Center for Logistics, Trade and Transportation Intermodal Transportation Curriculum for Secondary Education – Pilot Study Students’ Project Discussions WORKSHOP October 22 & 23, 2012 -
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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
http://www.usm.edu/cltt
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
Problem
Comprehension
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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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
http://www.usm.edu/cltt
Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
Project 2: Problem Comprehension
Inland Transportation within US
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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
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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Center for Logistics, Trade and Transportation
Questions?
Thanks
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