flows of freight have of late beenEssay

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¶ … flows of freight have of late been a critical element of the modern changes in the financial and economic systems at the local, regional and global scales. Looking at these changes one must only do so at quantitative, structural, and operational levels. Structural changes largely entail manufacturing systems with their production geography, while operational changes largely involve freight transportation and its distribution geography. Thus, the key question not only involves the nature, and movements of freights, but also the manner in which this freight is moving (Hesse & Rodrigue, 2004).

The multifaceted perspectives of friction in view of modern supply chain management involve a number of factors. Hesse and Rodrigue (2004) noted that transport expenses, the intricacies of the supply chain, the physical environment and the transactional environment were the most significant. Here, specific urban perspectives are assessed, including the logistic costs, the divergence of production and supply, intermodalism, reliability and transit time. From a geographical viewpoint the most evident difficulty entails the lack of connection between production and distribution/supply. Yet, despite the increasing extent of divergence between the elements of the supply chain, the degree of embeddedness between market demand, distribution and production has improved. The fact that there is an efficient distribution process/system that enables global commodity chains links or embeds the components of the supply chain in one cohesive systems of clients and suppliers. Extensive resource consumption around the world is proof of the reliance of the global economy on supply sources that are often located far away. The need to surmount that distance is essential to economic progress and the building and development of modern and efficient transport systems that have increased the level of integration of geographically distant areas with an improved geographical complimentarity. With developments in transportation, geographical distance has become quite less problematic, as comparative benefits are taken advantage of with regards to networks distribution capacity and production costs (Rodrigue, 2012).

In many supply chains, the speed/velocity of freight movement has grown to such an extent that time-based management of the distribution process or chain has become essential. This speed must also be achieved with a degree of reliability with regards to schedule integrity. This allows for a shift from push (supply based) logistics to pull logistics (demand based) where a significant part of the inventory can easily be kept in circulation, minimizing the need for warehousing. Still, the speed of freight faces several obstacles. For instance, more traffic means potential congestion along critical transport corridors or at terminals, both with a negative effect on the velocity of freight. Maritime shipping firms play an important role in the movement of freight because they form the longest leg in terms of global trade. Since the biggest inter-modal terminals are positioned within cities and other metropolitan locations, they are helping trigger newer and fresher challenges for the movement of freight, especially at their access gates. In fact, these points are usually the points of conflict or dispute over the externalities of freight flow (Rodrigue, 2012).

Total logistics costs entail a full range of costs to make goods available to the final consumer including transshipment, warehousing and transport. Supply chain managers are especially vulnerable to the cost structure stability implying that the routes that have higher inflation costs may not be considered, with these providing higher costs and less volatility being preferred. The least expensive routing option is considered, given that the cost structure stays table, and that the supply chains will unlikely be altered if a particular cost advantages is merely temporary. The notion of cost is relative due to the fact that its importance is linked to the value of the products or cargo being transported. Cost considerations often tend to be of more importance for highly containerized products that have low value, e.g. paper, as compared with high value goods such as electronics. Total logistic costs give a lot of information regarding location dynamics particularly of distribution centers. Transportation costs have continued to be a major issue as they amount to approximately 50% of the entire cost. Similarly, Inventory carrying costs have also been high in that they account for about 20% of total costs (Rodrigue, 2012).

Transit time is a key factor that hugely influences inventory cycle time and inventory carrying costs in supply chain management. Therefore, for a cargo that is perishable or has a high value, the shortest and/or fastest routing option will be preferred. Transit time is also a significant aspect in the measurement of transport costs, especially considering the fact that logistics concomitantly entail time and cost management. The cold chain, for instance, is a type of supply chain that has a high level/degree of time friction due to the fact that it transports products that are easily perishable and temperature sensitive. Longer time periods are associated with the risk of degradation of the product because it endangers the temperature integrity (Rodrigue, 2012).

Reliability is linked to an element that is mitigated by modern supply chain management activities. For a few supply chains, transit times can at times be a secondary factor if the shipments continue arriving at the distribution center within the stipulated time. If shipments continue to be reliable and regular, it is possible to structure supply chains accordingly via having more inventory in transit. Thus, lack of reliability then becomes a friction factor for supply chains. Freight distribution also entails some level of fragmentation, implying that the higher the degree of fragmentation, the more thorough and significant the efforts that will be made to maintain its operational conditions. The more the uncertainty, the more costly and less reliable freight distribution is. Some of the most common causes of uncertainty are congestion, energy prices, and capacity constraints (Rodrigue, 2012).

Bottlenecks in terms of logistics are locations within the global freight distribution network that have nodal capacity constraints. These are the key locations where logistical friction occurs, and it often corresponds to large cities. Physical limitations can create bottlenecks as the traffic expands. Insufficient investment in infrastructure can create bottlenecks in situations where rapid economic growth is occurring. Temporary transportation bottlenecks can be due to market or natural forces. A huge increase in demand (surge) can also bring about a bottleneck, because many freight distribution systems are designed to convey a constant degree/level of service. Insufficient investment, most commonly through little or no maintenance, can cause bottlenecks which have the potential to become permanent. Business rules and regulations that stop and delay the movement of goods and products for safety or security inspection scan result in bottlenecks. Even if the government's intention is not to bring about delays, these inspections often inevitably cause disruptions and delays. Supply chain bottlenecks are associated with specific responsibilities and procedures in the supply chain management that may cause logistical bottlenecks. For example, labor availability, including work shifts, may bring about time-based capacity shortfalls at distribution and terminal centers. Some companies may create bottlenecks as a rent seeking maneuver since they do have control over components of the supply chain. Technology can also create a bottleneck as various information exchange protocols can bring about delays in information processing and thus cause delays in shipments or trans-shipments (Rodrigue, 2012).

National firms may face an array of frictions in logistics such as volatile oil prices, fluctuating supply chains, stricter carbon controls, toll costs, lack of policies, offloading turnaround times, poor co-ordination among government departments and their related agencies, and delays at border points. Offloading and loading turnaround times often consume a lot of time. Moreover, the scarcity of skills, especially in field jobs such as technicians and qualified drivers, has a significant impact on accident rates, vehicle downtime, vehicle operating costs, fuel consumption, and vehicle lifespan. Firms are finding themselves increasingly under pressure to improve, or better yet, optimize their logistic processes and infrastructures in a way that is environmentally responsible. All of these factors have a role to play in the rising logistic operating costs (Henderson, 2013).

SLP1 Assignment

Part 1

FedEx

FedEx Corporation is a logistics firm that was incorporated on October 2, 1997, and caters for transportation, business services, and e-commerce under the brand name FedEx. The firm provides its services through four business segments: FedEx Services, FedEx Express, FedEx Freight, and FedEx Ground. FedEx Express provides an array of international and domestic shipping services for freight and delivery of packages. FedEx Ground offers residential and business money-back guaranteed package delivery services. FedEx Freight provides LTL (less-than-truckload) freight services. FedEx Services offers the three other FedEx firms with information technology, sales, marketing, customer service, communications, and quite a number of other back-office support services (FedEx Corp (FDX) Company Profile, n.d). Moreover, FedEx Services offers clients with retail access to FedEx Ground and FedEx Express shipping services via FedEx Office and Print Services ("FedEx Office") and provides technical support, customer service collection and billing services through FedEx TechConnect (FedEx Annual Report 2014, n.d).

The Federal Express Corporation (the FedEx) was founded in 1971 by Frederick W. Smith, a 28-year-old Memphis… [END OF PREVIEW]

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