Cambridge Advanced Learner's Dictionary (2005) defines freight as ―goods, but not passengers, that are carried from one place to another, by ship, aircraft, train or truck, or the system of transporting these goods‖. So Freight transportation is the process of conveying different types of goods from one point to another using a variety of transport modes. The transport of freight can involve road solutions, air deliveries and even the use of waterways to move the freight from a point of origin to a destination (Tatum, 2007)
Freight transport and logistics are a pre-condition and at the same time a "consequence"
of economic and social action. They are the backbone of the manufacturing industry that is characterized by division of labour. Efficient logistics systems and networks are therefore a key factor of success for businesses and business locations in international competition.
Freight transport, or shipping, is a key in the value chain in manufacturing (Chopra, Meindl, 2007). With increased specialization and globalization, production is being located further away from consumption, rapidly increasing the demand for transport. While all modes of transport are used for cargo transport, there is high differentiation between the nature of the cargo transport, in which mode is chosen (Bardi, et al., 2006).
Road freight is mainly in the transport of cargo units by means of roads by truck. The main advantage of road freight is that it helps to deliver the cargo to almost any place on earth, but is consumes a lot of energy, due to the fact that quite small cargo (in comparison to other modes of transportation) can be delivered at a time. Despite of that fact, using a truck and roads are still the only alternative to deliver cargoes to many places in the world, which do not have open water and railroads nearby.
A freight train is a group of freight cars (US) or goods wagons (UIC) hauled by a locomotive on a railway, ultimately transporting cargo between two points as part of the logistics chain. Trains may haul bulk, intermodal containers or specialized cars. Rail freight often causes high transshipment costs and is not as flexible as the road the sea, but allows using economy of scale, due to the fact that trains can transfer tens of thousands of tonnes per one voyage.
Air freight has become more common for products of high value; while less than one percent of world transport by volume is by airline, it amounts to forty percent of the value. Time has become especially important in regards to principles such as postponement and just-in-time within the value chain, resulting in a high willingness to pay for quick delivery of key
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components or items of high value-to-weight ratio. (Chopra, Meindl, 2007). In addition to mail, common items send by air include electronics and fashion clothing.
The last possible mode to deliver a cargo is to freight a ship. The main advantages of water-borne transport for both national economies and for the environment are its unrivalled low overall economic costs and the additional function of waterways as an environment for living and recreation. (Waterborne transport. Federal Ministry of Transport, Building and Urban Development of Germany, 2009). Sea transport has been the largest carrier of freight throughout recorded history. Ship transport can be over any distance by boat, ship, sailboat or barge, over oceans and lakes, through canals or along rivers. Ship freight has huge potential for economies of scale, because, for example, supertankers can reach sizes of 550,000 DWT. The main disadvantage of such mode of transportation is that you are not able to implement it to cargoes, which are critical to delivery time, because the sea trip may last more than a month (E.g. from China to Rotterdam along the South African coast).
3.2.1. Modal choice
Choice of particular mode and routes between two points is an essential element of meeting a transport demand. It requires an investigation of the basic economic and service characteristics of the available transportation modes and routes, such as capacity, costs, and performance of the existing or proposed transport system. It is obvious, that the choice of the best particular mode or combination of modes will minimize costs or maximize utility.
In spite of that, a mode may have higher directly assignable costs for performing a transport service, but the savings on handling, packaging, inventory, and other distributional costs may compensate that or even more. Though, Meyer and Straszheim (1997) believe that this may be difficult to model.
According to the report of Mathisen et al.(2009), there is the following dependence between the cost per ton and the distance. The functions are calculated for each route and showed in the figure below.
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Figure 3.1: Possible dependences between transport cost and transport distance for different transport modes (Mathisen et al. 2009).
At this graph FV, FJ and FS are the dependences between distances and feasible freight prices per ton for road, train and sea freight relatively. The initial investments per ton for each mode are a0V, a0J and a0S.
The choice of the mode is strongly dependent on the distance. If the distance is comparably short, the truck mode should be chosen. From some certain point (AVJ) the train usage will be more efficient. The sea freight is the most appropriate mode for very long distances (from AJS and longer), due to the larger economy of scale, which did not allow the shown function to grow faster, despite the fact of higher initial costs.
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