Page 191 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes 8.6 Transport Service

Transportation service is achieved by combining the capabilities of modes. Prior to deregulation
government policy limited carriers to operating in a single mode. Such restrictive ownership
sought to promote competition between modes and limit the potential for monopoly practices.
Following deregulation carriers were free to develop integrated modal services in efforts to
more efficiently and effectively meet the needs of customers. The following section reviews the
current range of services offered by different carriers. The description also includes examples of
carriers, representative of each category.
The selection of a suitable mode of transport to provide an effective transport service to the
customer is an important aspect of transport operations. The modes and specific operations of
transporting passengers are explored, the logistics regarding passenger tickets, passenger
belongings and claims and refunds to passengers are investigated to ensure smooth performance
of all activities and safe operations when dealing with the transportation of passengers.

8.6.1 Traditional Carriers

The most basic carrier type is a transportation firm that provides service utilizing only one of
the five basic transport modes. Focus on a single operational mode permits a carrier to become
highly specialized. Although single-mode operators are able to offer extremely efficient transport,
such specialization creates difficulties for a shipper who desires intermodal transport solutions
because it requires negotiation and business planning with multiple carriers.

Example: Airlines are an example of a single-mode carrier for both freight and passenger
service that traditionally limits service from airport to airport. Since deregulation most carriers
are developing services that facilitate multimodal integration.

8.6.2 Package Service

Over the past several decades, a serious problem existed in the availability of small shipment
transportation. It was difficult for common carriers to provide reasonably priced small-shipment
service due to overhead cost associated with terminal and linehaul operations. This overhead
forced motor carriers to charge a minimum charge. The minimum was generally in the range of
$100, regardless of shipment size or distance.

Due to the minimum charge and lack of alternatives, an opportunity existed for companies
offering specialized service to enter the smalI-shipment or package-service market.
Package services represent an important part of logistics, and the influence of carriers in this
segment is increasing due to their size and intermodal capabilities. The advent of e-commerce
and the need for consumer-direct fulfilment have significantly increased demand for package
delivery. While package services are expanding, the services required do not fall neatly into the
traditional modal classification scheme. Packages are regularly transported using the line-haul
services of rail, motor, and air. Package service provides both regular and premium services.

8.6.3 Intermodal Transportation

Intermodal transportation combines two or more modes to take advantage of the inherent
economies of each and thus provide an integrated service at lower total cost. Many efforts have
been made over the years to integrate different transportation modes. Initial attempts at modal
coordination trace back to the early 1920s, but during that early period, cooperation was

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