MKTG Discussion Questions Part 2
13-8 Chapter 13: International Land and Multimodal Transportation
Chapter 13: International Land and Multimodal Transportation 13- 9
Chapter 13
International Land and Multimodal Transportation
lEARNING oBJECTIVES
At the end of this chapter, YOU SHOULD:
1 Identify and understand the characteristics of truck and rail transportation.
2 Identify and understand the characteristics of intermodal transportation.
3 Identify the functions of freight forwarders, project cargo carriers, and alternative means of transportation.
Preview
This chapter will examine truck transport, rail transportation, containers, land bridges, liability issues, freight forwarders and more.
Chapter Outline
13-1 Truck Transportation
I. Trucking from a North American perspective is mostly a domestic means of transportation
a. There is substantial trade between the United States and Canada
II. There is some trade between the United States and Mexico, but most of the trade is conducted on a DAT basis---Delivered at (a) Terminal near the border.
III. More than 82 percent of merchandise shipped internationally within European Union is by truck
IV. Worldwide, trucking is dominated by a patchwork of rules and regulations regarding:
a. Number of axles a truck may have
b. Weight on axle
c. Total truck weight
d. Truck length and width
e. Requirements regarding truck’s mandatory equipment
f. Driver training
g. Driver’s hours of service
V. Trucks carrying international cargo tend to be semi trucks
a. Consists of a tractor
b. Consists of a trailer
VI. Major challenge is to abide by all the rules
VII. There are hundreds of different driving bans in Europe Union, such as the prohibition from trucks operating on certain days such as Sunday
VIII. Trucks tend to back up at border check points
IX. Trucking is challenged by infrastructure issues such as road conditions
X. Taxation on diesel fuel sometimes limits power of trucks
XI. High tolls in some European countries force truckers to take less desirable roads
XII. In Africa and Asia, there is often a tendency to seriously overload trucks
XIII. Political protests in Europe frequently result in activists blocking roads, thus disrupting truck traffic
13-2 Rail Transportation
I. Market share of more than 40 percent of all ton-miles in the United States were by rail in 2011 (40 percent of that traffic was intermodal)
II. Market share of less than 18 percent of international shipments within the European Community were by rail (small percentage of intermodal)
III. Railroads in Europe are focused on passenger service
IV. Traditionally, railroads have had three business activities:
a. Bulk freight
b. Break-bulk freight in boxcars
c. Automobile freight
V. Intermodal
a. Increasing numbers of containers on flatcars
b. Rail “land-bridge” developed across United States carrying freight between Asia and Europe
VI. U.S. railroads were in poor shape in the 1970s, but have transformed themselves into a dynamic transportation system
VII. European railroads have taken note and are attempting to reform
a. Difficult because they are nationalized and bureaucratic
b. European Union railroads passed a resolution opening their networks to each other’s crews and locomotives
i. France opposes it
ii. Infrastructure varies in rail gauge, electrical systems, and signaling systems
VIII. Eventually more trans-Asia rail traffic may replace some ocean shipping
13-3 Intermodal Transportation
I. Definition: Intermodal describes a shipment that takes several different means of transportation—road, rail, ocean, air—from its point of departure (seller/exporter) to its point of destination (buyer/importer)
II. The meaning has evolved recently to limit the use of this term to freight for which a single bill of lading covering more than one of these alternatives is issued
III. Shipping company is responsible for all means of transportation
IV. Term “intermodal” is strongly associated with sea-going containers
a. Yet it is possible to have a container use only one mode of transportation
b. It is possible to have non-containerized cargo use several modes of transportation
13-3-1 Types of Seagoing Containers
I. Most containers are “standard” types:
a. Twenty- and forty-foot units (6.1 and 12.2 meters respectively)
b. Standard containers are 8 feet wide (2.44 meters) and 8.5 feet tall (2.59m).
c. Fully enclosed in steel with double door at one end
d. Have wood floors, sometimes wooden sides
e. Can be stacked nine high
f. Ship capacities are measured in TEUs
II. Other containers:
a. Liquid-bulk container
b. Dry-bulk container
c. Open-top container
d. Extended length container—for cargoes larger than normal container size
e. Flat rack container
i. May have end walls to allow stacking
ii. Used to carry automobiles, boats
f. Refrigerated container—called “reefers”
g. High cube container—for cargoes larger than normal container size
h. Hanger container—contains steel bars on which clothes are hung for shipment
III. Special containers:
a. For automobiles
b. For livestock
c. Are not multi-purpose, meaning they must be back-hauled empty
IV. Imbalance of containers
a. Given imbalance of trade from Asia to the U.S., there are often too many containers in California and not enough in Asia
b. Some containers are stolen to be used for housing or storage (common in former Soviet countries and in Africa)
13-3-2 Land Bridges
I. Cargo travels across ocean, is unloaded in a port and loaded onto a train which takes it across land to another port where it is loaded onto another ship for more ocean travel
II. Typical land bridge is freight from Far East to Europe
III. Reasons for land bridge:
a. Ocean trip (through Panama Canal) takes longer than time spent unloading/loading cargo at both ports
b. Cheaper
c. Economies of scale of larger ships that cannot go through Panama Canal
d. Concern of shipping companies of reliability of Panama Canal when it was turned over to Panamanian government
IV. Other land bridges than across U.S.:
a. Across Russia (Far East shipments to Europe)
b. Africa would be an obvious one, but none is planned
c. Re-opening of North Korea could result in serious land bridge from South Korea over Russia’s Trans-Siberian railway to Europe
13-3-3 Liability Issues
I. Liability for care of cargo shifts from one mode to another
II. Sometimes liability shifts from carrier to carrier depending upon flag of carrier and carrier’s negotiated limit under the U.S. Ocean Shipping Reform Act (OSRA)
III. United Nations Commission on International Trade Law (UNCITRAL) has developed a multimodal liability framework (Rotterdam Rules) ratified by only two countries as of 2013. Still much hope exists that an international liability convention will eventually govern all international shipping.
13-3-4 Aircraft Containers
I. Aircraft containers are used to aggregate small individual packages rather than used to form a whole shipment
II. Most aircraft containers are designed to fit a specific aircraft
a. Cannot be used on other aircraft
b. Cargo may have to be unpacked and re-packed from airplane to airplane, negating security and causing handling concerns
III. Because aircraft containers are made of lightweight materials they cannot adequately protect cargo
IV. Aircraft containers are not intended to be intermodal—they are just for use on aircraft
13-4 Freight Forwarders
I. To avoid complexity, occasional shippers should use freight forwarder, which is, in effect, a travel agent for freight
a. Know alternative routes available
b. Knows how to determine costs of shipping goods
c. Can arrange all paperwork for shipment
II. Freight forwarders are different from:
a. Customs brokers
b. Freight forwarders
c. NVOCCs
d. Yet, all three functions can be present in the same firm
III. Freight forwarders are highly fragmented
a. Some are large
b. Some are small
c. Some specialize in moving project cargo
13-5 Project Cargo
I. Cargo outside normal realm of what shipping companies handle in weight, volume, or destination
II. Often consists of machinery or equipment for a major project like a dam or power plant
III. Needs special planning to reach destination
IV. Project cargo tends to move very slowly
13-6 Alternative Means of Transportation
13-6-1 Pipeline
I. Many are international
II. Can replace ships in areas of hazardous navigation
III. Can transport coal in the form of a “slurry,” which mixes water with pulverized coal
13-6-2 Barges
I. Can be used for international and domestic transportation
II. Most economic alternative to trucks and railroads
13-7 Ground Transportation Security
I. Most commonly-adopted approach has been increased scrutiny and additional inspections
II. The problem is that most road-entry points into countries are already at full capacity, and any enhanced inspections create delays (U.S. border with Canada, for example)
III. The U.S. has created the Free and Secure Trade program (FAST) for C-TPAT participants that allows these firms to clear Customs faster and avoid delays
Key terms
barge
A flat-bottomed boat designed to carry cargo on rivers and canals and to be pushed or pulled. Some of barges used on the rivers and canals of Europe are self-propelled.
co-modality
Another term for intermodal and multimodal.
container
A large metal box used in international shipments that can be loaded directly onto a truck, a railroad car, or an oceangoing vessel. The most common dimensions of containers are 8 8.5 20 feet and 8 8.5 40 feet.
double-stack
The practice of placing containers on a railroad car on top of one another. It contrasts with the practice of placing them one high, called single-stack.
dry-bulk container
A container used to transport bulk loads that are not unitized.
extended-length container
A container whose length extends beyond the traditional 40-foot length of standard containers.
flat-rack container
A container designed to hold cargo whose width does not fit inside a standard container. The width of the cargo should be less than 8 feet.
freight corridor
A section of a railroad network dedicated to freight traffic.
freight forwarder
A company that specializes in shipping cargo on behalf of shippers (exporters or importers). It is a “travel agent” for freight, finding the most appropriate itinerary and carrier, given the shipper’s objectives.
high-cube container
A container designed to hold cargo that is is voluminous and light. Its height is 9.5 feet.
hanger container
A container designed to hold cargo that cannot be laid flat in a box, and must remain on hangers during the international voyage.
intermodal
A shipment that takes several different means of transportation—road, rail, ocean, air—from its point of departure (seller/exporter) to its point of destination (buyer/importer). The meaning has evolved recently to limit the use of this term to freight for which a single bill of lading covering more than one of these alternatives is issued. Also called multimodal and co-modality.
ISO box
Another term for a standard container.
land bridge
A term coined to describe the practice of shipping goods from Asia to Europe through the United States. By taking the containerized goods to a West Coast port, loading them onto trains, transporting them across the United States, and loading them again on a ship from an East Coast port, shippers avoid the costs and delays of crossing the Panama Canal.
liquid-bulk container
A 20-foot container used to transport liquid loads.
multimodal
A shipment that takes several different means of transportation—road, rail, ocean, air—from its point of departure (seller/exporter) to its point of destination (buyer/importer). Also called intermodal and co-modality.
open-top container
A container designed so that cargo can be loaded from the top, and that is covered by a tarpaulin.
overloaded
A mode of transportation (truck, train, barge, ship, aircraft) that carries cargo of a greater weight or greater volume than it is designed to carry.
piggy-back
A technique, developed by railroad and trucking companies, that consists of placing truck trailers on specially designed railroad cars, so that the trailers can be carried over long distances economically.
pipeline
A mode of transportation consisting of a long series of pipes, connected end-to-end, and used for the transport of some liquid cargo (oil, refined petroleum products, water, and natural gas).
project cargo
A type of cargo which requires more advance planning because of its size, weight, or volume. Project cargo generally moves through unconventional means.
refrigerated container (reefer)
A container designed to hold cargo that must be maintained at a constant temperature. It generally needs an outside power supply.
road-train
An Australian trucking technique, consisting of having one tractor pulling multiple trailers. Road-trains are the conceptual equivalent of trains, but operating on a road. Road-trains have between three and seven trailers.
Rotterdam Rules
A 2008 international liability convention for intermodal cargo that restricts the liability of the carrier to U.S.$ 875 per package or per customary freight unit.
semi truck
An articulated truck that is made up of a tractor and a trailer.
single-stack
The practice of placing containers on a railroad car on only one height. It contrasts with the practice of placing them two high, called double-stack.
standard container
A large metallic box used in international trade that can be loaded directly onto a truck, a railroad car or an ocean-going vessel. The most common dimensions of a container are 8x8.5x20 feet and $8x8.5x40 feet.
tractor
The part of an articulated semi truck that is in the front and whose engine pulls the trailer.
trailer
The part of an articulated semi truck that is in the rear and is pulled by the tractor.
unit load device (ULD)
The term used to describe the containers used in airfreight transport.
PowerPoint SLIDES – STUDY THEM – PRINT THEM OUT !
· Truck Transportation (10 slides, 8 photographs)
· Rail Transportation (5 slides, 3 photographs)
· Intermodal Transportation (13 slides, 10 photographs)
· Liability Conventions (1 slide)
· Freight Forwarders (1 slide)
· Project Cargo (3 slides, 2 photographs)
· Alternative Means of Transportation (5 slides, 3 photographs)
Additional resources
Coyle, John J., Edward J. Bardi, Brian Gibson, and Robert A. Novack, Transportation: A Supply Chain Perspective, 7th Edition, 2010, South-Western, Cengage Learning, Cincinnati, Ohio.
Association of American Railroads, http://www.aar.org.
European Railroad Server, http://www.railfaneurope.net.