Summary of Chapter 1 and 2 Principles of Transportation

Transportation plays a critical role in the world economy as well as the supply chains that supply products to these economies. There are many different forms of transportation; from railroads to pipelines there are many different options available to companies today. One of the most important things to remember is that without transportation product can’t get to where they’re needed.

When America was first settled the only form of transportation available to import materials was through shipping vessels over the ocean and because of that most major cities at the time were settled on the Atlantic coast forming port cities. Then came the railroads making it easier to transport things throughout the country. After that came the automobile and roadway systems allowing for a less restrictive system of travel. And finally came the ability to establish piping systems to deliver raw materials like oil quickly and efficiently.

When it comes to freight demand you have to take into account the service components. These components are transit time, reliability, accessibility, capability, and security. Transit time will affect the amount of inventory each level of the supply chain will need to hold in reserve. Reliability is the consistency of the travel time. If the reliability level is low it will lead to more stock outs or higher inventory carry costs. Accessibility is the ability of the specific transportation provider to move freight between specific places. Capability refers to the carriers’ ability to provide special services. And finally security is in essence the safety of the goods while they’re in transit.

There are a set of external factors that are changing the dynamics of businesses today. These factors include globalization, technology, supply chain integration, consolidation, consumer empowerment, and government regulation and policy. The factor that is usually regarded as the most impactful on organizations is the globalization aspect....