Silicachem Corporation: Outbound Freight Transport Report

Topics: Intermodal freight transport, Transport, Cargo Pages: 5 (1215 words) Published: November 13, 2012
MSc in Logistics & Supply Chain Management

Freight Transport Assessment

SilicaChem Corporation:
Outbound Freight Transport Report

Jia GUO, Bethie

1. Introduction
This short report recommends the best options of serving the Spanish distributor and the North America customer based on information given. Although cost is the main consideration in the analysis, various other criteria such as service level and transport modal features are also examined. In order to deliver a more comprehensive discussion, weaknesses of the recommended modals are listed, which should be carefully evaluated when further information is available.

2. Serving the Spanish distributor

2.1 Recommendation
Based on the given information, the intermodal service offered by carrier MacAndrews is the most recommendable option, taking cost and service level as the major considerations. As shown by the cost comparison in Appendix 1, the service rate (cost per tonne) of MacAndrews is £119.05, the lowest among all available options, representing a huge annual cost reduction potential. Furthermore, the full-load capacity of intermodal containers is lower than that of road freight trucks, and thus would provide better chance of realizing full load benefits (Rushton, 2010).

Evaluating service levels is less straight forward than comparing costs. Although the transit time of intermodal options, 14 days, is much longer than the 4-day transit time of road freight, two other factors should be considered. On the one hand, SilicaChem should identify the transit lead time demanded by the Spanish distributor, because a ten-day-difference may be trivial to the customer. For example, when demand is reasonably stable or predictable, longer transit time is more tolerable as it would not greatly affect the distribution performance. On the other hand, delivery reliability, compare to delivery time, might be a more important determinant of service level. As European road transportation is recently suffering from congestion and safety issues, intermodal options might be able to offer more reliable services (Wiegmans, 2010). Nevertheless, the reliableness of intermodal transportation depends largely on the performance of the freight carrier (Wiegmans, 2010). As a result, a careful check on the carrier's professionalism, capacity and past records is vital when making the decision.

Despite cost and service level, some other criteria also favour the intermodal alternative. For instance, energy efficiency, environmental friendliness and government policy are few important factors for long-term delivery performance.

2.2 Weaknesses of intermodal
Although intermodal is a promising option, it has several weaknesses that should be evaluated base on further information. Firstly, it results in longer lead time, which suggests that the mode is less responsive to changing demand and more likely to result in higher inventory, both in pipeline and in warehouses. Second, transshipment and double handling are unavoidable in intermodal transportation. This might lead to less control, lower traceability and higher risk of damage in the case that a less professional carrier is taking charge of the transportation. Moreover, as more modes, routes and parties are involved, the delivery is more vulnerable to disturbing events. Lastly, final decision should also take account of the weaknesses of individual modes involved. For example, decision makers should examine whether the delay problems of sea and rail transport is serious in the selected route, as it may largely hinders delivery reliability.

2.3 Other modal options
Take into consider the weaknesses of intermodal and the advantages of road transportation, such as flexibility and door-to-door delivery, one of the most valid option would be employing both modal as a transportation portfolio (Wiegmans, 2010). SilicaChem could use intermodal to serve the stable part of the...

References: Rushton, A., Croucher, P. and Baker, P. (2010), The Handbook of Logistics and Distribution Management (4th ed), Kogan Page Limited London.
Wiegmans, B.W. (2010), “The freight transport portfolio: a new way to analyze intermodal freight transport as compared to single-model road transport”, Transportation Journal, Vol.49, No. 2, pp. 45-52.
Jennings, B. and Holcomb, M.C. (1996), “Beyond containerization: the broader concept of intermodalism”, Transportation Journal, Vol. 35, No. 3, pp. 5-13.
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