Have You Chosen The Right Mode Of Transportation

Today, relying on the Internet, online services and offline experience and modern logistics are deeply integrated with fierce market competition, so that enterprises’ requirements for logistics speed and transportation cost are constantly increasing.

Therefore, choosing the right logistics method can enable enterprises to balance between transportation timeliness and cost. 

On the premise of meeting customer requirements, minimize cost expenditures and create competitive advantages for enterprises.

The modes of transport of modern logistics are mainly divided into six kinds: water transport, railway transport, road transport, air transport, pipeline transport and multi modal transport.

There are six common modes of transportation in logistics:

一、Water Transportation

Waterways are divided into Marine transport and inland waterway transport.

Ocean shipping is the use of container ships or other types of ocean-going vessels to carry goods over long distances on the ocean.

Inland river transport refers to the use of medium and small vessels in inland rivers, lakes and other waterways for transport.

Waterways, as natural resources, are usually maintained and controlled by the government, so transport companies do not have to bear any capital costs.

However, ships may still have to pay some transportation costs, such as dam and gate fees, while on the water.

Loading and unloading terminals are usually operated by the government or private companies, so there is a fee to stack and move goods on the docks.

These costs will be paid by the transport company, passed on to the customer.

Therefore, the main cost of capital for transport companies is to hold or rent ships.

Because of the large volume of goods shipped by sea, these capital costs are low on a per-shipment basis.

Water transportation is a cost – saving option, although it adds a lot of time.

However, water transport is only suitable for cases where both the shipper and the consignee are located in a port or waterway, otherwise other short distance means of transport need to be added as a link.

The advantages of water transportation

1. Low input cost
2. Free or cheap road fare
3. Suitable for low – cost, large – volume cargo transport

Disadvantages of water transportation

1. slow speed
2. Port and dam charges are required
3. High carrying cost (The longer the journey time, the higher the inventory carrying cost)
4. Need to rely on forecast to estimate arrival time
5. Low flexibility

二、Rail Transportation

Rail transportation is also a low-cost means of transportation.

A locomotive plus a group of train personnel, can transport dozens or even 100 cars of goods (China’s Daqin coal line can even reach more than 200).

The huge amount of cargo transportation greatly apportioned the transportation cost.

Unlike water transport, which utilizes natural resources, railways have high capital input and maintenance costs.

If there is not enough traffic, the railway cannot operate.

Therefore, railways are suitable for transporting solid, high-volume, low-value goods.

However, one of the biggest problems in railway transportation is delays, such as the avoidance of traffic due to multiple trains passing on the same track.

In Europe, train traffic is often delayed due to the difference in gauge between different countries (e.g. Spain).

Unless the location of both shipper and consignee is connected to the railroad tracks, other modes of transportation need to be added to connect local pickup and delivery.

The advantages of railway transportation

1. Low cost of rail transportation.
2. Long-distance transport is faster.
3. Suitable for solid and durable, high volume, low value goods.

Disadvantages of railway transportation

1. High input and maintenance costs; Routes with insufficient traffic will be shut down.
2. Delayed transportation.
3. Gauge differences may exist in cross-border railway transport.
4. Additional pick-up and delivery charges.

三、Road Transportation

It mainly uses automobiles, or other special vehicles to carry out transportation on the highway.

Roads are built and maintained by governments, and such fees are usually collected in the form of taxes, rather than directly from freight companies.

Transport companies or businesses buy or lease transport vehicles, which require very low capital investment compared to ships and trains. The main cost of road transport is labor (driver’s salary), fuel and vehicle wear and tear.

Therefore, for short distance, small volume freight, road transport is faster, more affordable, more flexible, and can reach areas difficult to reach by water and rail. 

But for long distance transportation, the cost of road transportation is higher than that of water and rail transportation.

Advantages of road transportation

1. Fast and affordable.
2. Flexible, point-to-point transportation.
3. Low capital investment (roads built by the government).
4. Suitable for small quantity and multi-point transportation.

Disadvantages of road transportation

1. LCL (LTL – non FCL transport) costs more.
2. The cost of long-distance transportation is higher than that of water and rail transportation.
3. Road transfer fees (e.g. expressway, bridge tolls, etc.) are payable.

四、Air Transportation

The main cost of air transportation comes from fuel, navigation and airport management fees.

Although the airport is funded by the government, the management and maintenance costs of airport operators are very high.

That’s why, when we buy a plane ticket, a large portion of the cost goes to airport construction fees and fuel surcharges.

Despite its high cost, air freight is used to transport urgent, high-value, lightweight, perishable cargo.

In some specific industries, air transportation is the main mode of transportation.

In some industries, the cost of air freight will be directly passed on to customers.

For example, SF Express  offers faster delivery by charging higher freight rates for next-day delivery.

Advantages of air transportation

1. Very fast speed, greatly shorten the delivery time.
2. Low carrying cost.
3. Reduce safety stock (safety stock level can be lowered if delivery time is shortened).
4. Suitable for light weight, high value, urgent cargo.
5. No need for excessive packaging (low risk of damage).

Disadvantages of air transportation

1. Expensive.
2. The goods are limited in size and weight.
3. High capital investment.

There needs to be an airport suitable for taking off and landing.

Each mode of transportation has its own advantages and disadvantages, enterprises need to choose the most suitable mode of transportation according to the characteristics of their own goods, transportation routes, delivery requirements and other factors.

With the development of globalization and the popularity of e-commerce, International Multi modal Transport has become the mainstream mode of transportation at this stage.

Through the combination of various transportation tools, fast, economic and accurate transportation can be achieved.