1. Modes and Networks Transportation Logistics Spring 2008

2. Distribution systems One to one One to many Many to one Many to many

3. 1-1 Distribution Examples Port to rail head drayage Small in scale and/or scope Decisions: –Shipment frequency –Route (this is typically a function of the network and travel times) –Shipment times

4. 1-1 Distribution Constant demand Trade-off inventory and transportation cost: z=min v {(c h /D’)v+c f /v}, s.t. v<v max c f : fixed transportation cost c h : holding cost v*=sqrt{c f D’/c h }

5. EOQ (economic order quantity) z=min v {Av+B/v+C} v*=sqrt{B/A} z*=2sqrt{AB} If v*>v max use v=v max v* makes both of the terms in the objective function equal (motion cost = holding cost) Why should these be equal?

6. Lot Size problem with Variable Demand D(t) gives cumulative number of items demanded between 0 and t D’(t) is variable demand rate Seek the set of times when shipments are to be received and the shipment sizes that will minimize sum of motion plus holding costs over some time period With an infinite time horizon and constant demand this is the EOQ problem just discussed

7. When holding cost close to rent Variable demand Inventory cost negligible (big, cheap items) Increases with maximum inventory accumulation Recall motion cost independent of shipment sizes and times (only dependent on total amount moved or average) Thus we want to choose times and sizes to minimize holding cost v*= D(t max )/n, all equal minimizes cost cost/time=c r D(t max )/n+c f n/t max, find n by minimizing

8. When rent is negligible Small, expensive items Simple expression cannot be obtained unless D(t) varies slowly with t (CA method) Use numerical solution (e.g. dynamic programming)

9. One to Many Distribution Movement of containers from the port to landside destinations Delivery systems Decisions: –Network structure –Fleet size (VRP and TSP) –Shipment frequency –Use of an intermediate facility (minimizing logistics cost)

10. Many to one distribution Export containers being delivered to a marine port Collection systems The same analytical methods can be used as with one to many distribution Decisions: –Network structure –Fleet size –Shipment frequency –Use of an intermediate facility

11. Many to Many Distribution Global distribution of marine containers Collection and distribution systems Decisions: –Network structure –Coordination of inbound and outbound shipments

12. Many to many distribution The problem can often, and should often, be broken down into pieces –Inbound logistics (many to one) –Outbound logistics (one to many) –Be mindful of who is responsible for cost within the supply chain –Most supply chains are not operated by the same entity –Use terminals to consolidate some of the flow

13. Transportation Modes Rail Air Road Pipeline Water Package Carrier Multi-modal

14. Relative Mode Volumes

15. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Load of the Global Transport System by Mode TonsTons-kmRevenue (2004) Road?6,000 to 8,500 billion tons-km $796 billion Rail8,930 million tons7,773 billion tons-km$330 billion Maritime6,758 million tons (loaded) 6,787 million tons (unloaded) 44,474 billion tons- km $484 billion

16. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Barge Hopper car 100 car train unit Semi-trailer truck 1500 Tons 52,500 Bushels 453,600 Gallons 100 Tons 3,500 Bushels 30,240 Gallons 10,000 Tons 350,000 Bushels 3,024,000 Gallons 26 Tons; 910 Bushels 7,865 Gallons 9,000 for a tanker truck 124 tons Capacity 5 57.7 (865.4 for 15 barges in tow) Truck Equivalency Vehicle 3.8 384.6 1 Post-panamax containership 5,000 TEU 2,116 9,330 VLCC 300,000 tons 2 million barrels of oil 747-400F

17. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Comparison of the Relative Efficiencies of Rail and Trucking in the United States ModeFuel Consumption Infrastructure Capacity CostsSafety Railroad455 ton-miles per gallon 216 million tons per mainline per year 2.7 cents per ton-mile 0.61 fatalities per billion ton- miles; 12.4 incidents per billion ton- miles Trucking105 ton-miles per gallon 37.8 million tons per lane per year 5.0 cents per ton-mile 1.45 fatalities per billion ton- miles; 36.4 incidents per billion ton- miles

18. Rail high fixed costs (land, tracks) low variable costs (operating costs, e.g., labor, fuel) slow, but inexpensive way to transport heavy freight that doesn’t require special handling, long distances two choices in the PNW historically not a market driven industry

19. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Geographical Settings of Rail Lines Penetration Lines Local / Regional Networks Transcontinental Lines Nation A Nation B

20. TypeFunctionExamples Short distance (within a gateway / hub) Modal shift, improved capacity and throughput. Switch carrying, Alameda, “Agile Port”, Panama Hinterland access (between a gateway and its vicinity) Expand market area, reduce distribution costs & congestion Rail shuttles, PIDN, Virginia Inland port Landbridge (between gateways) Long distance container flows, continuity of global commodity chains North American landbridge Circum- hemispheric (between gateways with a maritime segment) Integrated global transport chains Northern East- West Corridor

21. Ownership of Major North American Rail Lines, 2005 Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use.

22. Capital Expenditures as % of Revenue

23. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Class I Ton-Miles per Route- Mile

24. Highway low fixed costs (government builds, maintains highways) medium-high variable costs (operating costs, e.g., labor, fuel) most accessible mode (more highways than railroads, waterways, pipelines); best for transporting medium to high value products short to moderate distances

25. Highway LTL – less than truckload TL – truckload Specialty Often the only choice for segments of a trip Competitiveness depends on pricing (managing loads and schedules)

26. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Length of the Interstate Highway System, 1959-2006 (in miles)

27. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Cost Structure of Trucking, United States, 2006

28. Water moderate fixed costs (ships and freight handling equipment) low variable costs (operating costs, e.g., labor, fuel) very slow, but inexpensive way to transport large, heavy freight over long distances (e.g., oceans, rivers, inland waterways, lakes) late deregulation Intermodal productivity important

29. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Domains of Maritime Circulation

30. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Types of Maritime Routes Port-to-PortPendulumRound-the-World

31. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Pendulum Services and Cabotage A B C D E F Cabotage Country 1 Country 2 Pendulum Service

32. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Length of the Major Inland Waterway Systems, 2000

33. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Ton-miles Shipped by Maritime Transportation, 1970-2005 (in billions)

34. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Registered World Fleet, 1914- 2000

35. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Operating Costs of Panamax and Post- panamax Containerships (in USD)

36. Air low fixed costs (aircraft and freight handling equipment) highest variable costs (e.g., labor, fuel, maintenance) very fast; used for transporting high value and/or high perishability product over short to medium distances. competitiveness depends on operational skill

37. Pipeline highest fixed costs (right of way & construction costs of equipment) lowest variable costs (no significant labor or fuel costs) slow, but dependable (e.g., no weather, traffic disruptions); no flexibility with regard to types of products that can be transported – must be liquid (e.g., petroleum) single origin stable, large flows

38. Copyright © 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. Oil and Gas Pipelines Mileage in the United States, 1960-2004

39. Multimodal Carrier Good intermodal connections All modes Emerged as package delivery, e-business now 3PL providers Consolidation important Many are service rather than cost oriented –Have been leaders in developing IT solutions Deregulation