Module -5 : Introduction to Distribution Management

Designing the distribution network, role of distribution, factors influencing distribution, design
options, distribution networks in practice. HUB & SPOKE V/S Distributed Warehouses. Mode of
transportation and criteria of decision. Transportation Infrastructure .Factors impacting road transport
cost, Packaging Issues in Transportation, role of containerization, Hazards in transportation, State of
Ocean Transport, global alliances.

Role of Distribution

• Balance your supply and demand

• Capable to handle market changes
• Supply disruptions and increase in demand.
• Reduce the number of transactions needed to get a product from supplier to customer.

Distribution channels facilitate the sales of goods to the supply chain and move products from the
producer to the customer. These functions maximize profit and customer satisfaction.

The purpose of a distribution channel is to bridge the gap between the manufacturer and the user of
the product.
The channel is composed of three main categories:
 The Producer of the Product (manufacturer, craftsman)
 The Middleman (at a retailer or wholesaler level)
 The Consumer of the Product (individual, institution)

The channel’s functions are divided into three categories:

 Transactional Functions (buying, selling, and risk assumption)
 Logistical Functions (assembly, storage, sorting, and transportation)
 Facilitating Functions (after-sales service, finance, carrying information, and leadership)

These factors affect the price of the product and influence the brand and marketing strategy.

Importance of Distribution Management System

Distribution Management directly affects the profit of the organization. To understand the
importance of DMS, challenges faced by sales channels need to be examined. To reach a wider
audience the company develops various sales and marketing techniques. The channels are an outlet to
sell these products, but:
 The majority of the distributors are small and unorganized. They have insufficient capital and
technology.
  To break into rural areas, it’s necessary to add several levels in the distribution chain,
incurring extra costs.
 No real-time data on orders, inventory or claims, and returns lead to under or overstocking.
 Lack of data and information because of limited internet facilities.

DMS controls and monitors the distribution network. It stores all the data and information related to
the clients, stock, and sales. This data is easier to access, analyze, and report.
CRM features are embedded in DMS so customer satisfaction is ensured. Less workforce, less
operational cost, less processing time means an increase in productivity, and better sales for the
company.

Advantages of a Distribution Management System

1. DMS keeps everything in order.

2. Easier for the shoppers because all information is available at one location.
3. Lessens any form of error regarding time, location, or quantity of the delivery of the product.
4. Low administration costs for the organization because of less involvement of employees.
Distribution Management Software manages a lot of functions.
5. Better time management
6. Discrepancies between the actual numbers and recorded numbers can be found easily.
7. Better inventory monitoring
8. Increase in efficiency and accuracy of the services offered to the customer.
9. Optimum utilization of resources
10. Quick contract documentation processes and approval. Less paperwork because everything is
digitalized.
11. Hassle-free delivery and returns are managed online
12. Methodized payment collection
13. Improved sales target achievement
14. Effective reporting both ways from producer to the middle agents and customers and vice versa.

An organization’s profitability, scale of operations, and brand can be impacted by the strategic
selection of distribution channels. The distribution management strategy depends on a variety of
factors such as the company’s mission statement, goals, target market, area of service, types of
products, etc.

There are three distribution management strategies:

1. Mass: The mass strategy aims to distribute to the mass market
2. Selective: This strategy aims to distribute to a selective group of sellers only
3. Exclusive: The exclusive strategy aims to distribute the product to an extremely limited group

Distribution Management System:

 Does Order processing
 Warehousing and inventory
  Reducing overheads and management costs
 Synchronizes demand and supply of the products
 Arranges for deliveries and conducts billing process
 Creates Performa invoice/Bill of Exchange
 Analyzes business information and creates reports
 Makes business forecasts, etc.

That is why the role of DMS is incredibly important and should be adopted in every organization for
its betterment, higher revenue generation, and cost reduction.

Important Factors influencing Distribution

Important factors affecting the choice of channels of distribution by the manufacturer are:

(A) Considerations Related to Product

When a manufacturer selects some channel of distribution he/she should take care of such factors
which are related to the quality and nature of the product. They are as follows:

1. Unit Value of the Product:

When the product is very costly it is best to use small distribution channel. For example, Industrial
Machinery or Gold Ornaments are very costly products that are why for their distribution small
distribution channel is used. On the other hand, for less costly products long distribution channel is
used.

2. Standardized or Customized Product:

Standardized products are those for which are pre-determined and there has no scope for alteration.
For example: utensils of MILTON. To sell this long distribution channel is used.
On the other hand, customized products are those which are made according to the discretion of the
consumer and also there is a scope for alteration, for example; furniture. For such products face-to-
face interaction between the manufacturer and the consumer is essential. So for these Direct Sales is
a good option.

3. Perishability:
A manufacturer should choose minimum or no middlemen as channel of distribution for such an item
or product which is of highly perishable nature. On the contrary, a long distribution channel can be
selected for durable goods.

4. Technical Nature:
If a product is of a technical nature, then it is better to supply it directly to the consumer. This will
help the user to know the necessary technicalities of the product.
(B) Considerations Related to Market
Market considerations are given below:

1. Number of Buyers:
If the number of buyer is large then it is better to take the services of middlemen for the distribution
of the goods. On the contrary, the distribution should be done by the manufacturer directly if the
number of buyers is less.

2. Types of Buyers:
Buyers can be of two types: General Buyers and Industrial Buyers. If the more buyers of the product
belong to general category then there can be more middlemen. But in case of industrial buyers there
can be fewer middlemen.

3. Buying Habits:
A manufacturer should take the services of middlemen if his financial position does not permit him
to sell goods on credit to those consumers who are in the habit of purchasing goods on credit.

4. Buying Quantity:
It is useful for the manufacturer to rely on the services of middlemen if the goods are bought in
smaller quantity.

5. Size of Market:
If the market area of the product is scattered fairly, then the producer must take the help of
middlemen.

(C) Considerations Related to Manufacturer/Company

Considerations related to manufacturer are given below:

1. Goodwill:
Manufacturer’s goodwill also affects the selection of channel of distribution. A manufacturer
enjoying good reputation need not depend on the middlemen as he can open his own branches easily.

2. Desire to control the channel of Distribution:

A manufacturer’s ambition to control the channel of distribution affects its selection. Consumers
should be approached directly by such type of manufacturer. For example, electronic goods sector
with a motive to control the service levels provided to the customers at the point of sale are resorting
to company owned retail counters.

3. Financial Strength:
A company which has a strong financial base can evolve its own channels. On the other hand,
financially weak companies would have to depend upon middlemen.
(D) Considerations Related to Government
Considerations related to the government also affect the selection of channel of distribution. For
example, only a license holder can sell medicines in the market according to the law of the
government.
In this situation, the manufacturer of medicines should take care that the distribution of his product
takes place only through such middlemen who have the relevant license.

(E) Others

1. Cost:
A manufacturer should select such a channel of distribution which is less costly and also useful from
other angles.

2. Availability:
Sometimes some other channel of distribution can be selected if the desired one is not available.

3. Possibilities of Sales:
Such a channel which has a possibility of large sale should be given weight age.

Design options for a distribution network

When considering distribution between any other pair of stages, such as supplier to manufacturer or
even a service company serving its customers through a distribution network, many of the same
options still apply. Managers must make two key decisions when designing a distribution network:
1. Will product be delivered to the customer location or picked up from a prearranged site?
2. Will product flow through an intermediary (or intermediate location)?

Based on the firm’s industry and the answers to these two questions, one of six distinct distribution
network designs may be used to move products from factory to customer. These designs are
classified as follows:

1. Manufacturer storage with direct shipping

2. Manufacturer storage with direct shipping and in-transit merge
3. Distributor storage with carrier delivery
4. Distributor storage with last-mile delivery
5. Manufacturer/distributor storage with customer pickup
6. Retail storage with customer pickup
Manufacturer storage with Direct shipping

In this option, product is shipped directly from the manufacturer to the end customer, bypassing the
retailer (who takes the order and initiates the delivery request). This option is also referred to as drop-
shipping. The retailer carries no inventory. Information flows from the customer, via the retailer, to
the manufacturer, and product is shipped directly from the manufacturer to customers, as shown in
Figure

The biggest advantage of drop-shipping is the ability to centralize inventories at the manufacturer,
which can aggregate demand across all retailers that it supplies. As a result, the supply chain is able
to provide a high level of product availability with lower levels of inventory.

Drop-shipping also offers the manufacturer the opportunity to postpone customization until after a
customer has placed an order. Postponement, if implemented, further lowers inventories by
aggregating to the component level. For example, a publisher may drop-ship books that have been
printed on demand, thus reducing the value of inventory held.
Manufacturer storage with direct shipping and in-transit merge

under which each product in the order is sent directly from its manufacturer to the end customer, in-
transit merge combines pieces of the order coming from different locations so the customer gets a
single delivery. Information and product flows for the in-transit merge network. In-transit merge has
been used by Dell and can be used by companies implementing drop-shipping. When a customer
ordered a PC from Dell along with a Sony monitor (during Dell’s direct selling period), the package
carrier picked up the PC from the Dell factory and the monitor from the Sony factory; it then merged
the two at a hub before making a single delivery to the customer.
As with drop-shipping, the ability to aggregate inventories and postpone product customization is a
significant advantage of in-transit merge. In-transit merge allowed Dell and Sony to hold all their
inventories at the factory. This approach has the greatest benefits for products with high value whose
demand is difficult to forecast, particularly if product customization can be postponed.
Response times, product variety, availability, and time to market are similar to those for drop-
shipping. Response times may be higher if the shipments from the various sources are not
coordinated. Customer experience is likely to be better than with drop-shipping, because the
customer receives only one delivery for an order instead of many partial shipments.

Distributor storage with Carrier Delivery

Under this option, inventory is held not by manufacturers at the factories, but by distributors/ retailers
in intermediate warehouses, and package carriers are used to transport products from the intermediate
location to the final customer. Amazon and industrial distributors such as W.W. Grainger and
McMaster-Carr have used this approach combined with drop-shipping from a manufacturer (or
distributor). Information and product flows when using distributor storage with delivery by a package
carrier. Relative to manufacturer storage, distributor storage requires a higher level of inventory
because of a loss of aggregation. From an inventory perspective, distributor storage makes sense for
products with somewhat higher demand.
Distributor storage with last-Mile Delivery

Last-mile delivery refers to the distributor/retailer delivering the product to the customer’s home
instead of using a package carrier. Amazon Fresh, Peapod, and Tesco have used last-mile delivery in
the grocery industry. The automotive spare parts industry is one in which distributor storage with
last-mile delivery is the dominant model. It is too expensive for dealers to carry all spare parts in
inventory. Thus, original equipment manufacturers (OEMs) tend to carry most spare parts at a local
distribution center typically located no more than a couple of hours’ drive from their dealers and
often managed by a third party. The local distribution center is responsible for delivering needed
parts to a set of dealers and makes multiple deliveries per day. Unlike package carrier delivery, last-
mile delivery requires the distributor warehouse to be much closer to the customer. Given the limited
radius that can be served with last-mile delivery, more warehouses are required compared to when
package delivery is used.

Distributor storage with last-mile delivery requires higher levels of inventory than the other options
(except for retail stores) because it has a lower level of aggregation. From an inventory perspective,
warehouse storage with last-mile delivery is suitable for relatively fast-moving items that are needed
quickly and for which some level of aggregation is beneficial. Auto parts required by car dealers fit
this description.
Manufacturer or Distributor storage with Customer pickup

In this approach, inventory is stored at the manufacturer or distributor warehouse, but customers
place their orders online or on the phone and then travel to designated pickup points to collect their
merchandise. Orders are shipped from the storage site to the pickup points as needed. Transportation
cost is lower than for any solution using package carriers because significant aggregation is possible
when delivering orders to a pickup site. This allows the use of truckload or less-than-truckload
carriers to transport orders to the pickup site. For a company such as Seven-Eleven Japan or
Walmart, the marginal increase in transportation cost is small because trucks are already making
deliveries to the stores, and their utilization can be improved by including online orders. As a result,
Seven-Eleven Japan and Walmart allow customers to pick up orders without a shipping fee.
Retail storage with Customer pickup

In this option, often viewed as the most traditional type of supply chain, inventory is stored locally at
retail stores. Customers walk into the retail store or place an order online or by phone and pick it up
at the retail store. Examples of companies that offer multiple options of order placement include
Walmart and Tesco. In either case, customers can walk into the store or order online. A B2B example
is W.W. Grainger: Customers can order online, by phone, or in person and pick up their order at one
of W.W. Grainger’s retail outlets.
Local storage increases inventory costs because of the lack of aggregation. For fast- to very fast-
moving items, however, there is marginal increase in inventory, even with local storage. Walmart
uses local storage for its fast-moving products while delivering a wider variety of products from its
central location for pickup at the store.

Selecting a Distribution network Design

A network designer needs to consider product characteristics as well as network requirements when
deciding on the appropriate delivery network. The various networks considered earlier have different
strengths and weaknesses. Only niche companies end up using a single distribution network. Most
companies are best served by a combination of delivery networks. The combination used depends on
product characteristics and the strategic position that the firm is targeting. The suitability of different
delivery designs (from a supply chain perspective) in various situations.
Hub and Spoke vs Distributed Warehouses

The Hub and Spoke distribution model

The hub and spoke model is a system that simplifies a network of routes. It is extensively used in
commercial aviation for both passengers and freight. Delta Airlines came up with this method in
1955, but in the 1970s, FedEx implemented it and revolutionized the way airlines were run.
The model is named after a bicycle wheel, which has a strong central hub with a series of connecting
spokes. In the sense of aviation, airline routes all of its traffic through one central hub or hubs.
The design of a hub and spoke model is efficient for various reasons. The first involves day to day
operations of a freight company. By centralizing control, the company can afford a smaller staff
which concentrates on management from a central location. All packages can be sorted at the hub,
rather than sorted in multiple locations. This makes the freight company much more efficient and
reduces the risk of error.
In the recent years, shipping companies have adopted the hub-and-spoke warehousing model to
speed up deliveries and reduce costs. In this model, different transports collect goods from its point
of origin (the tips of the spokes), and then transport it back to a central processing unit (the hub). The
shipment is then either warehoused or distributed directly from the hub to customers. Mostly, large
scale companies operate through a hub and spoke logistics systems.

Distributed Warehouses model

Distributed warehousing is an approach to warehousing where a business fulfills, ships, and/or

distributes goods from multiple smaller, strategically-placed warehouses.

Modes of transportation and their performance characteristics

The following modes of transportation are used:

[Link]
[Link] carriers
[Link]/Roadways
[Link]
[Link]/sea
[Link]
[Link]
[Link]

The effectiveness of any mode of transportation is affected by,

 Equipment investments and operating decisions by the carrier
 Available infrastructure and transportation policies
  A carrier’s primary objective is to ensure good utilization of its assets while providing
customers with an acceptable level of service
 Carrier decisions are affected by equipment cost, fixed operating cost, variable operating
cost, the responsiveness the carrier seeks to provide its target segment, and the price the
market is ready to pay
 E.g. FedEx designed a hub-and-spoke airline network for transporting packages to provide
fast, reliable delivery times
 UPS uses a combination of aircrafts, rail and trucks to provide cheaper transportation with
somewhat longer delivery times
 FedEx charges for packages based primarily on size
 UPS charges based on both size and destination

[Link]
Airlines have a high fixed cost in infrastructure and equipment
 Labor and fuel costs are largely trip related and independent of the number of passengers or
amount of cargo carried on a flight
 A airline's goal is to maximize the daily flying time of a plane and the revenue generated per
trip
 Airlines vary seat prices and allocate seats to different price classes as a significant factor of
success
 Air carriers offer a very fast and fairly expensive mode of transportation
 Small, high-value items or time-sensitive emergency shipments that have to travel a long
distance are best suited for air transport

Key issues that air carriers face include

 The location and number of hubs
 Assigning planes to routes
 Setting up maintenance schedules for planes
 Scheduling crew
 Managing prices and availability at different prices

[Link] Carriers
 They are transport companies like FedEx, UPS and U.S. Postal Service, which carry small
packages ranging from letters to shipments weighing about 150 pounds
 They use air, truck and rail transport
 They are expensive
 The major service they offer is rapid and reliable delivery
 They are best suited for small and time-sensitive shipments
 They also allow shippers to speed inventory flow and track order status, and thus helping
shippers to help their customers track their packages
 They pick up packages from the source and deliver it to the destination site
  The demand for the package couriers has increased due to increase in just-in-time deliveries
and focus on inventory reduction
 They are the preferred mode of transportation for e-businesses such as [Link] and Dell
 Companies use air cargo carriers for larger shipments and package carriers for smaller, more
time sensitive ones
 E.g. Dell uses air cargo to bring components from Asia but uses package carriers to deliver
PCs to customers
 Given the small size of packages and several delivery points, consolidation of shipment is a
key factor in increasing utilization and decreasing costs for package carriers
 Package carriers have trucks that make local deliveries and pick up packages
 Packages are then taken to large sorting centers from which they are sent by full truckload,
rail, or air to the sorting centers closest to the delivery point
 From delivery-point sorting centers, the package is sent is sent to customers on small trucks

The key issues in this industry include:

 The location and capacity of transfer points
 Information capability to facilitate and track package flow
 Scheduling and routing of the delivery truck

[Link]/Roadways
 Trucking industry consists of two major segments -TL (Truck Load) and LTL (Less than
Truckload)
 Trucking is more expensive than rail but offers the advantage of door-to-door shipment and
shorter delivery time
 It has the advantage of requiring no transfer between pickup and delivery

TL (Truck Load)
 TL operations have relatively low fixed cost and owning a few trucks is often sufficient to
enter a business
 The goal of a TL carrier is to schedule shipments to meet service requirements while
minimizing both trucks' idle and empty travel time
 TL pricing displays economies of scale with respect to the distance traveled and also the size
of the trailer used
 It is suited for transportation between manufacturing facilities and warehouses or between
suppliers and manufacturers
E.g. P&G offers TL shipment to customer warehouses
 The major issue in this industry is minimizing the time a truck is idle and the distance that it
travels without a load

LTL (Lower then Truck Load)

 LTL operations are priced to encourage shipments in small lots, usually less than half a TL
  Prices display some economies of scale with the quantity shipped as well as the distance
traveled
 LTL shipments take longer time than TL shipments because of other loads that need to be
picked up and dropped off
 LTL shipment is suited for shipments that are too large to be mailed packages but that
constitute less than half of TL
 A key to reducing LTL costs is the degree of consolidation that carriers can achieve for the
loads carried
 They use consolidation centers to which trucks bring in many small loads originating from
different geographic areas and leave with many small loads destined for the same geographic
area
 Consolidation increases the delivery time and the fixed cost of setting up consolidation
centers

Key issues for the LTL industry include:

 Location of consolidation centers
 Assigning of loads to trucks
 Scheduling and routing of pickup and delivery
 The goal is to minimize costs through consolidation without hurting delivery time and
reliability

[Link]
 It is used to move commodities over large distances
 They incur high fixed cost in terms of rails, locomotives, cars and yards
 There is significant trip related labor and fuel costs that is somewhat independent of cars but
vary with the distance traveled and the time taken
 Any idle time after the train is powered is very expensive due to labor and fuel costs
 The railways have to keep locomotives and crew well utilized as they constitute over 60
percent of the expenses
 The price structure and the heavy load capability makes rail an ideal mode for carrying large,
heavy, or high-density products over long distances
 Transportation by rail takes time
 Thus it is ideal for very heavy, low value shipments that are not very time sensitive
E.g. Coal
 The goal for railroad firms is to keep locomotives and crews well utilized

Major operational issues include:

 Vehicle and staff scheduling
 Track and terminal delay
 Poor on-time performance
 The railroad performance is hurt by the large amount of time taken at each transition
[Link]/sea
 Water transport, by its nature, is limited to certain areas
 It is ideally suited for carrying very large loads at low cost
 It is the slowest of all the modes and significant delays occur at ports and terminals
 It is difficult to operate for short-haul trips (it is still used effectively by Japan and Europe for
short hauls)
 In global trade, water transport is the dominant mode for shipping for all kinds of products
E.g. Cars, grain, apparel
 It is the cheapest mode of transport
 A significant trend has been the containerization, which has led to a demand for larger, faster,
and more specialized vessels to improve the economics of container transport.

Major issues:
 Delays at ports, customs, security
 Management of containers used form major issues in global shipping

[Link]
 It is used primarily for the transport of crude petroleum, refined petroleum products and
natural gas
 A significant initial fixed cost is incurred in setting up the pipeline and related infrastructure
 A pipeline operations is typically optimized at about 80 to 90 percent of pipeline capacity
 Due to cost considerations, they are best suited when relatively stable and large flows are
required
 It may be an effective way of getting crude oil to a port or a refinery
 Pipeline charging consists of two parts
1.A fixed component related to the shipper's peak usage
[Link] relating to the actual quantity transported
 This pricing structure encourages the shipper to use the pipeline for the predictable
component of demand

[Link]
 This is suitable when there are hilly regions which are inaccessible
 They cause the least damage to the ecology
 Using this, bulk items can be moved quickly
 It is vulnerable to high winds
 There is limitation on size and quantity of haul

[Link]
 It is the use of more than one mode of transport to move a shipment to the destination
 A variety of intermodel combinations are possible, with the most common being truck/rail
 This mode of transportation has grown due to containerization, which helps in easy transfer
between modes, and rise of global trade
 For global trade this modes is often the only mode
  This mode can create a price/service offering that cannot be matched by any single mode

 E.g. The rail/truck intermodel system offers the benefit of lower cost than TL and delivery
times that are better than rail
 It creates convenience for shippers, who have to deal with only one entity representing all
carriers who together provide the intermodel service.

Key Issues:
 Exchange of information to facilitate shipment transfer between different modes as these
transfers often involve considerable delays, hurting delivery time performance

Transportation Infrastructure and Policies

 The transportation infrastructure includes
 Roads
 Seaports
 Rail
 Airports
 Canals

Governments play a significant role in building and managing these infrastructure elements

Why infrastructure is important?

 Improved infrastructure has played a significant role in the development of transportation and
the resulting growth in trade
E.g. The role of railroads and canals in the economic development of U.S.
 The role of improved road, air and port infrastructure can be seen in the development of
China.
 There are reasonable grounds for the government to either own or regulate a monopolistic
transportation infrastructure asset
 When the transportation infrastructure asset has competition, within the mode or across
modes, private ownership, deregulation and competition works well
 Roads, ports and airports are largely public and not private, hence their public ownership is
justified
 Economist Vickrey has argued for public ownership of these assets but the setting of quasi-
market prices to improve overall efficiency
 Quasi-market prices need to take into account the discrepancy between the incentives of an
individual using the transportation infrastructure and the public as a whole that owns the
infrastructure
 Consider a vehicle owner who bases his decision to use a highway on the cost and benefit of
doing so
 The number of users whose value from a trip exceeds a particular cost is thus defined by the
demand curve
 The costs incurred by a motorist include the cost of time spent on the highway and the cost of
operating and maintaining the vehicle
 The time spent on the highway increases nonlinearly with congestion on a highway
 The average cost of each motorist increases with traffic flow as shown in the figure
 The number of motorists using the road is determined by the intersection of the demand
curve with the average cost curve at point A
 This results in an average cost to the motorist of P0 and a traffic flow of Q0

 From the perspective of public, it is more appropriate to consider how each additional
motorist impacts the total cost
 An additional motorist increases the average cost by a small amount but increases the total
cost across all motorists by a much large amount
 This is shown in figure by the marginal curve, which measures the marginal increase in the
total cost as a result of additional traffic flow
 We can observe that marginal cost curve is higher than the average cost curve
 This implies that, the marginal impact of a motorist on total cost is much higher than his or
her share of the impact
 From the marginal cost perspective, motorists should be charged a toll P1-P0 so that they
bear the true cost they are imposing on the highway system
 This toll will lower the traffic to Q1
The Factors Influencing the Cost of Transportation

1) Fuel Costs : Petrol and diesel have been in the price movement for a long time, and there is no
chance of the costs going down. With everything changing so rapidly around us, even the slightest
fluctuation of 2 paise per liter can hugely affect the transportation of goods.

2) Labour Expenses : Transporting goods needs hands, which comes with a price. You will have a
team of skilled and trained people to do the work, including moving, packaging, storing, labelling,
loading, unloading, and much more. The more people you need, the more cost you need to spend on
Labour which affects the final cost of transportation.

3) Means of Transportation : Choosing the method to transport the goods is an essential factor that
affects the cost of transportation. If you choose a bigger vehicle such as a Truck, your expense will
increase if you choose a small vehicle. Other vehicles used in India for transportation are trucks,
minivans, mini trucks, pickup trucks, etc. It is essential to select a suitable and affordable mode of
transporting the goods from one place to another. You need to calculate the labour costs, the driver’s
fee, the capacity of the vehicle to carry the given good items, transit time, and other such factors

4) Inefficient Routes : Road transportation in India can be very tricky if you cannot set up a proper
route. How do we do that? We at Tulsi Logistic service our clients with transportation strategies that
help lessen your burden from extra costs spent on longer routes. We have our in-house exports and
digital tools to optimise the vehicle route that helps us plan for your effectively. Get in touch with us
today.

5) The urgency of delivery : Transition costs are affected by the speed of delivery; if you have an
urgent priority delivery, it will cost you more than the regular ones. So plan your deliveries
beforehand to avoid facing the extra expenditure

6. The Distance : The distance the vehicle will travel from the warehouse to the manufacturing
company and to the final destination affects the costs. The only way to avoid paying extra money is
by reducing the pickup and drop-off points as much as possible.

7. Government Regulation : There are specific government regulations and rules such as taxes,
tolls, and other state acts that you need to abide by in order to complete your deliveries. Changes and
updates in the structure can affect the final cost of transportation.

Packaging issues in transportation

• Packaging is instrumental in getting the merchandise to the destination a safe, presentable
condition.
• International shipping requires better packaging compared to domestic packaging.
• Packaging should be environmental friendly and eco responsible.
• Intermodal containers must be encouraged.
• Cost attention should be considered for international packaging.
Importance of Packaging In Logistics
The world best materials in the world will be worthless if they are not able to reach their destination
and not only reaching their respective location is sufficient, but they must also be reached without
getting damaged. And to ensure, that your products are safe in their journey, packaging of the goods
play a vital role. In here we are discussing the importance of packaging in logistics.

1. Products Are Protected Products that get damaged in the transportation process can create
significant difficulties. It will not only cost you the value of the damaged product and shipping cost
but, there is also a possibility you also need to send replacements. Which gives you an additional
cost? Damaged goods upset clients, and gives the company a poor name. A good logistics packaging
keeps products safe, and ensures that your product arrives at their address in the perfect form and free
from any damage.

2. Give vital information to the customers A distributor requires a lot of information about the
product. And a transportation packaging is a suitable position to display the same. Numerous things
can be printed on the packaging boxes. Simple things, like which way up the transportation package
required to put, or the products in the package are fragile or not. One can also give detailed handling
guidance, for example, an appropriate temperature range for the products which is getting delivered.

3. A good packaging makes storage of goods possible A suitable packaging allows to store
products easily. It really does not matter what the size of the product, or how delicate a product is if
the right packaging is done.

4. Product packaging can even help you in increasing your sales figures If the packaging of your
product is retail ready, your goods can be displayed on the counters in their custom display. By
selecting packaging that highlights brand colors, product information, and other information which is
required to know by a customer, the chances of sales goes up are quite bright.

Role of containerization in logistics

What is containerization in shipping?
Shippers looking to reduce cargo handling, increase security and cut costs often turn to
containerization, the practice of consolidating multiple cargo shipments in a standardized ocean
container for transport as a single unit.
Even if containerization conveys numerous advantages to freight distribution, it does not come
without challenges. The main advantages of containerization are:

Standardization. The container is a standard transport product that can be handled anywhere in the
world (ISO standard) through specialized modes (ships, trucks, barges, and wagons), equipment, and
terminals. Each container has a unique identification number and a size type code, allowing to be a
unique transport unit that can be managed as such.
Flexibility. Containers can be used to carry a wide variety of goods such as commodities (coal,
wheat), manufactured goods, cars, and refrigerated (perishable) goods. There are adapted containers
for dry cargo, liquids (oil and chemical products), and refrigerated cargo. Discarded containers can
be recycled and reused for other purposes.

Costs. Container transportation offers lower transport costs due to the advantages of standardization.
Moving the same amount of break-bulk freight in a container is about 20 times less expensive than
conventional means. Containers enable economies of scale at modes and terminals that were not
possible through standard break-bulk handling. The main cost advantages of containerization are
derived from lower intermodal transport costs.

Velocity. Transshipment operations are minimal and rapid, and ship port turnaround times have been
reduced from 3 weeks to about 24 hours. Because of this transshipment advantage, transport chains
involving containers are faster. Container shipping networks are well connected and offer a wide
range of shipping options. Containerships are also faster than regular cargo ships and offer a
frequency of port calls allowing a constant velocity.

Warehousing. The container is its own warehouse, protecting the cargo it contains. This implies
simpler and less expensive packaging for containerized cargoes, particularly consumption goods. The
stacking capacity on ships, trains (double-stacking), and on the ground (container yards) is a net
advantage of containerization. With the proper equipment, a container yard can increase its stacking
density.

Security and safety. The container contents are unknown to carriers since it can only be opened at
the origin (seller/shipper), at customs, and the destination (buyer). This implies reduced spoilage and
losses (theft).

The main drawbacks of containerization are:

Site constraints. Containers are a large consumer of terminal space (mostly for storage), implying
that many intermodal terminals have been relocated to the urban periphery. Draft issues at the port
are emerging with the introduction of larger containerships, particularly those of the post-Panamax
class. A large post-Panamax containership requires a draft of at least 13 meters.

Capital intensiveness. Container handling infrastructures and equipment (giant cranes, warehousing
facilities, inland road, rail access) are important capital investments that require large pools of
available capital. This requires the resources of large corporations or financial institutions. Further,
the push towards automation is increasing the capital intensiveness of intermodal terminals.

Stacking. The complexity of the arrangement of containers, both on the ground and modes
(containerships and double-stack trains), requires frequent restacking, which incurs additional costs
and time for terminal operators. The larger the load unit or the yard, the more complex its operational
management.

Repositioning. Because of trade imbalances, many containers are moved empty (20% of all flows).
However, either full or empty, a container takes the same amount of space. The observed divergence
between production and consumption at the global level requires the repositioning of containerized
assets over long distances (transoceanic).

Theft and losses. High-value goods and a load unit that can forcefully be opened or carried away (on
a truck) implied a level of cargo vulnerability between a terminal and the final destination. About
1,500 containers are lost at sea each year (fall overboard), mainly because of bad weather.

Illicit trade. The container is an instrument used in the illicit trade of goods, drugs, and weapons, as
well as for illegal immigration (rare).

Safety Hazards in the Transportation Industry:

Workers in the transportation industry face many challenges. Whether in the form of inclement
weather or the risk of accidents, truckers encounter problems. It’s important to recognize these issues
to help truckers become aware of potential mishaps. Keep reading to learn about the top five safety
hazards in the transportation industry today.

1)Distracted Driving
Driving for extended periods of time can lead to distracted driving. Some truckers believe they can
multitask, take small breaks, or look at their phone while on the road. However, this is a significant
safety hazard. Keeping your eyes on the road is only a portion of driving. Truckers must mentally
register weather conditions, other drivers, and obstacles on the road, meaning there is no room for
distractions.

2)Slips and Falls

Slips and falls are a big problem in the transportation industry. Given that truckers operate large
vehicles, it can be difficult to enter or exit the truck. As a result, slips and falls can occur.
Fortunately, truckers can follow a written safety program for trucking companies that covers fall
protection and prevention.

3)Changing Weather Conditions

Changing weather can affect driving conditions for truckers. If a trucker is unable to adjust their
driving accordingly, it could lead to a dangerous situation. For example, if a trucker is driving
through a mild snowstorm, they must drive slowly and with caution. Failure to do so may cause the
truck to slide on ice and hit other vehicles. Ultimately, truckers must be aware of weather conditions
and prepare themselves to modify their driving accordingly.
4)Ergonomic Injuries
Drivers can experience back, arm, leg, and hand pain from sitting in uncomfortable positions for
extended periods. In addition, when ergonomic injuries occur, they can affect the driver’s ability to
handle and unload cargo. Over time, injuries can delay delivery and pick-up times and further affect
the driver’s body.

5)Transportation Accidents
One of the most obvious hazards is transportation accidents. Truckers drive large vehicles that have
significant blind spots and are difficult to maneuver quickly. In addition, drivers are on the road for
long hours through different weather conditions; the risk of accidents increases when truckers face
bad road conditions or encounter reckless [Link] in the transportation industry face many
challenges and hazards. It’s essential to recognize hazards to keep truckers aware of potential
accidents

State of ocean transport

Ocean transportation is any movement of goods and/or passengers using seagoing vessels on voyages
that are undertaken wholly or partly at sea. With Twill, you can transport ocean freight via our ocean
transportation services in more than 150 countries and to and from over 300 ports.

[Link] managers reliant on ocean cargo shipping have been confronted with a series of
calamities and close calls this year, note industry analysts.
[Link] pandemic led to global changes in consumption and shopping patterns, including a surge in e-
commerce. This was followed by increased import demand for manufactured consumer goods—most
of which are moved on container vessels.
[Link] the lessening of lockdown measures and varying speeds of recovery worldwide—as well as
stimulus packages supporting consumer demand—inventory-building and frontloading contributed to
a further increase in containerized trade flows. Finally, the recent obstruction of the Suez Canal by a
grounded container ship contributed to another escalation of freight rates.
[Link] United Nations Conference on Trade and Development (UNCTAD) recently released a paper
titled “Container Shipping in Times of COVID-19: Why Freight Rates Have Surged.”
[Link] notes that the underlying causes of skyrocketing expenses are complex and include capacity
management by carriers and a severe shortage of containers. Pandemic-related delays in intermodal
connections further cloud the picture.
6.“The impact of the container shortage is greater on longer and thinner trade routes to developing
regions than on the main east-west routes
[Link] the outset, the disruptions resulting from the pandemic, trade imbalances and changing trade
patterns led to shifts in the geography of container trade. Empty boxes were left in places where they
were not needed, and repositioning was not planned. Moreover, as carriers introduced “blank
sailings,” or skipped port calls, a mismatch between supply and demand for empty containers was
exacerbated, as empty boxes were left behind and failed to be repositioned.
Global alliances
Shipping alliances have become the big thing for many shipping lines. As the alliances make it
possible to have lower prices and offer a larger variety of services. Do you want to know more about
three of the major shipping alliances worldwide and their benefits? Then keep reading

Recently, shipping alliances have been in the news:

“Hyundai Merchant Marine (HMM) is to join THE Alliance when its slot charter agreement with 2M
expires next April”, according to the Loadstar.
Three major shipping alliances (2M, THE Alliance, and Ocean Alliance) were formed in 2017. They
were formed to facilitate two elements that ocean carriers compete on: low prices and broad service
coverage. These three alliances account for 80% of the global container market, according to
Alphaliner’s ranking of all the shipping lines.

Benefits of shipping alliances

Shipping alliances can help carriers facilitate low prices and broad service coverage through
economies of scale and economies of scope. The high fixed-cost structure of shipping lines is one of
the main arguments for shipping lines to collaborate. A weekly liner service between different ports
requires investment in a set of ships. They will sail irrespectively of their utilization rates.
Collaboration between carriers, for instance, through a vessel sharing agreement (VSA) can mitigate
this risk and increase utilization rates.
Shipping lines are under high pressure to offer low prices to their customers as container
transportation. Their business is mainly a commodity since containerization has brought down
transport costs.
Ship size significantly increased to mega-ships of more than 20,000 TEUs to generate lower costs per
transported container. Variable costs that can be reduced through the usage of shared resources
include many things not only ships. But also ports, terminals, and networks. In the end, shipping
alliances are tools used to acquire bigger ships together. As well as to share vessels to guarantee high
utilization rates. Because substantial cost savings (economies of scale) can only be achieved if
partners are willing to collaborate.

Networking gives better services

Moreover, collaboration helps carriers to improve service offerings to their customers through a more
comprehensive global shipping network. Research shows that extending coverage and providing
more routes is the most important motivation for participating in strategic alliances. Why? Most
shipping companies are stronger in certain areas. This usually happens with a lot of experience and
partnerships between carriers. Carriers, who are strong in complementary regions with a broader
network, increase service offerings to their customers.
Entering alliances seems to be a good fit for smaller (extended service coverage) and larger shipping
lines (rationalization of resources). But, in the end, every carrier makes its own strategic choices.
This becomes clear when you look at the different strategies of MSC and their German competitor,
Hapag-Lloyd. For a long time, MSC focused on organic growth by acquiring ships rather than
shipping firms. It did not engage in alliances until 2015. In contrast, Hapag-Lloyd has been
collaborating in partnerships since 1989 and acquired various carriers, but never bought mega-ships.