Page 185 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes Shippers and Consignees

The shipper and consignee have the common objective of moving goods from origin to
destination within a prescribed time at the lowest cost. Services include specified pickup and
delivery times, predictable transit time, zero loss and damage, as well as accurate and timely
exchange of information and invoicing.

Carriers

The carrier, as the intermediary, takes a somewhat different perspective. Carriers desire to
maximize their revenue associated with the transaction while minimizing the costs necessary to
complete the transaction. The perspective suggests that a carrier wants to charge the highest rate
that the shipper (or consignee) will accept and minimize the labour, fuel, and vehicle costs
required to move the goods. To achieve this objective, the carrier desires flexibility in pickup
and delivery times to allow individual loads to be consolidated into economic moves.

Government

The government maintains a high interest level in the transaction because of transportation’s
impact on the economy. Government desires a stable and efficient transportation environment
to sustain economic growth. Transportation enables the efficient movement of products to
markets throughout the country and thus promotes product availability at a reasonable cost.
The situation in the Soviet Union prior to its break-up demonstrates the impact of an inadequate
transportation system. Although not he only reason, the transportation system was a contributing
factor in the Soviet economy’s inability to supply food to the market even though adequate
production existed.
A stable and efficient commercial economy requires that carriers offer competitive services
while operating profitably. Many governments are more involved with carrier activities and
practices than with other commercial enterprises. Involvement may take the form of regulation,
promotion, or ownership. Governments regulate carriers by restricting the markets they can
service or by setting the prices they can charge. Governments promote carriers by supporting
research and development or by providing rights-of-way such as roadways or air traffic control
systems. In countries like the United Kingdom or Germany, some carriers are owned by the
government, which maintains absolute control over markets, services, and rates. Such control
allows government to have a major influence on the economic success of regions, industries, or
firms.

Public

The final participant, the public, is concerned with transportation accessibility, expense, and
effectiveness, as well as environmental and safety standards. The public ultimately determines
the need for transportation by demanding goods from around the world at reasonable prices.
While minimizing transportation cost is important to consumers, trade-offs associated with
environmental and safety standards also require consideration. The effects of air pollution and
oil spills remain a significant transportation issue even though there have been tremendous
strides in pollution reduction and consumer safety during the past two decades. The cost of
reducing the risk of environmental or vehicle accidents is passed on to consumers, who must
collectively judge how much safety is necessary.
The transportation relationship is complex because of the interaction between the parties. This
leads to frequent conflicts between parties with micro interest shippers, consignees, and carriers
– as well as parties with a macro interest – government and the public. These conflicts have led
to duplication, regulation, and restrictions of transportation services.

180 LOVELY PROFESSIONAL UNIVERSITY