Comtois also recognizes that transportation plays a considerable role in the economy with its omnipresence throughout the production chain, at all geographic scales.
Coyle, Kusumal Ruamsook and Evelyn A. Thomchick From the Quarter 1 issue Comment High transportation costs are driving three main shifts in supply chain strategies. These changes are having a beneficial impact not just on transportation budgets but also on broader supply chain and financial performance.
During the s and the first part of the 21st century, the high availability and low cost of transportation services relative to the cost of holding inventory encouraged organizations to emphasize fast, frequent delivery to customers through such means as just-in-time delivery.
But things have changed dramatically in the last decade, and companies increasingly are calling such long-standing strategies into question. The "game changers" are volatile, escalating oil prices and an imbalance of supply and demand for freight transport services. These realities have led to high transportation costs—high enough to cause companies to make transport-driven shifts in their supply chain strategies.
Three such shifts are having a notable impact today. The first is a shift from offshoring to nearshoring sourcing strategies in an effort to reduce the number of miles shipments travel.
The second is a shift from designing products and packaging for marketability and more efficient production toward designs that also incorporate "shipability" considerations. But it is not widely recognized that their benefits go well beyond that.
As we will explain, they also contribute to improvement in an organization's broader supply chain and financial performance. Why are prices high? A conjunction of factors and economic developments lies behind rising transportation costs. At the center of today's transport challenges are oil prices.
Freight movement in most modes remains largely dependent on ever-more expensive and finite fossil fuels, primarily diesel fuel. According to the U. Energy Information Administration, the price of crude oil is the dominant factor influencing changes in diesel prices.
An equally influential factor in transportation costs, the demand-supply imbalance of freight transport services, is a repercussion of trade growth that has outpaced the availability of transport services to such an extent that it has led to serious issues of congestion and capacity constraint in the United States.
The remarkable growth in U. This is likely to get worse in the coming decades.
Despite a significant drop in total freight volume during the depths of the recession, economic conditions are improving, and it is projected that freight volume will grow 68 percent bywith particularly strong growth in international freight. Simply put, more goods entering through the ports means more domestic moves to deliver these goods to their destinations.
Moreover, as ships increase in size, demand for inland transportation services also grows.
This becomes clearly evident when one considers that the average size of container ships calling at U. To put this trend in perspective, the average size of container ships in was 1, TEUs foot equivalent units.
More telling, perhaps, is that by that point, containerships of more than 18, TEUs were already on order, and 22,TEU ships were being discussed. It is no surprise, therefore, that capacity constraints are particularly severe at major truck and freight rail corridors linking major seaports to inland destinations.
The HTF is a U. The money is distributed among the U. In essence, persistent oil price volatility and capacity constraints mean that high-priced transportation is here to stay.
As a result, managing transportation costs is more important than ever for preserving margins and profitability as well as improving supply chain performance.
The effect on strategy A business environment that is being strangled by volatile oil prices and high-cost transportation solutions has prompted organizations to rethink their supply chain strategies. Three transport-driven shifts in supply chain strategy in particular have emerged and are gaining ground:How Does Globalisation Affect Freight Transport in Singapore Essay omnipresence throughout the production chain, at all geographic scales.
Singapore Review () stated that Singapore is heavily dependent on exports; therefore freight transportation holds an important role in stimulating the economy of Singapore and making it what it is today. Globalization integrates production, distribution and consumption across borders creating one market.
Global business has grown tremendously since WWII. Global business has grown tremendously since WWII. Organizations like the WTO, along with innovations in technology and transportation constitute substantial movement toward globalization.
Potential for creating new markets as well as cost savings push companies to consider globalization. Globalisation, Transport and the Environment OECD has recently analysed the impacts of globalisation on transport levels, the consequences for the environment, and the policy instruments that can be used to limit any negative impacts for the environment.
The key . 5 THE IMPACT OF GLOBALISATION ON INTERNATIONAL ROAD AND RAIL FREIGHT TRANSPORT ACTIVITY – PAST TRENDS AND FUTURE PERSPECTIVES 1. Introduction 1.
This paper first establishes the recent trends in international trade volumes. Global goods movement is a critical element in the global freight transportation system that includes ocean and coastal routes, inland waterways, railways, roads, and air freight.
In some cases, the.