Related Terms: Physical Distribution
Transportation concerns the movement of products from a source—such as a plant, factory, or workshop—to a destination—such as a warehouse, customer, or retail store. Transportation may take place by air, water, rail, road, pipeline, or cable routes, using planes, boats, trains, trucks, and telecommunications equipment as the means of transportation. The goal for any business owner is to minimize transportation costs while also meeting demand for products. Transportation costs generally depend upon the distance between the source and the destination, the means of transportation chosen, and the size and quantity of the product to be shipped. In many cases, there are several sources and many destinations for the same product, which adds a significant level of complexity to the problem of minimizing transportation costs. Indeed, the United States boasts the world's largest and most complex transportation system, with four million miles' worth of roads, a railroad network that could circle the earth almost seven times if laid out in a straight line, and enough oil and gas lines to circle the globe 56 times.
The decisions a business owner must make regarding transportation of products are closely related to a number of other distribution issues. For example, the accessibility of suitable means of transportation factors into decisions regarding where best to locate a business or facility. The means of transportation chosen will also affect decisions regarding the form of packing used for products and the size or frequency of shipments made. Although transportation costs may be reduced by sending larger shipments less frequently, it is also necessary to consider the costs of holding extra inventory. The interrelationship of these decisions means that successful planning and scheduling can help business owners to save on transportation costs.
Transportation is divided into modes based on the type of transportation used—waterborne, rail, road-based, air, and pipeline. In turn "single-mode" and "multiple-mode" materials movements are recorded, the latter type sometimes referred to as "intermodal transport." This mixed mode of transport involves two or more modes to make a shipment. An example is oil transport to a port facility by tanker followed by pipeline transport of the crude to a refinery. In the Age of Information, as we like to call our times, we also transport data using wire or wireless methods; but while "data deliveries" are essentially equivalent in some businesses to "shipments," as yet data transfer is not routinely considered to be transportation.
Water, rail, and truck transportation modes are each capable of transporting anything moving in commerce physically, but these modes have different levels of access to customers, different speeds, and thus carry different types of cargo. Barges very rarely carry packaged-good shipments and trucks almost never move bulk commodities except over very short distances. Air transport is limited in transporting very bulky and very heavy objects, but air transport is ideal for light packages and for items that must be transported rapidly; pipelines move liquids and gases or other substances that behave in an analogous way but cannot be used in other applications.
Air transportation offers the advantage of speed and can be used for long-distance transport. However, air is also the most expensive means of transportation; it is generally used only for smaller items of relatively high value—such as electronic equipment—and items for which the speed of arrival is important—such as perishable goods. Air transport is centralized at airports; the lack of landing sites, even for helicopters, makes air transport a hub-to-hub method. The U.S. Department of Transportation (DOT) therefore considers ancillary transportation associated with air shipments part of air shipments, such as truck or rail delivery of goods to and from airports to final destinations. Despite what has been said about limitations on weight and size, as these relate to air transportation, an astonishing variety of goods have been flown occasionally under certain circumstances, including very big and heavy equipment—disassembled into appropriate and transportable sub-groupings.
The rail transportation network in the United States included 121,400 major rail lines in the mid-2000s. Trains are ideally suited for shipping bulk products and can be adapted to meet specific product needs through the use of specialized cars—i.e., tankers for liquids, refrigerated cars for perishables, and cars fitted with ramps for automobiles. Roughly two-thirds of all freight moved by rail consists of coal shipments in dedicated trains that run from points of coal mining to electric utilities that burn the coal.
Rail transportation is typically used for long-distance shipping. Less expensive than air transportation, it offers about the same delivery speed as trucks over long distances and exceeds transport speeds via marine waterways. In fact, deregulation and the introduction of freight cars with larger carrying capacities has enabled rail carriers to make inroads in several areas previously dominated by motor carriers. But access to the rail network remains a problem for many businesses.
Unless a business is located directly at a sea or river port or is served by a railroad siding, it is going to receive its inputs, and ship its products, using truck transportation over the highway network. Transport systems designed around trucks are the most flexible—because a mix of small and large equipment can be readily assembled and deployed and because all points are accessible to trucks. For this reason, by the last quarter of the 20th century, trucking became the dominant mode of transportation. The chief limitations of transport by motor carrier is that large bulk shipments of commodities are expensive to move because, in effect, each railcar equivalent of load requires its own engine and driver. Commodity movements by truck are therefore very limited.
Water transportation is the least expensive and slowest mode of freight transport. It is generally used to transport heavy products over long distances when speed is not an issue. Although accessibility is a problem with ships—because they are necessarily limited to coastal area or major inland waterways—piggybacking is possible using either trucks or rail cars. However, industry observers note that port terminal accessibility to land-based modes of transportations is lacking in many regions. The main advantage of water transportation is that it can move products all over the world.
Pipelines are used predominantly to transport natural gas and oil. To move such materials long distances in pipes, booster stations must be built at intervals which receive the gas, recompress it, and push it back into the pipeline or receive the liquid and pump it on its way under higher pressure. Chemicals and slurries (e.g., powdered coal in water) can also be transported in pipelines. The most extensive network consists of natural gas pipelines, comprising around 276,000 miles of transmission lines from which around 920,000 miles of distribution lines carry gas to users. In its overall freight statistics, the DOT includes only petroleum shipments by pipeline.
In its most recent (2006) comprehensive report on transportation modes, the Department of Transportation showed data for the year 2002. The value of all freight shipped that year was $13,052 billion, amounted to 19,487 million tons, and the total movement was 4,409 billion ton-miles. A ton-mile is 1 ton of freight moved 1 mile.
Using ton-miles as the overall measurement, 92.4 percent of all freight moved by single modes, 5.3 percent moved by two or more modes (intermodally), and 2.3 percent of freight moved by modes the DOT could not determine. In order of rank, the known modes had the following shares of total transportation as measured by ton-mile: truck (34.4 percent), rail (31.1), pipeline carrying oil (15.6 percent), water (11.0), mixed combinations (3.7), truck and rail combined (1.1), parcel, postal, or courier (0.5), and air transport (0.3) percent.
"Class I Railroad Statistics." Association of American Railroads. Available from http://www.aar.org/PubCommon/Documents.AboutTheIndustry/Statistics.pdf. Retrieved on 30 April 2006.
U.S. Department of Transportation. Freight in America. 2006.