Term Paper: Trucking vs. Railways in Supply Chain Context

Pages: 12 (3847 words)  ·  Bibliography Sources: 10  ·  Level: College Senior  ·  Topic: Transportation  ·  Buy This Paper

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[. . .] Main findings of this study are:

• A premium money back guarantee may be offered for the domestic intermodal shipments to diversify clientele. Although it is merely on the lanes but it is felt by BNSF that it can perform quite well, a signal is sent by it to the customers that the firm is very thoughtful about being punctual. The intermodal companies have been able to get new customers as well with the help of the guarantees.

• When it comes to the working together of the railroads the reliability gets very difficult. It has been noticed quite often that reliability is not always very high in case of the single line shipments with the interline shipment.

• Load centering which is a place where all the containers are put together in accordance with their last stop has actually shown to make the performance and transit times better.

In the American Trucking Association (2012) study it was observed that the rules which govern the truck size, weight limits and the potential impacts relate to the alteration in these limits. Modal competition and shipper concerns have also been discussed in the paper. Main results of this study

• A reduction in the costs of truck can take place due to the alteration in the size of trucks as, there will be need for less trips. Reduction in other costs like order processing, ware housing, and loss and damage might also take place.

• The decrease in the costs of truck can result in a change in the choice of mode and can shift from truck to rail.

• There is no competition between rail and truck for the truck shipments that cover the short distance.

• It was in 1994 that the market share especially the intermodal freight was increased by the railroads.

• 9.4% was the return on investment in case of railroad in comparison to the return on investment in 1993 which was 7.1%.

• The decision-making process of the shipper has been modeled by the report. The carrier and mode switching behavior is step 6. It may be a high cost option to switch the carriers. The factors which affect the ode choice are:

service quality, carrier use and transit time, carrier use, asset productivity and customer satisfaction.

• A strong growth is expected to take place in the rail intermodal traffic in the next 10 years.

• The public and private sector both benefit from the investments in the roadways which help in connecting the intermodal rail freight terminals

In addition, Federal Highway Administration (2004) has studied all the factors regarding the betterment of funding for the freight infrastructure. The sources from the information has been reviewed are Federal, local and State. Main results of their studies are as follows:

• There are various ways in which the freight financing is conducted and there is a need to make these various methods available as a guideline for the decision makers of the transportation.

• Quantifying the public benefits from the projects of freight investment is very hard. Comparing the non-freight projects against the freight projects is also a very difficult thing to do.

• Conflicts are there among the long-term project planning and the short-term demands of the market. Because of this it is usually on the high-level financial support that the large-scale projects depend upon.

• There are variations in the financing costs which depend upon the sponsoring agency such as the Treasure bonds are not tax-exempt while the municipal bonds are.

• Debt is often chosen to be issued by the local sponsors rather than waiting for the offer of funds that comes just once each year.

• Receiving grants had been found to be difficult by the shortline rail companies as the needs might be far beyond the financial capability that they have.

It has been argued by American Trucking Association (ATA) (2006) that it is not because of the unfair subsidies that the trucks are dominant, instead its because of their flexible, reliable, timely and efficient nature that they are dominant. These characteristic are very important today when all the manufactured goods have to be delivered in the just-in-time manner. Main results of this study are:

• In order for a sufficient change in the modal shift to take place from truck to rail for the average rail haul length (700km), the highway user fees has to triple for the trucks. There won't be any modal shift in case of the short-haul lengths (under 500km) because of the change in the charges of the users.

Approximately 70% of the shipments by the trucks are short-haul.

According to the Road Information Program (2001) the delivery of the services and goods to the customers will become slow with the increase in the traffic therefore, in the future higher costs will be faced by the consumers. The relationship that exists between the living standards in U.S. And the traffic congestion has been analyzed in this paper. Main results of this study

• The demand for the courier freight services and trucks has increased due to the ever-growing service economy as well as the increased productivity of the manufacturing sector.

• The trucks carry about 72% of the goods that are shipped from within the U.S. And about 69% of the tonnage of goods.

• The total costs for the urban traffic congestion is 78 billion each year in the lost fuel and time.

• One of the problems which is being faced by the freight transport is the bad conditions of the roads that connect the port and rail terminal to the major roads.

• It is being estimated by the U.S. Census Bureau that by 2020 the total freight tonnage will double up.

• It is being expected that by the year 2020 trucking will grow in the Western states by approximately 100%, in the Planes and Midwest states by 89%, in the New England and Mid-Atlantic by 79% and in the Southern states by 89%

• It is expected that from among all the increases in the freight movement, 82% will occur by the truck.

The creation along with the successes of joint intermodal service among the Santa Fe Railway as well as J.B. Hunt Transport Services Inc. was reported by Jeff (2001). Main results of this study

• It was shown by the partnership that the biggest customers of the railroads could be the trucking companies and that they can definitely work together.

• It was quoted by the Chairman Hunt, "With the betterment of railroads with the service and the high fuel prices and less number of driver there will be increased intermodal."

The aim of the Washington State Department of Transportation (2001) study was to depict the worth of rail freight as the transportation system's part in the state of Washington. Main results of this study were:

• In the absence of rail service there will be a need to add more than 1 million trucks to some sections of the interstate highway which will result in $329 million in the travel-time and vehicle operating costs to the travelers of the highway.

• In the absence of the rail service, there will a need for the increased highway capacity which will cost $851 million.

Washington State Department of Transportation is a federal program which, in order to fund the freight rail facility construction and rehabilitation loans money. It hasn't been since 1995 that this program has gotten any appropriations and still it hasn't been harmed as, it is from the repaid loans that the money is collected.

Conclusion

It can be concluded through this review and by looking at the various relevant studies that there are a lot of factors which influence the freight mode choice. The freight demand characteristics, commodity characteristics, customer characteristics, cross elasticities, modal characteristics, freight costs have all been studied by the researchers and they have found that all of these have the tendencies to have an impact on the mode choice. Similarly, it has also been noted that in case of the higher valued good and the short trips the trucks are preferred whereas, in case of the low-value and bulky products, and the long trips the railways are preferred. Most of the times it is important to weigh the cost benefits against the customer service as well as satisfaction for a lot of the commodities where there is a time constraint. In case of the commodities which have either the service guarantees or the time constraints mostly truck is preferred as a mode of transportation because of the reliability, speed and flexibility.

It is a reasonable deduction here that the balance between the factors can get shifted due to the intervention of policy. The characteristics which make the commodities… [END OF PREVIEW]

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Trucking vs. Railways in Supply Chain Context.  (2014, April 20).  Retrieved July 23, 2019, from https://www.essaytown.com/subjects/paper/trucking-railways-supply-chain-context/2361761

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"Trucking vs. Railways in Supply Chain Context."  Essaytown.com.  April 20, 2014.  Accessed July 23, 2019.
https://www.essaytown.com/subjects/paper/trucking-railways-supply-chain-context/2361761.