4.2 Modes of Transportation – Global Value Chain (2024)

1. Identify different modes of transportation and their characteristics

Modes of Transportation

Some paragraphs came from Faramarzi & Drane (n.d.)Introduction to Operations Management under a Creative Commons Attribution-NonCommercial-ShareAlike License 4.0.

Trucking

The majority of goods are shipped by truck completely or at some point during the shipping. Trucking is the most flexible of all modes of transportation. It is categorized by “Full Truck Load” (TL) when the entire truck is hired and delivered directly, or “less-than-truckload” (LTL) which generally includes integrating orders to increase utilization of the truck. Presently, Canada is facing a serious issue which is shortage of qualified drivers. Demand for drivers continues to increase every year, and the average age of drivers is increasing. The trucking industry will face challenges to make driving more attractive to entice new workers into trucking jobs (Faramarzi & Drane, n.d.).

The most used mode of transport which allows extended delivery services for other types of transportation. For improving efficiency, profitability, service level, and productivity; transportation companies cooperate with fellow transportation companies by creating efficient transport planning, extending portfolio and vehicle capacity, and strengthening market position in the region. This definition is called horizontal cooperation. As road transportation is most used globally by organizations, policymakers insist on shifting companies to more environmentally friendly modes of transportation such as inland waterways or rail carriage.

Railroads

Rail can be a very cost-effective means of transporting goods for long-distance travels. Goods in containers, or products that are bulky and heavy are ideal for train transport. Canada has a very old and well-established rail system. It ships products including cars, fertilizer, food and beverages, forest products, grain, metals and minerals and petroleum products. Often, large manufacturers locate themselves near rail lines for easy shipment of raw material into and finished goods out of their facilities. Compared to trucking, shipping by rail is very energy efficient, and removes many trucks from congested highways (Faramarzi & Drane, n.d.).

The essential and efficient mode of transport, among other types, links to other carriers by using containers. This mode increased over decades and continues to grow.

Airfreight

For goods that are expensive, small and light, and urgent air shipping may be a good choice. Air carriers charge by a combination of the weight and size of the shipment. This mode of transport is generally used when speed is more important than cost. Shipping by air is very reliable. Firms may want to consider the environmental impact of regular use of air shipping (Faramarzi & Drane, n.d.). The airfreight mode of transport is steadily growing. Also, the airfreight sector is changing direction to integration and cooperation with other modes of transportation such as water and inland carriages. This action will allow companies to provide services like Just-In-Time. Also, air transport is a part of the intermodal system.

Waterway

This is a very common way of shipping goods. The goods that travel by water include chemicals, stone, cement, sugar, coal and other heavy commodities (Faramarzi & Drane, n.d.) .

The Great Lakes St. Lawrence Seaway System is a 3,700 kilometer marine highway that runs between Canada and the United States. Since 1959, it is serving many industries to ship iron ore, coal, limestone, steel, grain and cement. The cost for shipping by waterways is economical. Most low-cost products are shipped by waterways (Faramarzi & Drane, n.d.)

For the international movement of freight, maritime transport performs a dominant role in the supply chain. Service quality such as real-time information or tracking systems is more important than delivery price for the logistics industry. The water industry has three types of operation: industry, liner, and tramp shipping. Industry shipping supplies raw materials like natural gas, which requires high-pressure containers. Liner shipping conveys standardized containers partially or comprising manufactured products from various shippers and different consignments (Lun & Marlow, 2011). Liner Shipping Companies (LSCs), which offer this type of operation, invest in ships, containers, and cutting-edge technology for improving customer satisfaction (Lun & Marlow, 2011). Manage capacity is a central key point in the liner shipping operation. Tramp shipping has irregular schedules, sporadic routes, and prices to maximize profit with long-term contracts (Laake & Zhang, 2016). Liner shipping is similar to bus services, while tramp shipping is the same as taxi services (Lun & Marlow, 2011)

Pipelines

Crude oil, natural gas and other petroleum products are shipped by pipelines. Once the pipelines are built, the cost per kilometer for shipping is very inexpensive. There is a lot of opposition and concern over new pipelines because of worry over spills and leaks that may contaminate land and waterways.

(Faramarzi & Drane, n.d.) CC-BY-NC-SA-4.0

Table 4.1

Characteristics of Mode of Transportation

This material is adapted from Faramarzi & Drane (n.d.) Introduction to Operations Management under a Creative Commons Attribution-NonCommercial-ShareAlike License 4.0.

Multimodal/Intermodal Shipping

This refers to the use of a combination of different types of transportation to move goods from origin to destination. A common example is a combination of truck/ship/train. The goal is to ship the goods as efficiently as possible. The goods are shipped under a single contract with a carrier, and can be easily tracked. It also uses several modes of transportation but also uses a container so that freight does not have to be handled each time it changes modes. Each mode will have a carrier responsible for the shipment. The use of containers increases the security, reduces loss and damage and increases the speed of shipment (Faramarzi & Drane, n.d.).

Figure 4.1
Transportation Modes

Note. From Faramarzi & Drane, n.d. CC BY-NC-SA 4.0.[Image description].

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Identify different modes of transportation and their characteristics.

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There are many criteria by which the mode of freight transportation will be chosen. It depends on the distance, value, availability of services, freight rates, characteristics of goods, budget, cost of transport, reliability, safety, urgency, carrier timing, etc. A critical decision for companies is to choose the suitable carrier to transport. Companies need to select the proper mode of transportation, which plays a vital role in supply chains. Urgent air shipping may be reasonable for expensive, small, and light goods. Air carriers charge by a combination of the weight and size of the shipment. This mode of transport is generally used when speed is more important than cost. Shipping by air is very reliable.