SorbonneParis IV

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• Sorbonne-Paris IV
• 4th May 2007
• Lecture
• INTERNATIONAL LOGISTICS
  TRANSPORTATION
• By
• Dr L. Boukersi
• Principal Lecture in International
  Marketing
• London South Bank University

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INTERNATIONAL LOGISTICS TRANSPORTATION

• SECTION 1
• TRANSPORT IN CONTEXT
• SECTION 2
• DIMENSIONS OF TRANSPORT
• SECTION 3
• STRATEGIC ASPECTS OF
• INTERNATIONAL TRANSPORT

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• SECTION 1
• TRANSPORT IN CONTEXT

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• Marketing Mix

Product
MARKETING MIX
Promotion
Price
Distribution
Transport
Channel Strategy
Logistics Strategy
Inventory
Location
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International supply chain
Store
Use/consume
Move
Move
Market (Europe)
Make
Plant (China)
Information flow
Move
Move
Store
Mine (India)
Transport
Warehouse
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• Logistics is the process of planning,
  implementing and controlling the efficient and
  cost-effective flow/movement and storage of raw
  materials, in-process inventory, finished goods
  and related information from point of origin to
  point of consumption for the purpose of meeting
  customer service requirements.
• Logistics management is more specifically focused
  on providing product
• through
  physical move

transport
punctuality
inventory
availability
through storage
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• Advances in transportation and
  telecommunications technologies have
• contributed to the rapid growth of
  international trade and helped to overcome
• the resistance of space and time.

1500-1850
1850-1930
1950s 1960s-to date
Average speed
Average speed Average speed
Large jet Aircraft of
sailing ship was of steam
locomotive of propeller
average speed 10mph (16
km/h) was 65mph and
aircraft
500-700 mph
steamship 36mph
300-400mph
(800-1120Km/h) (58 km/h)
(480-640 km/h)


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A countrys Logistics Cost reflects its
Economic Development
Agriculture
Mining
Industry
Services
Information
Argentina
Poland
Brazil
Kenya
Ukraine
Belgium
Canada
Logistics Costs / GNP
Japan
United States
Singapore
Economic Development
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Ten Largest Global Logistics Service Providers,
1998
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• SECTION 2
• DIMENSIONS OF TRANSPORT

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• .

(i)
(ii)
(iii)
The Way (or Mode)
The Vehicle
The terminal
. Ship/Vessel . Barge . Aircraft . Road
trailer . Locomotive
a) Natural . Water (seas rivers) . Air b)
Man-Made . Road . Rail . Pipeline c) Hybrid .
Canal
.Seaport . Airport . Distribution Centre
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• (i) International Air Transport
• The youngest and the most rapidly growing.
• Accounts for around 1 in volume and
• 20-30 in value of total world trade
• Rapid growth, requires high capital investment.
• Divided in 3 sectors
• - Express (FedEx, TNT, UPS, DHL)
• - Special commodities (perishables, live
  animals, hazardous products)
• - Traditional Air Cargo (moving in containers
  or pallets)
• High speed, quick transits, reliable and low
  risk of damage for sensitive items
• Limited capacity, very costly, subject to
  competition not suitable for all goods and
  vulnerable to climatic conditions

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• Frankfurt is the largest air freight
  transshipment site in Europe

• 25 780 m² freight shipment Hall (Lufthansa
  Cargo
• Centre)
• Handles 700 000 tonnes per year
• 6000 shipment per day
• Operated by Lufthansa

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• (ii) International Sea Transport
• High-capital investment
• Low-cost mode because of large capacity shipment
• Accounts for 98 of world trade in volume and 10
  in value.
• Types of ships
• - Liners (scheduled regular services between
  ports)
• - Tramps (operate in all parts of the world in
  primarily bulk cargo coal, grain, timber,
  sugar, fertilizers...)
• - Specialised Vessels ( 22 types)
• Can ship large volume at low cost and offer more
  opportunities for consolidation.
• Very slow, routes and timetables not usually
  flexible

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• Port of Rotterdam

• The port industrial area stretches over a
  length of 40km and covers
• 10,000 hectares
• More than 500 scheduled services link Rotterdam
  with over 1000 ports
• Around 370 million tonnes handled in 2005
• The European market is accessible from Rotterdam
  via all modes of transport
• Rotterdam is an excellent hub for multimodal
  shipping hence its name gateway
• to Europe.
• The 5 largest oil firms (Shell, BP, Esso, Kuwait
  Petroleum Texaco) have
• refineries there).

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• (iii) International Rail Transport
• One of the oldest modes that acted as a catalyst
  to economic development in industrialised
  countries
• Experienced rapid growth in the last 20 years.
• Efficient way to move goods inland
• Provides fast links, safe and environmentally
  friendly
• Dependent on available fixed routes and
  timetables hence, not flexible.
• Subject to mechanical breakdowns and industrial
  actions

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• (iv) International Road Transport
• Requires low-capital investment as it can be
  provided in-house
• Experienced tremendous growth in the last 2
  decades
• Relatively low cost and efficient transit time
• Provides door-to- door delivery
• Very flexible as suitable alternative routes can
  be found, if need be.
• Very competitive within certain distance bands
• Low capacity as only small consignments can be
  moved.
• Time consuming on long distance bands
• Subject to high toll charges, restrictive
  regulations and
• traffic congestions in some countries
• Accounts for almost 70 of cargo shipped within
  Europe.

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• (v) Canals and Inland Water Transport
• Low-cost mode of transport but slow
• Europe possesses 36,000 km of waterways
• In Europe, only 6 of freight traffic are carried
  out by inland whereas 12 in the US.
• 40 of Netherland freight traffic is carried by
  inland waterways shipping
• Though it can accommodate high freight capacity,
  this mode is not yet fully exploited in Europe.
• The completion of the canal joining the Rhine and
  the Danube (RMD), in 1992, opened up a 3500km
  cheap inland waterways route between the North
  Sea and the Black Sea

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• (vi) MULTIMODAL TRANSPORTATION
• There are 10 inter-modal service combinations of
  which the mostly used are
• - rail-truck (piggyback),
• - truck-water (fishback) and
• - sea-air (international transport).
• For example Sea-Air concept refers to
  transferring cargo from ships deck to aircraft
  take-off (in less than 5 hours).
• The purpose of multimodal combination is to
  reduce cost and achieve speedy delivery on long
  distance hauls.
• Piggyback or trailer on flatcat (TOFC) offers
  convenience and flexibility of trucking with
  long-haul cost efficiency of rail.
• This form is the most widely used between the UK
  and the continental Europe especially after the
  completion of the Channel Tunnel.

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• The desire to achieve the dual objectives of cost
  reduction and speedy delivery has also spurred on
  the construction of multimodal hubs, with
  significant infrastructure investments, in some
  strategic locations such as Dubai, Hong Kong,
  Seattle, Amsterdam, Frankfurt .
• For example, in Dubai, the integration of the
  airport and seaport has enabled a volume of more
  than 100,000 tonnes to be converted annually from
  sea to air transport.
• Amsterdam Airport Schiphol is a true gateway to
  Europe as most of the European cities are within
  300-mile radius and 95 of Europe can be reached
  by road (truck) within 24 hours.
• Amsterdam Airport is a unique multimodal hub as
  it provides a combination of air, road, rail
  and water links.
• The Port of Amsterdam is the 5th largest in North
  Western Europe in terms of transhipment tonnage,
  is located within a 40 mile radius from Schiphol.

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• Hong Kong International Airport Multimodal Hub
  and Gateway to China Far East

• Airport seaport fully integrated hence, its
  position as the worlds premier hub
• Worlds busiest international air cargo with 3.4
  million tonnes of cargo handled
• through it annually.
• 40 million passengers passed through it in 2005
• Its core values Safety, security, efficiency
  and excellence

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Lille as Regional Multimodal Hub

• Road transport over 550 kilometres of highways
  linked directly into the pan-European road system
  
• Frances densest rail network, offering an
  efficient freight and passenger-transport
  alternative with 1,512 km of rail track and 122
  local freight stations
• High-speed rail service Lille is at the heart of
  the TGV network serving Northern Europe
• Direct rail link to the UK via the Channel Tunnel
  
• High-performance inland waterway network serving
  Northern Europe (680 km / 422 miles of canals).
• Seven seaports in the immediate vicinity
  Rotterdam, Antwerp, Felixstowe, Le Havre,
  Dunkirk, Calais and Boulogne sur mer
• Rail and waterways links with main ports in
  Northern Europe complete forwarding service
  combining inland transport by barge and the
  shipping feeder

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Market Share by Freight Transport Mode,
1980-2000
United States (tonnes-mile)
Europe (tonnes-km)
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• SECTION 3
• STRATEGIC ASPECTS OF
• INTERNATIONAL TRANSPORT

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• Transport Decisions

- Mode selection - Vehicle Routing -Vehicle
scheduling - Shipment consolidation
Transport Decisions
Xi
Yi
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• (i) Mode selection

Efficiency (cost)
Mode Selection
Depends
Responsiveness (Speed Reliability)

• The mode selection is determined by the
  fundamental trade-off between
• the cost of transporting a given product
  (efficiency) and the speed/reliability with
• which the product is transported
  (responsiveness).
• Fast modes are costly but very responsive and
  slower modes are less costly but
• not responsive.
• If no competitive mode is identified, the
  relative cost of inventory is taken into
• consideration as fast modes incur less
  inventory costs and slower modes high
• inventory costs

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Total Logistics Costs Trade-off
Total Logistics Costs
Costs
Transport Costs
Inventory Costs
Sea
Road
Rail
Air
speed/reliability
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Changes in the Relative Importance of Logistical
Functions in Distribution Systems
Responsiveness
Cost reduction
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• (ii) Vehicle Routing
• This refers to finding the best paths that a
  vehicle should follow (e.g. a network of roads,
  rail lines, shipping lanes, air navigational
  routes) in order to minimise time or distance
• (iii) Vehicle scheduling
• Vehicle scheduling is a very complex extension
  of the vehicle routing, which is subject to a
  large number of regulatory restrictions.
• (iv) Shipment consolidation
• With transportation, it costs less on per-weight
  basis to move larger quantities because of the
  existence of fixed costs which remain the same
  irrespective of shipment sizes.
• Traffic managers always try to consolidate large
  numbers of small shipments into a small number of
  large shipments.

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SHIPMENT CONSOLIDATION
Small Shipments
Large Shipments
Destinations
London Glasgow
Oslo Stockholm
Small number
Large number
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Conclusion

• The two major benefits of international
  transportation are
• (i) Enhance business competitiveness
• Progress in transportation has contributing to
  the separation between markets and production
  sites. As a result, international transportation
  enabled production to exploit location
  advantages hence competitiveness enhancement
• (iii) Better living standards
• Rapid international shipments at reasonable
  prices have place seasonal products in markets
  that would have not otherwise been available
  hence better consumer choice at lower prices

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• Thank you
• for your kind attention