Logistics, Trade Administration and Supply Chain

By Robert Bowman It wasn't as if it was a huge surprise. Rumors that Hanjin was financially imperiled extended back to 2013. The Korean line sought to restructure its debt in April of last year, then submitted a last-ditch liquidity plan in August for raising an additional $450m. At the time, Hanjin expressed optimism that it could come to terms with creditors while remaining in business. But the Korean government refused to bail out the carrier, the plan was rejected, and Hanjin went into receivership on Sept. 1. Then, on Feb. 17 of this year, a South Korean court declared Hanjin bankrupt, ordering liquidation of its assets. Hanjin left a huge mess to be sorted out. It had 89 ships in service and was involved in some two dozen alliances or vessel-sharing arrangements (VSAs) with carrier partners. Huge amounts of money were owed to terminals, crewmembers and supporting vendors, with total outstanding debt of approximately $6bn. It could take years for them to recover even a fra...

To date, pipeline transportation offers a very limited range of services and capabilities. The most economically feasible products to move by pipeline are crude oil and refine petroleum products. However, there are some experimentation with moving solid products suspended in liquid referred to as slurry or containing the solid products in cylinders that in turn move in a liquid within the pipe. If these innovations prove to be economical, pipeline service could be greatly expanded. Early experience with coal suspended in liquid has not been favourable because pipes have eroded. Product movement by pipeline is very slow, only about three to four miles per hour. This slowness is tempered by the fact that products move 24 hours a day, 7 days a week. This makes the effective speed much greater when compared with other modes. Pipelines capacity is high, considering that a 3 mph flow in a 12 inch diameter pipe can move 89,000 gallons per hour. Concerning transit time, pipeline service...

Air transportation is being considered by increasing numbers of shippers for regular service, even though air freight rates exceed those of trucking by more than two times and those of rail by more than 16 times. The appeal for air transportation is its unmatched origin to destination speed, especially over long distances. Air service dependability and availability can be rated as good under normal operating conditions. Delivery time variability is low in absolute magnitude, even though air service is quite sensitive to mechanical breakdown, whether conditions and traffic congestions. Variability when compare with average delivery times, can rank air as one of the least reliable modes. The capability of air has been greatly constrained by the physical dimensions of the cargo space in the aircraft and the aircraft's lifting capacity. This is becoming less of a constraint, however, as larger aircraft are put into service. For example, jumbo airplanes such as Boeing 747 and L...

Trucking moves freight with smaller average shipment size than rail. More than half of the shipments by truck are less than 10,000 pounds or LTL volume. The inherent advantages of trucking are its door-to-door [DTD] service, involving no loading or unloading between origin and destination as is often true of rail and air modes; its frequency and availability of service and its DTD speed and convenience. Truck and rail services show some distinct differences, even though they compete for many of the same product shipments. First, in addition to the common and private legal classification of carriers, trucking offers services as contract carrier as well. Contract carriers do not hire themselves out to service all shippers as do common carriers. Shippers enter into a contractual agreement to obtain service that better meets their particular needs and requirements without incurring the capital expense and administrative problems associated with private ownership of a trucking fleet. ...

The railroad is a long hauler and slow mover of raw materials [coal,lumber and chemicals] and of low-valued  manufactured products [food, paper and wood products] and prefers to move shipment sizes of at least a full carload. This relatively slow speed and short car distance travelled in a day reflect the fact that the majority of freight car time is spent on loading and unloading operations, moving from one place to another within terminals, classifying and assembling cars into trains or standing idle during seasonal slump in car demand. Rail service exist in two legal forms, common carrier or privately owned. A common carrier sells its transportation service to all shippers and it is guided by the economic and safety regulations of the appropriate government agencies. In contrast, private carriers are shipper owned with the usual intent of serving only the owner. Because of the limited scope of the private carrier's operations, no economic regulations are needed. Nearly all ...

Transportation usually represents the most important single element in logistics cost for most firms. Freight movement has been observed to absorb between one-third and two-thirds of total logistics costs. Thus, the logistician needs a good understanding of transportation matters. Although a comprehensive discussion of transportation is not possible within the scope of this text, this subject highlights what is essential to the logistician for his or her managerial purpose. The focus is on the facilities and services that make up the transportation system and on the rates [costs] and performance of various transport service that a manager might select. Spefcifically, we wish to examine the characteristics of the transportation service alternatives that lead to optimal performance. It is performance that the user buys from the transportation service. Importance of an Effective Transportation System One needs only to contrast the economies of  developed nation with those of a...

Outdated philosophies may prevent us from recognizing and integrating some of the new ways the warehouse or distribution center (DC) can add real value to our operations. Let’s talk about moving dinosaur thinking into the 21st century. Let’s talk about the evolution of warehousing as a means of adding value to your organization. In another “era,” when I first started out, there were basically only four types of warehousing that were thought to benefit an organization: Storage Warehouse: The use of a facility to stockpile inventory for outbound shipment in a make-to-stock plant environment or where MRO items are held for consumption, repair, and service of plant facilities and equipment. The intention is to have long-term storage. Production Warehouse: The utilization of a facility to hold materials and components for inventory prior to their need in processing, production, or manufacturing. The goal is to level demand. Order Fulfillment DC: A facility that holds inventory to meet cust...

Transportation: Transportation is a very essential part of the logistics system. A major focus in logistics is upon the physical movement or flow of goods or upon the network that moves the product. This network is composed of transportation agencies that provide the service for the firm. The logistics manager is responsible for selecting the mode or modes of transportation used in moving the raw materials and finished goods or for developing private transportation as an alternative. Storage: A second area, which has a trade-off relationship with transportation, is storage or in some circumstances called warehousing. It involves two separate but closely related activities i.e. inventory management and warehousing. A direct relationship exist between transportation and the level of inventory and the number of warehouses required. For instance, if firms use a relatively slow means of transport, they usually have to keep higher inventory levels and usually have more warehousing spa...