantities of containers.
The growth in capacity comes with increasing problems to cope with large
amounts of containers to be transshipped over short periods of time as
shipping companies want to reduce their port time as much as possible.
Economies and Diseconomies of
Scale in Container Shipping
Source: Photo: Dr. Jean-Paul Rodrigue
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Project 2: Shipping Shoes from China
How should I ship my shoes from Shenzhen, China
to Kansas City, USA?
 Shoes are manufactured, labeled, and packed at Shenzhen plant
 ~4.5M shoes shipped per year from this plant
 6,000 to 6,500 shoes shipped per container (~700-750 FEUs / year)
 Value of pair of shoes ~$35
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Project 2: Problem Comprehension
40 shipping lines visit these ports each w/ many options
Examples:
 APL - APX-Atlantic Pacific Express Service
 Origins: Hong Kong -> Kaohsiung, Pusan, Kobe, Tokyo
 Stops: Miami (25 days), Savannah (27), Charleston (28), New York (30)
 CSCL - American Asia South loop
 Origins: Yantian -> Hong Kong, Pusan Stops: Port of Los Angeles(16.5 days)
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Project 2: Problem Comprehension
Inland Transport @ Origin
3 Port Options
 Shekou (30k)
• Truck
 Yantian (20k)
• Rail
• Truck
 Hong Kong (32k)
• Rail
• Truck
• Barge
In Hong Kong
• 9 container terminals
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Project 2: Problem Comprehension
Inland Transportation within US
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Project 2: Problem Analysis
Port of New York / New Jersey
Maher Terminal
 Express Rail II NS RR
• Double stack thru:
•Harrisburg, Pittsburgh,
Cleveland, Ft. Wayne, to
Kansas City
 CSX RR (5-10 days)
• Double stack thru:
• Philadelphia, Baltimore,
Washington, Pittsburgh,
Stark, Indianapolis, to
Kansas City
Truckload (2.5 - 3 days)
• NJ Turnpike to I-78W, I81S, I-76/70 to Kansas City
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Project 2: Problem Analysis
Intermodal transport that utilizes trucking is the most expensive shipping option
Source: Morrison, 2012
• Intermodal shipping that utilizes rail transportation uses the lowest energy
and produces the least CO2 emissions
• The all-water route via the Panama Canal is the least expensive option
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Project 2: Problem Analysis (cont’d..)
“Given a choice, many shippers today are
leaning toward a delivery service that costs
less and is more reliable, even if the delivery
time were slightly longer" (Spivak, 2011)
Source: Morrison, 2012
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Project 2: Decision Making
Transportation Decision
Let students do the research to find the details
Calculate total point to point cost
Calculate total transit time
Calculate emissions and energy consumptions
Identify the reliability, dependability, and other performance parameters of
modes and shipping companies
Compare the values and select the best
 So how do I ship shoes from Shenzhen to Kansas City?
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Project 3: Intermodal Choice
 Consider a product to be transported from a location A to a
location B.
 The distance between A and B is (y) mile.
 Mode options and associated distances are given below:
1. Truck (mile) × Cost = Total1
2. Rail (mile) × Cost + Truck (mile) × Cost = Total2
3. Truck (mile) × Cost + Rail (mile) × Cost + Truck(y mile) ×
Cost = Total3
4. Truck (mile) × Cost + Water (mile) × Cost + Truck(y mile) ×
Cost = Total4
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Center for Logistics, Trade and Transportation
Project 3:
Intermodal
Options:
A manufacturer has three
options available to deliver
its product to a
distribution center.
Option 1: Road-Rail-Road
Option 2: Road only
Option 3: Road-Water-Road
 A Manufacturer (M) ships goods to a Distribution
Center (D) located in a different city.
 There are three modes of transportation
options available.
 Loading/unloading, or container transaction
from one mode to another mode is
$10/container.
 Inventory carrying (lead time) (including
insurance) cost is 1% of total goods value.
 Assume cargo transportation is estimated 20
containers.
 Average container value is approx. $10,000
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Option 1: Intermodal Choice
Road-Rail-Road
 Distance travelled:
D
R2
 From factory to Intermodal-1 is 60 miles,
 From Intermodal-1 (R1) to Intermoda-2 is 420 miles,
 From Intermodal-2 (R2) to Distributor is 40 miles,
 Base cost by rail is $30/Container
M
R1
 Transportation costs by road per ton
Costs
Up to 100 mile
$/ton
90
Mode
Up to 200 mile
85
Rail
Up to 500 mile
70
Water
Sign
Road
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Option 2: Intermodal Choice
By Road (direct)
 Distance travelled:
D
 From Manufacturing factory (M) to Distribution (D) center
is 400 miles
 Transportation costs by road per ton
M
Costs
Up to 100 mile
$/ton
90
Mode
Up to 200 mile
85
Road
Up to 500 mile
70
Rail
Sign
Water
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Option 3: Intermodal Choice
Road-Water-Road
P2
 Distance travelled:
 From factory to Port-1 (P1) is 70 miles,
D
 From Port-2 (P2) to Distributor is 50 miles,
 From Port-1 to Port-2 is 500 miles,
 Base cost by water is $20/Container
M
P1
 Transportation costs per ton
Costs
Up to 100 mile
$/ton
90
Up to 200 mile
85
Up to 500 mile
75
Mode
Sign
Road
Rail
Water
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Center for Logistics, Trade and Transportation
Solution to Project 3
Up to miles
100
200
500
Option 1
Option 2
Option 3
Option 1
Road ($)
$90
$85
$75
Rail ($) Water ($) Containers Handling ($) Value/container
$30
$20
20
$10
$10000
Cost ($) per container
Transportation
Loading /
(miles)
transaction
Road
Rail Water
100
420
4
400
2
120
500
4
Transportation
(miles)
Road
Rail
Port
$9,000 $12600
Option 2 $30,000
Option 3 $10,200
-
Carrying + Insurance cost
Carrying
(days)
1.00% /day/ton (road)
1.00% /day/ton (Rail)
4
3
7
Loading /
transaction
1.20% /day/ton (water)
$800
Carrying
Inventory
(days)
$8,000
$30,400
-
$400
$6,000
$36,400
$10,000
$800
$16,800
$37,800
Total
20 × 10000 × 7
×1.2%= 16,800
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Questions?
Thanks
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