Transport Management

Definition

Transport or transportation is the movement of people and goods from one location to another. Transport is performed by various modes, such as air, rail, road, water, cable, pipeline and space.

Transportation is an essential ingredient in the economic development.

Carriage costs

There are two types of costs involve in transportation

Fixed Cost

Costs that do not change with the volume of goods carried.

Example: Purchase cost of vehicle owned by the carrier.

Variable cost

Costs that change due to operation costs such as fuel, maintenances, and driver’s wages is referred as variable costs or operating costs.

Mode of transport

Various modes of transport

Rail Transport

Rail is a mode of transport with large capital investment.

Carry large volumes of bulky goods over long distances.

Rail service is cheaper than road transport for large quantities such as grain, potash, and coal etc., moved over long distance.

Road Transport

Road transport can provide door-to-door delivery when road condition is good.

Carry small volume of goods to certain distance.

In Road transport, most of their costs are operating in nature.

Air Transport

Air transport can provide speed of service over long distance.

Normally, carry low-weight cargo with high value or for emergency items.

Cost is higher than for other modes and costs are mainly variable.

Water Transport

Ships are slow and carry large volume of goods.

Operating cost are low and useful low-value, bulky cargo over long distance.

Pipelines

Pipelines are one of the modes of the transport for moving gas, oil and refined products.

Capital costs are high and operating costs are very low.

Four basic cost elements in transportation

Line haul

Line haul costs are incurred in transporting goods over a route but not including costs of loading and unloading.

Line-haul costs vary directly with distance.

Pickup and delivery

Similar to Line-haul costs except that the cost depends more on time spent than on the distance travelled.

Terminal handling

No of times a shipment must be loaded handled and unloaded.

Billing and collecting

Paper work or invoice made out at every time of shipment.