Freight Transport Management Notes

Module 1
Transport Function
Transport Functionality
Transportation is the process of moving people, goods, or services from one
place to another. It serves several key functions

1. Accessibility Transportation facilitates access to goods, services,

employment, and social activities by connecting different locations.
2. Mobility It enables the movement of people and goods, supporting economic
activities, trade, and tourism.
3. Logistics Transportation is a critical component of supply chain management,
ensuring the efficient flow of goods from suppliers to consumers.
4. Connectivity It links producers, consumers, markets, and distribution centers,
facilitating trade and commerce.
5. Distribution Transportation helps distribute goods from manufacturers to
retailers and end-users, supporting retail operations and consumer demand.

Transport Structure and Classification

Transportation systems can be classified based on various criteria, including
mode, infrastructure, and purpose

1. Mode of Transport Different modes include rail, water, pipeline, air, and
motor carriers.
2. Infrastructure Transportation infrastructure comprises roads, railways, ports,
airports, and terminals.
3. Purpose Transport can be categorized as passenger transport, freight
transport, or a combination of both.

Principles and Participants

1. Efficiency Transportation systems aim to maximize the movement of people
and goods while minimizing costs and time.
2. Safety Safety measures and regulations are implemented to protect
passengers, workers, and cargo during transportation.
3. Sustainability Increasing focus on environmental sustainability drives efforts
to reduce carbon emissions, improve fuel efficiency, and promote eco-friendly
transport modes.
4. Accessibility Transport systems should provide equitable access to all
individuals and communities, regardless of geographic location or
socioeconomic status.
5. Integration Effective coordination and integration of different transport
modes and services enhance connectivity and efficiency.

Transport Services

1. Traditional Carriers Conventional carriers such as railways, shipping lines,

and trucking companies provide transportation services for passengers and
cargo.
2. Package Service Package delivery services specialize in transporting small
parcels and packages, offering door-to-door delivery and tracking capabilities.
3. Ground Package Service Ground package services utilize trucks and vans for
local and regional delivery of packages and parcels.
4. Air Package Service Air freight carriers transport cargo via airplanes, offering
fast delivery for time-sensitive shipments.

Intermodal Transportation

Intermodal transportation involves the use of multiple modes of transport within

a single journey. Key intermodal transport methods include

1. Piggyback (TOFC - Trailer on Flatcar) Trucks or trailers are loaded onto rail
flatcars for long-distance transport.
2. COFC (Container on Flatcar) Containers are loaded directly onto rail flatcars
for efficient rail transport.
3. Containerships Large vessels equipped with standardized containers carry
cargo across oceans and seas.
4. Non-operating Intermediaries Third-party logistics providers facilitate
intermodal transport by coordinating shipments and managing logistics
operations.

Modes of Transport

1. Rail Rail transport utilizes trains and railways for the movement of
passengers and freight over land.
2. Water Water transport includes shipping by sea, rivers, and canals, using
vessels such as ships, barges, and boats.
3. Pipeline Pipelines transport liquids, gases, and solids through pipes, primarily
for the distribution of oil, gas, and water.
4. Air Air transport involves the movement of passengers and cargo by aircraft,
providing fast and long-distance transportation.
5. Motor Carriers Motor carriers, including trucks, vans, and buses, transport
passengers and freight over roads and highways.

Module 2
Transport Economics
The Structure of Transport Costs and Location of Economic Activities
- Transport costs play a crucial role in determining the location of economic
activities.
- High transport costs can deter firms from locating in remote areas or distant
markets.
- Conversely, efficient and affordable transport infrastructure can facilitate
economic development and attract businesses to specific locations.
Demand for Transport
- Transport demand is influenced by factors such as population density,
economic activity, urbanization, and consumer preferences.
- As economic activities and population grow, the demand for transport services
also increases.
- Demand for transport is elastic, meaning that changes in prices, incomes, or
other factors can significantly affect the quantity demanded.

Models of Freight and Passenger Demand

1. Freight Demand Models Predict the quantity and patterns of freight
movements between origins and destinations.
2. Passenger Demand Models Estimate the volume and characteristics of
passenger travel, including mode choice, trip frequency, and travel behavior.

Model Choice
- Choosing the appropriate transport demand model depends on factors such as
the scale of analysis, data availability, and the specific objectives of the study.
- Models may range from simple statistical models to complex mathematical
simulations, depending on the level of detail required and the resources
available.

Cost Functions in the Transport Sector

- Cost functions in the transport sector capture the relationship between inputs
(e.g., labor, fuel, capital) and outputs (e.g., distance traveled, passengers
transported).
- Common cost functions include total cost, average cost, marginal cost, and
economies of scale.
- Cost functions are essential for assessing the efficiency and viability of
transport infrastructure and services.

Special Problems of Individual Modes of Transport

- Each mode of transport faces unique challenges and constraints, including
- Road Transport Traffic congestion, road maintenance, and environmental
pollution.
- Rail Transport Infrastructure maintenance, capacity constraints, and
competition with other modes.
- Water Transport Dredging, port congestion, and vulnerability to weather
conditions.
- Air Transport Air traffic congestion, airport capacity, and safety concerns.
- Pipeline Transport Pipeline maintenance, leakage, and vulnerability to
sabotage or accidents.

Intermodal Coordination in the Indian Situation

- Intermodal transportation involves the seamless movement of goods or
passengers across different modes of transport.
- In India, intermodal coordination faces challenges such as inadequate
infrastructure, fragmented logistics networks, and regulatory barriers.
- Efforts to improve intermodal coordination include investments in multimodal
transport hubs, integration of transport services, and policy reforms to promote
seamless logistics operations.
- Initiatives like the Dedicated Freight Corridors (DFCs) aim to enhance
intermodal connectivity and efficiency by linking key industrial and
consumption centers through dedicated rail corridors.

Module 3
Transport Administration
Operations Management
- Operations management involves overseeing the processes and activities that
create goods and services within an organization.
- It includes planning, organizing, coordinating, and controlling resources to
achieve efficient and effective production or service delivery.
Consolidation
- Consolidation refers to the process of combining multiple shipments or orders
into a single shipment or delivery.
- It helps reduce transportation costs, improve efficiency, and optimize
inventory management by minimizing empty space and maximizing load
capacity.

Negotiation
- Negotiation is the process of reaching agreements or settlements through
discussion and compromise between parties.
- In operations management, negotiation occurs with suppliers, vendors,
partners, and customers to establish terms, prices, delivery schedules, and other
contractual agreements.

Control
- Control involves monitoring, evaluating, and regulating processes and
activities to ensure they align with organizational goals and standards.
- It includes setting performance targets, measuring actual performance,
identifying deviations, and implementing corrective actions as needed.

Auditing and Claim Administration

- Auditing involves examining and assessing operations, processes, and
financial records to ensure compliance with regulations, standards, and best
practices.
- Claim administration involves managing claims and disputes related to
contracts, agreements, or transactions, including processing claims,
investigating discrepancies, and resolving disputes through negotiation or
arbitration.

Logistical Integration
- Logistical integration refers to the seamless coordination and integration of
various logistical functions and activities within a supply chain or organization.
- It involves aligning transportation, inventory management, warehousing,
procurement, and distribution activities to optimize efficiency, reduce costs, and
improve customer service.
- Logistical integration facilitates the flow of materials, information, and
resources across the entire supply chain, from suppliers to customers, to meet
demand and deliver value effectively.

Module 4
Transport Documentation
Transport Documents

1. Delivery Order A document issued by a carrier or shipping agent authorizing

the release of goods to the consignee or their authorized representative upon
arrival at the destination port or terminal.

2. Dock Receipt A receipt issued by the carrier or its agent upon receiving goods
at the dock or terminal for shipment, serving as evidence of receipt and
acknowledging the condition and quantity of the goods.

3. Bill of Lading (B/L) A legal document issued by the carrier to the shipper,
acknowledging receipt of goods for shipment, specifying the terms of the
contract of carriage, and serving as a title to the goods. It also acts as a receipt,
evidence of the contract of carriage, and a document of title.

4. Freight Bill A document issued by the carrier or freight forwarder to the

shipper or consignee, detailing the charges for transportation services rendered
and providing instructions for payment.

5. Sea Way Bill (SWB/e-SWB) A non-negotiable transport document issued by

the carrier or its agent, serving as a receipt for goods shipped by sea and
containing terms of the contract of carriage. Unlike a bill of lading, it is not a
document of title.
6. Airway Bill (AWB/e-AWB) A transport document issued by an airline or its
agent, serving as a receipt for goods shipped by air, outlining the terms of
carriage, and containing instructions for handling and delivery.

7. Shipping Guarantee A document issued by the shipper or consignor to

guarantee payment of freight charges or other expenses associated with the
shipment.

8. Packing Note or List A document detailing the contents, quantities, and

packaging of goods being shipped, serving as a guide for handling, loading, and
unloading.

9. Consignment Note A document issued by the carrier or its agent, detailing the
goods being transported, their origin, destination, and other relevant
information.

10. Shipping Manifest A detailed list of all cargo items loaded onto a vessel or
aircraft, including information such as shipper, consignee, description of goods,
quantity, and weight.

Export Documents

1. Bill of Lading (BOL) An export version of the bill of lading issued by the
carrier, serving as evidence of the contract of carriage and title to the goods for
export shipments.

2. Certificate of Origin A document certifying the origin of goods, issued by an

authorized body or chamber of commerce, often required by customs authorities
for tariff purposes.
3. Commercial Invoice A document issued by the seller to the buyer, detailing
the goods sold, their quantity, price, terms of sale, and other relevant
information for customs clearance and payment purposes.

4. Consular Documents Documents authenticated by a consulate or embassy of

the importing country, often required for certain exports to attest to the
authenticity of the commercial invoice or other export documents.

5. Destination Control Statement A statement included on export documents

indicating that the goods are destined for a specific country or end-use, as
required by export control regulations.

6. Dock Receipt Similar to the dock receipt in transport documents, it serves as

evidence of receipt of goods at the dock or terminal for export shipment.

7. Electronic Export Information (EEI) Information submitted electronically to

the U.S. Census Bureau's Automated Export System (AES) for all export
shipments valued over a certain threshold or requiring an export license.

8. Export License A government-issued authorization permitting the export of

certain goods or technologies, often required for sensitive or controlled items.
Module 5
Pricing
Pricing Fundamentals

Fundamentals of Pricing
- Pricing refers to the process of determining the value of a product or service
and setting a monetary amount for its sale.
- It involves considering various factors such as production costs, market
demand, competition, and perceived value to establish a price that maximizes
profitability and meets customer expectations.
Principles of Pricing
- Value-based Pricing Setting prices based on the perceived value of the product
or service to the customer.
- Cost-based Pricing Determining prices by adding a markup to the cost of
production or procurement.
- Competitive Pricing Pricing products or services in line with or slightly below
competitors' prices to gain market share.
- Dynamic Pricing Adjusting prices in real-time based on market conditions,
demand fluctuations, or customer segmentation.

F.O.B Pricing (Free On Board)

- F.O.B pricing refers to a pricing method where the buyer pays for the cost of
transportation from the seller's location to the destination.
- The seller is responsible for the cost and risk of delivering the goods to the
designated transportation carrier.

Delivered Pricing
- Delivered pricing involves setting prices that include the cost of transportation
and delivery to the customer's location.
- The seller assumes responsibility for arranging and paying for transportation,
and the price charged to the customer reflects this.

Pricing Issues

Potential Discrimination
- Pricing discrimination involves charging different prices to different customers
based on factors such as location, purchasing power, or willingness to pay.
- While pricing discrimination can increase profitability, it may also lead to
customer dissatisfaction or legal concerns.
Quantity Discounts
- Quantity discounts are discounts offered to customers who purchase large
quantities of a product or service.
- They encourage bulk purchases and can help businesses increase sales volume
and reduce inventory levels.

Pick-up Allowances
- Pick-up allowances are discounts offered to customers who arrange for their
own transportation or pick up goods from the seller's location.
- They help reduce shipping costs for the seller and can be an incentive for
customers to take on the responsibility of transportation.

Promotional Pricing
- Promotional pricing involves temporarily reducing prices to stimulate demand,
attract new customers, or increase sales during specific time periods or
promotional events.
- Examples include discounts, coupons, rebates, and limited-time offers.

Menu Pricing
- Menu pricing involves offering a selection of products or services at different
price points to cater to diverse customer preferences and budgets.
- It allows customers to choose from various options based on their needs and
willingness to pay.

Platform Service Pricing

- Platform service pricing involves charging fees for access to a platform or
marketplace that connects buyers and sellers.
- Examples include subscription fees, transaction fees, and listing fees charged
by online marketplaces.

Value-Added Service Cost

- Value-added service costs are additional charges for optional services or
features that enhance the value or convenience of a product or service.
- Examples include expedited shipping, installation services, and extended
warranties.

Efficiency Incentives
- Efficiency incentives involve offering discounts or rewards to customers who
streamline their purchasing process, consolidate orders, or improve payment
terms.
- They encourage efficiency and help reduce costs for both the seller and the
customer.