Module 2
Domestic logistics operations
Role and Importance of transportation
a. Movement of Goods
Transportation plays a critical role in helping the physical transfer of raw materials to
manufacturing units and finished goods to end customers. Without effective transportation,
supply chains would collapse due to the inability to move goods efficiently.
b. Customer Service
Timely and safe delivery of goods directly impacts customer satisfaction. Reliable
transportation services help build trust and long-term relationships with customers.
c. Cost Efficiency
Efficient transportation helps to minimise logistics costs by optimising fuel usage, reducing
labour expenses, and limiting storage needs.
d. Market Reach
A strong transportation network allows businesses to expand their operations to national and
international markets. It enables access to remote regions.
e. Supply Chain Continuity
Transportation ensures the steady flow of goods across the supply chain. Maintaining supply
chain continuity is very important for meeting demand and ensuring customer satisfaction.
f. Time-Sensitive Delivery
For industries dealing with perishable goods, medical supplies, or e-commerce, fast and on-
time delivery is essential. A good transportation system ensure fast delivery
Objectives of efficient transportation management
1. To Minimise transportation Costs – Use cost-effective routes, modes, and fuel-
efficient practices.
2. To ensure Timely Delivery – Ensure goods reach the right place at the right time,
improving reliability.
3. To Improve Service Quality – Safe handling, accurate tracking, and proper
documentation to build customer trust.
4. To Optimise Resource Utilisation – Use vehicles, warehouses, and manpower
efficiently; reduce idle time and empty returns.
5. To Enhance Visibility & Control – Use GPS, RFID, and TMS(transport
Management System)for real-time tracking and better coordination.
6. To Support Sustainability Goals – Reduce fuel use and emissions through route
optimisation and eco-friendly transport.
Factors Influencing Mode Selection
1. Total Logistics Cost – Includes fuel, handling, and storage; cost-effective choice
reduces expenses.
2. Timely Delivery of Goods – Fast and reliable transport ensures smooth supply chain
operations.
3. Product Condition & Safety – Mode must protect goods from damage or spoilage.
4. Volume & Weight of Shipment – Large/bulky goods favour sea or rail; small/light
shipments may use air or road.
5. Infrastructure Availability – Roads, ports, airports, railways, and warehouses
influence feasible choices.
Challenges in Transportation
1. Rising Transportation Costs – Transportation is costly and directly affects logistics
efficiency.
o Fuel Price Volatility – Fluctuations in global oil prices raise freight charges;
sudden hikes in diesel/aviation fuel increase shipping rates and disrupt
budgets.
o Labour Costs – Higher wages & shortage of skilled staff increase expenses.
o Maintenance & Operational Expenses – High cost of fleet maintenance ,
spares parts, insurance etc add to financial burden
o Toll Fees & Tariffs – Highway tolls and cross-border tariffs raise transport
costs.
2. Infrastructure & Traffic Issues
Poor Road/Rail Infrastructure –poorly maintained road Slows down goods
movement.
Port Congestion – Delays in loading/unloading, limited dock space outdated
equipment slowdown processing and create bottlenecks.
Urban Traffic Congestion –high traffic in cities allows deliveries and causes delays .
3. Environmental Regulations
Emission Standards – Strict laws on CO₂, SOx, NOx force use of cleaner but
costlier technologies
Noise & Pollution Controls – Restrictions on delivery time and vehicle type to
reduce pollution increase costs.
Sustainable Packaging & Waste Disposal – Companies increasingly required to use
recyclable materials and reduce in-transit waste.
Carbon Tax & Penalties – Extra costs for exceeding emission limits push firms to
adopt green practices.
4. Security & Risk Issues
Cargo Theft – Electronics, medicines, branded goods often stolen during
transit.
Terrorism & Piracy – Threats on shipping routes and international hubs.
Accidents & Natural Disasters – Human errors, floods, storms, earthquakes
disrupt supply chains.
Cybersecurity Threats – Growing risk of hacking and data theft in digital
logistics.
Types of transportation in logistics
1. Road Transportation
Road transport involves the movement of goods using trucks, vans, or other vehicles on
roads. It is flexible, cost-effective for short to medium distances, and allows door-to-door
delivery.
2. Rail Transportation
Rail transport is ideal for moving large quantities of goods over long distances on land. It is
more economical and environmentally friendly
3. Air transportation
Air transport is the fastest method of delivering goods, especially for international delivery.
However, it is more expensive and typically used for lightweight, high-value, or time-
sensitive items.
4. Sea (Maritime) Transportation
Sea transport is used for shipping large, bulky goods internationally via cargo ships. It is cost-
effective for long-distance trade but slower compared to other modes of transport.
5. Pipeline Transportation
Pipeline transport is used for moving liquids and gases such as oil, natural gas, and water
through pipelines. It offers a continuous, safe, and efficient flow but is limited to specific
types of goods.
6. Intermodal Transportation
Intermodal transport involves the use of two or more transportation modes (like rail and
truck) without handling the cargo itself during transfers.
Intermodal Transportation
Meaning: Goods are transported using two or more modes (road, rail, sea, air).
Contracts: Separate contracts for each mode.
Responsibility: Each carrier is responsible for its part only.
Example: A container moves from a factory → truck (to port), ship (to another
country), rail (to city). Each mode has a separate contract.
Multimodal Transportation
Meaning: Goods are transported using two or more modes under a single contract.
Contracts: Only one contract for the entire journey.
Responsibility: One operator (MTO – Multimodal Transport Operator) is responsible
for the whole trip.
Example: Same container → truck + ship + rail, but handled under one contract by a
single logistics company.
Key Difference:
Intermodal = Many contracts, many responsibilities
Multimodal = One contract, single responsibility
