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Key Considerations for Selecting Transportation Mode

Road transport is ideal for small consignments whereas rail transport would be suitable for heavy or bulky items. Air transport would be more suitable for perishable and for speedy delivery of goods but it comes at a higher cost. However, sea transport is more ideal for longer distances if time is not a factor. Hidden costs like package cost, insurance premium, finance charges etc. may add to the final cost. Hence, it is important to study all the various factors before choosing the cost-effective transport mode. In the current world where time is money, it is critical to select the correct mode of transportation to deliver goods in an effective manner. The type and volume of goods, delivery timeline, geographical locations and regulatory requirements at different places are some of the major factors that determine the selection of transport mode. The main types of transport modes include air, sea, road and rail transport. Every mode of transport has their advantages and disadvantages. This article discusses the factors that should be taken into consideration when deciding on the transport mode for moving goods.

Nature of Product and Transport Cost

The size, weight and volume of goods plays a vital role in selecting the mode of transport. Air and land transport options are favored for fragile and less weight shipments. If there is no urgency sea and rail transports are suitable for heavy weight and long distance shipments. In the case of fragile, high value and hazardous goods, air and land transport modes are preferred over other modes due to the nature of the goods. Export planning is a not a simple process.

Total cost of transport from “Origin to Destination” would need to be carefully considered when choosing mode/modes of transport. Cost will make a significant impact on the selling price. Thus, the final cost must be decided based on transport cost. Henceforth, budget is the primary consideration for selecting the transportation mode. Rail transport is most economical when heavy or bulky products are being transported over a long distance via land. Land transport, typically by truck, is more suitable for lesser volume of goods for shorter distance. It also saves picking and handling cost. The cheapest mode of transport is water transport, but it is also the slowest mode. However, it is most suitable for heavy and bulky goods that are needed to be transported over longer distances when there is no urgency in delivery of goods. The best option to transport consumable, treasured and fragile goods is air mode although it is typically the most expensive mode. Thus, overall consideration of transportation cost is most important for imports and exports. It is also important to keep in mind the ‘hidden costs’ such as insurance and finance charges while calculating total cost.

Availability, Regularity and Safety

Availability is another key factor in selecting the transportation mode. Due to inaccessibility of certain transport modes, a higher frequency is required to reduce waiting time to satisfy customer demand. In most cases, speed determines the selection of the mode where urgency is considered as a crucial aspect. The best option is always fastest mode but it will obtain less profit for the business. The slowest mode, which would likely be the cheapest, will result in unacceptable delays for the customer, affecting business. In the case of an emergency, speed influences much more in the day-to-day expeditions. The transport mode will also be influenced crucially by safety and security of goods in transit.  Sea transport is generally considered as the riskiest due to unpredictable nature of sea and long duration of travel. Additional packaging to protect the goods in transit could add to the overall cost. As losses incurred are less, road transport is preferred over rail transport. Special facilities are essential for some of the goods and hence the mode of transport has to be considered diligently. For e.g., refrigeration is required for perishable goods; security measures are required for handling dangerous goods.

Lead Time of Product and Flexibility

It is important to consider the right mode of transport for certain goods that needs to be transported quickly, especially perishable goods. Air transport is the best and speedy option to meet the urgent requirements for long distances. However, this would be costlier. Under land transport, road transport is preferred over rail transport for shorter distance deliveries. However, rail is faster and more economical for longer haul journeys. Although water transport is the cheapest transport mode, it is not considered suitable where time is a critical factor. Flexibility in transporting goods should be considered in the selection of right transportation mode. Any potential delays that would lead to downstream delays due to rigid schedules needs to be carefully considered. Road transport is considered the most flexible mode as it is not constrained by pre schedule time table, flight time and shipping routes. Road transport is very easily accessible as there are no restrictions in day and night operation. It will suit for all time frames at personal convenience and has the added benefit of door-to-door delivery. For air and sea transport, additional delays will be encountered due to the inflexible schedules.

Product Size and Other Considerations

Product size is also one of the factors to be considered for selecting the transport mode. The weight, density and shape of the products as well as its packaging will affect the selection of transport mode. For instance, lightweight products can be transported by land or air such as electronic components, whereas heavier products like iron or heavy metals are suited for railroads or waterways. Shape of packaging goods is also one of the factors to be considered, since dimensions involve certain limit in air and land transportation. There are other considerations such as the terms of export sales contract which stipulates certain conditions like particular mode of transport to be used. Another factor is the location of foreign market which would eliminate certain modes of transport due to geographical conditions. There should also be available bulk handling or container handling equipment facilities at the port of destination.

Conclusion

There are many factors that determine the mode of transport to be selected for a particular goods movement. Mode of transport from origin to destination could be a single mode or a combination of different modes. Rail transport would be most ideal for heavy or bulk items. Road transport would be most suitable for smaller consignments covering shorter distances. If speed is the most import factor to be considered, air transport would be the fastest mode especially for light, perishable or valuable goods. However, if time is not of priority, sea transport is always the most ideal mode of transport specially for longer distances.


References

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Dewitt, W. & Clinger, Jennifer. (2017). “Intermodal Freight Transportation”. Retrieved from https://tradelogistics.co.za/factors-to-consider-when-choosing-the-most-suitable-mode-of-transport/, accessed 10/09/21.

Navata Road Transport. (2020). “7 Factors in choosing The Right Mode of Transport for the Goods Movement”. http://www.navata.com/cms/choosing-the-right-mode-of-transport/ accessed 10/09/21.

NurjannaBinte Hamid, DLSM. (2019). “Considerations for Selecting Transportation Mode”. Retrieved from https://publication.sipmm.edu.sg/considerations-selecting-transportation-mode/ , accessed 10/09/2021.

SivalingamMunisamy, DLSM. (2018). “The Eight P’s for Effective Delivery of an Integrated Logistics Operation”. Retrieved from SIPMM: https://sipmm.edu.sg/8-p-effective-delivery-integrated-logistics-operations, accessed 10/09/2021.

Sonia Lai Jie Yin, DLSM. (2018). “Key Success Factors for Effective Logistics Practices”. Retrieved from SIPMM: https://sipmm.edu.sg/key-success-factors-effective-logistics-practices, accessed 10/09/2021.

Balaji Vidhya, DLSM
Balaji Vidhya, DLSM
Balaji Vidhya has substantive years of experience in the field of logistics, specifically in the Shipping Industry. She holds a Master degree and is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Vidhya completed the Diploma in Logistics and Supply Management(DLSM) on September 2021 at SIPMM Institute.
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