What are the seven economic drivers? Briefly explain each

What are the seven economic drivers? Briefly explain each.

Distance, Weight, Density, Stowability, Handling, Liability, and Market

Distance- distance is a major influence on transportation cost because it directly contributes to variable expense, such as labor, fuel, and maintenance.

Weight- the transport cost per unit of weight decreases as load size increases. Small loads should be consolidated into larger loads in order to maximize scale economics.

Density- density is the combination of weight and volume. Both weight and volume are important since transportation cost for any movement is most of the time quoted in dollars per unit of weight.

Stow ability- stow ability refers to how product dimensions fit into transportation equipment. Different sizes and shapes, as well as large size or length may not fit well in transportation equipment, which will result in wasted capacity.

Handling- certain handling equipment may be needed to load and unload trucks, railcars, or ships. Products being grouped together in boxes and pallets will impact handling costs.

Liability- this includes product characteristics that can result in damage. Carriers must either have insurance to protect against potential damage of accept financial responsibility.

Market- market factors such as lane volume and balance influence transportation cost. Since transportation vehicles and drivers usually return to their origin, they must either find a backhaul load or the vehicle is returned or deadheaded empty. When a truck is returned empty maintenance, fuel, and labor costs must still be charged.

Describe the five modes of transportation, identifying the most significant characteristic of each

Describe the five modes of transportation, identifying the most significant characteristic of each.

Rail, Highway, Water, Pipeline, and Air

Rail-Railroads have handled the largest number of ton-miles in the United States to this day. A ton-mile is the standard measure of freight activity. The capability to efficiently transport large tonnage over long distances is the main and most important reason railroads continue to handle significant intercity tonnage.

Highway- Highway transportation has grown fast since the end of World War II. This growth has resulted from the ability to operate door to door. Trucks are very flexible because of the ability to operate on many different roadways. Almost one million miles of highway are available to trucks. Trucks have a small fixed investment in terminal facilities and operate on publicly financed and maintained roads.

Water- Water is the oldest mode of transportation. The main advantage of water transport is the capacity to transport extremely large shipments. Water transport ranks between rail and highway carrier in terms of fixed cost.

Pipeline- Pipelines account for nearly 70% of all crude and petroleum ton-mile movements. Natural gas is also transported using a pipeline system. Pipelines operate on a 24 hour basis and there is no empty container or vehicle that has to be returned at the end of the day. The fixed costs are high but the variable costs are the lowest out of all the modes of transportation.

Air- Air is the newest but least utilized mode of transportation. The most significant advantage of airfreight lies in the speed with which a shipment can be transported. Air shipment can be done in hours while the other modes of transportation may take days.

Railroads have the largest percentage of intercity freight ton-miles, but motor carriers have the largest revenue. How do you explain this relationship?

Railroads have the largest percentage of intercity freight ton-miles, but motor carriers have the largest revenue. How do you explain this relationship?

While Railroads have the largest percentage of intercity freight-ton miles, this does not necessarily mean that they would have the largest revenue. While the railroads are hauling a greater amount of goods the costs associated with railway transportation are less expensive per freight ton compared to motor carriers. This can be attributed to the fact that the trains can carry larger loads and that the trucks are able to take good directly to their destinations. So while the trains are carrying more goods, the motor carriers are still able to generate a greater revenue due to the fact that they are more versatile, even with smaller loads. This is especially true for intercity travel because the trucks can be quicker and more efficient than the railways in shorter distances.

Illustrate the relationship between the size and shape of a distribution warehouse and the materials handling system

Illustrate the relationship between the size and shape of a distribution warehouse and the materials handling system. Why do some warehouses have square design while others are rectangular?

Materials handling systems are the basic driver for warehouse design. Warehouses are designed to facilitate efficient product flow, and that is why the materials handling system must be selected early in the warehouse development. The size and shape of the warehouse has to mend around the needs of the product flow, making it as efficient as possible. If the warehouse is too big, it can be a waste of money and time. If it is the wrong shape, it could cause a bottleneck of products or it could cause confusion among workers. A perfect harmony is needed between the shape, size, and materials handling system.

Square warehouses are believed to have overall efficiency. They limit the distance that pickers have to travel to find their order. The rectangle uses a continuous towline, which minimizes inbound movement.