Analyzing trade-offs between transportation,inventory and production costs on freight networks

The purpose of this paper is to determine optimal shipping strategies (i.e. routes and shipment sizes) on freight networks by analyzing trade-offs between transportation, inventory, and production set-up costs. Networks involving direct shipping, shipping via a consolidation terminal, and a combination of terminal and direct shipping are considered. This paper makes three main contributions. First, an understanding is provided of the interface between transportation and production set-up costs, and of how these costs both affect inventory. Second, conditions are identified that indicate when networks involving direct shipments between many origins and destinations can be analyzed on a link-by-link basis. Finally, a simple optimization method is developed that simultaneously determines optimal routes and shipment sizes for networks with a consolidation terminal and concave cost functions. This method decomposes the network into separate sub-networks, and determines the optimum analytically without the need for mathematical programming techniques.     

Optimization of bus allocation to depots by minimizing dead kilometers

In metropolitan cities, public transportation service plays a vital role in mobility of people, and it has to introduce new routes more frequently due to the fast development of the city in terms of population growth and city size. Whenever there is introduction of new route or increase in frequency of buses, the non‐revenue kilometers covered by the buses increases as depot and route starting/ending points are at different places. This non‐revenue kilometers or dead kilometers depends on the distance between depot and route starting point/ending point. The dead kilometers not only results in revenue loss but also results in an increase in the operating cost because of the extra kilometers covered by buses. Reduction of dead kilometers is necessary for the economic growth of the public transportation system. Therefore, in this study, the attention is focused on minimizing dead kilometers by optimizing allocation of buses to depots depending upon the shortest distance between depot and route starting/ending points. We consider also depot capacity and time period of operation during allocation of buses to ensure parking safety and proper maintenance of buses. Mathematical model is developed considering the aforementioned parameters, which is a mixed integer program, and applied to Bangalore Metropolitan Transport Corporation (BMTC) routes operating presently in order to obtain optimal bus allocation to depots. Database for dead kilometers of depots in BMTC for all the schedules are generated using the Form‐4 (trip sheet) of each schedule to analyze depot‐wise and division‐wise dead kilometers. This study also suggests alternative locations where depots can be located to reduce dead kilometers. Copyright © 2015 John Wiley & Sons, Ltd.     

A cost and CO2 comparison of using trains and higher capacity trucks when UK FMCG companies collaborate

Companies working in a collaboration are able to achieve higher vehicle capacity utilisation and reduced empty running, resulting in lower costs and improved sustainability through reduced emissions and congestion. Collaboration produces higher volumes of goods to be moved than individual companies which means that further efficiencies may be possible by relaxing the freight mode constraints and considering rail and higher capacity vehicles. This paper explains how real world data has been used in a model to quantify the economic and environmental benefits in the FMCG sector delivered through collaboration utilising road and rail freight modes. Data for one month was provided by 10 FMCG companies and included freight transport flows between depots and customers, inter depot movements, and supplier collections. Detailed road and rail costs and operating characteristics were obtained and, with the transport flows, applied to a network design model which was used to validate the company data sets. A strategy examining the potential use of alternative higher capacity vehicles and rail for the flows between nine regional consolidation centres showed cost and CO₂ savings. Just under half the inter-regional flows benefited from double deck trailers, longer heavier vehicles for 30% of the flows and rail with different wagon configurations for the rest. In summary there was a 23% reduction in cost with 58% fewer road kilometres and a 46% reduction in CO₂ emissions. The ability to backhaul the same mode of transport between most of the regional centres was one of the strengths of this strategy.     

Assessing the energy and greenhouse gas emissions mitigation effectiveness of potential US modal freight policies

This paper estimates the total embodied energy and emissions modal freight requirements across the supply chain for each of over 400 sectors using Bureau of Transportation Statistics Commodity Flow Survey data and Bureau of Economic Analysis economic input-output tables for 2002. Across all sectors, direct domestic truck and rail transportation are similar in magnitude for embodied freight transportation of goods and services in terms of ton-km. However, the sectors differ significantly in energy consumption, greenhouse gas emissions, and costs per ton-km. Recent pressure to reduce energy consumption and emissions has motivated a search for more efficient freight mode choices. One solution would be to shift freight transportation away from modes that require more energy and emit more (e.g., truck) to modes that consume and emit less (e.g., rail and water).Our results show there are no individual sectors for which targeting changes would significantly decrease the total freight transportation energy and emissions, therefore we have also looked at the prospect of policies encouraging many sectors to shift modes. There are four scenarios analyzed: (1) shifting all truck to rail, shifting top 20% sector mode choice, (2) based on their emissions, (3) based on a multi-attribute analysis, and (4) increasing truck efficiency (e.g., mpg). Increasing truck efficiency by 10% results in similar energy and emissions reductions (approximately 7% for energy and 6% for emissions) as targeting the top 20% of sectors when selected based on emissions, whereas selecting the top 20% based on availability to shift from truck results in slightly less reductions of energy and emissions. Implementing policies to encourage higher efficiency in freight trucks may be a sufficient short term goal while efforts to reduce truck freight transportation through sectoral policies are implemented in the long term.     

Rail-truck multimodal freight collaboration: a statistical analysis of freight-shipper perspectives

Due to the effects of congestion, capacity reduction of truck-freight carriers, growing freight transportation demand, and increasing social and environmental concerns, there is a critical need for freight shippers to improve shipping quality and reduce transportation costs. Rail-truck multimodal freight collaboration can potentially address this need. In this study, we explore freight-shipper perspectives relating to the factors that may foster or impede their usage of rail-truck multimodal freight collaboration services, and the correlations of their operational and behavioral characteristics with these factors. The study provides insights to rail and truck carriers on collaboration mechanisms that can address the needs of freight shippers, including adopting synergistic technology to improve in-transit visibility, accommodating non-containerized cargo, improving the transshipment process, designing service quality control strategies, and constructing investment and revenue-sharing plans.     

Empty freight car dispatching model under freight car pool concept

In the last few years, growing attention has been given to the cost savings potential of the specialized freight car pool concept. Under this concept, a fleet of single-purpose freight cars are pooled at many loading points, and the cars emptied at unloading terminals can be sent back to any loading point in order to reduce empty car miles and time. As part of a continuing effort to improve the car dispatching method for this concept, this paper offers an improvement to the traditional linear programming transportation problem approach, incorporating daily variations of empty car supply and demand characteristics in the model. The proposed method, therefore, allocates cars between supply and demand points with the dispatching date specified, enabling the dispatcher to make daily car disposition decisions. It can incorporate both the travel distance cost and inventory cost of empty cars at terminals in the objective. If the holding of empty vehicles at the terminals for future dispatch is allowed, the problem is structured as a transshipment problem in which the overnight storage is the transshipment point.     

Multioutput analysis of cargo handling firms: An application to a Spanish port

Cargo handling in ports is a multioutput activity, as freight can arrive in many forms such as containers, bulk, rolling stock, or non-containerised general cargo. In this paper, the operation of cargo handling firms in a Spanish port is analysed through the estimation of a multioutput cost model that uses monthly data on three representative firms located at the Las Palmas port. This permits the calculation of product specific marginal costs, economies of scale (general and by firm) and economies of scope, which help identifying optimal pricing policies and the potential cost advantages of increasing production.     

Freight transportation demand: A survey of recent econometric studies

This paper surveys econometric studies of freight transportation demand which have been published since the mid-1970s. It describes the variables, data sources, and estimation procedures utilized by the studies. In addition, it summarizes their statistical results. The studies included in this survey typically accounted for freight rates and service characteristics (e.g., transit time and reliability). Data sources often varied across the studies.Based on the data they utilized, the surveyed studies are classified as either aggregate or disaggregate. The data in the aggregate studies consist of information on total flows by modes at the regional or national level, while the data in the disaggregate studies pertain to individual shipments. The earlier aggregate studies estimated linear logit models. It has been pointed out that when they are estimated on aggregate data these models are subject to certain shortcomings. To avoid these shortcomings, more recent aggregate studies have estimated flexible forms such as translog functions. The disaggregate studies surveyed in this paper used either logit or probit models.Statistical results often varied with the commodities analyzed, making it somewhat difficult to generalize the findings of the different studies. One finding common to several studies is that freight rates have a significant impact on shipment decisions. This paper discusses certain theoretical and empirical limitations of the surveyed studies. It also offers suggestions for future research in freight transport demand. Freight demand models can be used to examine various effects of the recent deregulation in freight transportation.     

Freight Transport Deceleration: Its Possible Contribution to the Decarbonisation of Logistics

The paper challenges the conventional view that the movement of goods through supply chains must continue to accelerate. The compression of freight transit times has been one of the most enduring logistics trends but may not be compatible with governmental climate change policies to cut greenhouse gas emissions by 60–80% by 2050. Opportunities for cutting CO₂ emissions by ‘despeeding' are explored within a freight decarbonisation framework and split into three categories: direct, indirect and consequential. Discussion of the direct carbon savings focuses on the trucking and deep-sea container sectors, where there is clear evidence that slower operation cuts cost, energy and emissions and can be accommodated within current supply chain requirements. Indirect emission reductions could accrue from more localised sourcing and a relaxation of just-in-time (JIT) replenishment. Acceleration of logistical activities other than transport could offset increases in freight transit times, allowing the overall carbon intensity of supply chains to reduce with minimal loss of performance. Consequential deceleration results from other decarbonisation initiatives such as freight modal split and a shift to lower carbon fuels. Having reviewed evidence drawn from a broad range of sources, the paper concludes that freight deceleration is a promising decarbonisation option, but raises a number of important issues that will require new empirical research.     

Incorporating Logistics in Freight Transport Demand Models: State-of-the-Art and Research Opportunities

Freight transport demand is a demand derived from all the activities needed to move goods between locations of production to locations of consumption, including trade, logistics and transportation. A good representation of logistics in freight transport demand models allows us to predict the effects of changes in logistics systems on future transport flows. As such it provides better estimations of the costs of interaction and allows to predict changes in spatial patterns of freight transport flows more accurately. In recent years, the attention for freight modelling has been growing and new research work has appeared aimed at incorporating logistics in freight models. In this paper we review the state of the art in the representation of logistics considerations in freight transport demand models. Our focus is on the service and cost drivers of changes in logistics networks and how these affect freight transport. Our review proceeds along a conceptual framework for modelling that goes beyond the conventional 4-step modelling approach. We identify promising areas for freight modelling that have an integrative function within this framework, such as spatial computable general equilibrium models, supply chain choice models and hypernetwork models.     

Joint optimization of freight facility location and pavement infrastructure rehabilitation under network traffic equilibrium

Establishment of industry facilities often induces heavy vehicle traffic that exacerbates congestion and pavement deterioration in the neighboring highway network. While planning facility locations and land use developments, it is important to take into account the routing of freight vehicles, the impact on public traffic, as well as the planning of pavement rehabilitation. This paper presents an integrated facility location model that simultaneously considers traffic routing under congestion and pavement rehabilitation under deterioration. The objective is to minimize the total cost due to facility investment, transportation cost including traffic delay, and pavement life-cycle costs. Building upon analytical results on optimal pavement rehabilitation, the problem is formulated into a bi-level mixed-integer non-linear program (MINLP), with facility location, freight shipment routing and pavement rehabilitation decisions in the upper level and traffic equilibrium in the lower level. This problem is then reformulated into an equivalent single-level MINLP based on Karush–Kuhn–Tucker (KKT) conditions and approximation by piece-wise linear functions. Numerical experiments on hypothetical and empirical network examples are conducted to show performance of the proposed algorithm and to draw managerial insights.     

Refocusing the Modelling of Freight Distribution: Development of an Economic-Based Framework to Evaluate Supply Chain Behaviour in Response to Congestion Charging

The distribution of freight is a major contributor to the levels of traffic congestion in cities. However it is much neglected in the research and planning activities of government, where the focus is disproportionately on passenger vehicle movements. Despite the recent recognition of the contribution of freight transportation to the performance of urban areas under the rubric of city logistics, we see a void in the study of how the stakeholders in the supply chain might cooperate through participation in distribution networks, to reduce the costs associated with traffic congestion. Given that transport costs are typically over 45 of all distribution costs, with congestion a major contributor in the urban setting, the importance of establishing ways in which supply chain partnerships might cooperate to reduce levels of freight vehicle movements has much merit. This paper sets out a framework to investigate how agents in a retail supply chain might interact more effectively to reduce the costs of urban freight distribution. We propose an interactive agency choice method as a way of formalising a framework for studying the preferences of participants in the supply chain to support specific policy initiatives. Such a framework is a powerful way of investigating the behavioural response of each agent to many policies, including congestion pricing, as a way of improving the efficient flow of traffic in cities.     

Comparison of road freight transport trends in Europe. Coupling and decoupling factors from an Input–Output structural decomposition analysis

Decoupling road freight transport from economic growth has been acknowledged by the European Union as a key means to improving sustainability. It is therefore important to identify both the coupling and decoupling drivers of road freight transport demand in order to determine possible factors that may contribute to reduce road transport in the future without curbing economic development. This research proposes an Input–Output (IO) structural decomposition analysis (SDA) to explain road freight transport in terms of a set of key factors that have strongly influenced road freight demand in recent decades in European countries—such as economic growth, economic structure and the evolution of road transport intensity (including improvements in both supply and transport systems). This methodological approach allows us to quantify and compare their contribution in different European countries to either increase or decrease road freight transport demand. The empirical basis for this analysis is a dataset of nine European countries which have IO tables and road transport data available from 2000 to 2007, comprising data on domestic production, imports and exports as well as tonne-kms for 11 types of commodity classes. The results show that, as a whole, aggregate road transport demand has grown—driven mainly by economic activity—but this growth has been strongly curbed in some countries by changes in road freight transport intensity and moderately by the dematerialization of the economy. International transport has been also proven to be a key factor driving road freight transport volumes. Moreover, the increased penetration of foreign operators in national haulage markets appears to have reinforced the final decoupling levels observed in some cases.     

Exchange rate and transport cost sensitivities of bilateral freight flows between the US and China

This paper explores the long-run impacts of gross domestic product, exchange rate, and transport costs on bilateral air and ocean freight flows between the US and China. The study employs a cointegration framework by using export and import data over the period of 2003:Q1-2014:Q2. Results show that gross domestic product is the key determinant of bilateral freight flows, indicating that real income of a trading partner is a driving force of the bilateral freight flows between the US and China. In examining the sensitivities of the bilateral trade flows, air freight flows are found to be more responsive to a real income change than ocean freight flows. The bilateral exchange rate is a significant factor affecting the freight flows from China to the US, suggesting that a US dollar appreciation against the Chinese yuan increases the inflows of Chinese commodities to the US. The impacts of the bilateral exchange rate and transport cost are found to vary at industry and commodity levels. These findings support the importance of employing disaggregate data in the bilateral freight flow analysis.     

Framing the Nexus of Globalisation,Logistics and Manufacturing in Europe

Abstract

Under the ongoing influence of globalisation, supply chains have changed significantly. New logistics and manufacturing systems have emerged, causing longer transport distances and increasing transport emissions. The existing research into the sustainability impacts of freight transport has largely viewed it as being a macro-level economic and political phenomenon and has ignored the interdependencies amongst micro-level economic actors, including firms and businesses in the private sector. In this paper, we presume that the lack of conceptualisation of freight transport in relation to wider institutional contexts and firm behaviour results in the lack of a holistic approach to understanding freight governance in the face of globalisation. We argue for the use of institutional economic geography lenses to elucidate the distribution networks of emerging logistics and manufacturing practices and its implications for freight transport. We illustrate our argument through a broad look at the European logistics and manufacturing practices and global production.     

Optimal recharging strategies for electric vehicle fleets with duration constraints

Electrical vehicles (EVs) have become a popular green transportation means recently because they have lower energy consumption costs and produce less pollution. The success of EVs relies on technologies to extend their driving range, which can be achieved by the good deployment of EV recharging stations. This paper considers a special EV network composed of fixed routes for an EV fleet, where each EV moves along its own cyclic tour of depots. By setting up a recharging station on a depot, an EV can recharge its battery for no longer than a pre-specified duration constraint. We seek an optimal deployment of recharging stations and an optimal recharging schedule for each EV such that all EVs can continue their tours in the planning horizon with minimum total costs. To solve this difficult location problem, we first propose a mixed integer program (MIP) formulation and then derive four new valid inequalities to shorten the solution time. Eight MIP models, which were created by adding different combinations of the four valid inequalities to the basic model, have been implemented to test their individual effectiveness and synergy over twelve randomly generated EV networks. Valuable managerial insights into the usage of valid inequalities and the relations between the battery capacity and the total costs, number of recharging facilities to be installed, and running time are analyzed.     

Investigating the market for inter-modal freight technologies

Freight carried by rail has traditionally been mainly low value bulk commodities. The market for transport of such commodities appears at best static and is forming a smaller proportion of the total demand for freight transport. There is thus an urgent need for rail operators to develop practical and cost effective inter-modal systems, which offer high quality services to consignors of consumer goods whose premises are not usually connected to the rail network. Much long-haul traffic of this type is international. In continental Europe, a number of inter-modal technologies—including swapbodies and piggyback—have long been in use. Development of similar technologies for use within the more constrained loading gauge of Great Britain, has received a great boost from the impending opening of the Channel Tunnel. The alternative technologies are discussed, before turning to ways of stimating the market for them. A large part of the paper is devoted to reporting on a computerised survey using our LASP (Leeds Adaptive Stated Preference) technique. The reason for using hypothetical Stated Preference data is the inadequate nature and extent of data on actual choice decisions, particularly in circumstances in which confidential freight rates are individually negotiated and little general merchandise goes by rail. By bringing together the results of this survey with information on costs and quality of service, the likely future market for inter-modal freight technologies is assessed. It is seen that the potential for inter-modal services within Britain is very limited, although there should be a good opportunity on the major corridor from London to Scotland through the West Midlands and the North West. When the Channel Tunnel is opened, however, the potential for services between Britain and continental Europe will be enormous, provided that an adequate quality of service can be offered.     

Evaluation of road-rail interaction in Thailand

The main line of the State Railway of Thailand to serve the Northeastern region of the Kingdom was built in 1900 to the town of Korat and subsequently extended to its northern extremity at the Laos border. The Friendship Highway, a modern highway parallel to the railway and serving the same transportation corridor, was completed in 1958 as far as Korat. In 1965 the northern extension of the Friendship Highway was opened to Nong Khai, the northern terminus of the railway.The effect of the nearby and parallel highway on freight traffic - for upland crops, vegetables, rice, kenaf, and forest products - is shown in terms of tonnages dispatched by the railway and in relation to the production of those commodities. Passenger traffic originating on the Northeastern railway line is analysed. Statistics indicating the shift in modal split between road and rail, for both freight and passengers in the Kingdom, are presented for a six-year period. An estimate of the loss in revenue for the Korat-Nong Khai segment of the railway has been made for both originating passengers and certain classes of freight traffic. Clearly demonstrated is the unceasing trend toward road haulage of freight and the use of highway buses by intercity passengers. This paper is intended to draw attention to the magnitude of the problem rather than to suggest definitive solutions.     

Green supply chain network design to reduce carbon emissions

We consider a supply chain network design problem that takes CO₂ emissions into account. Emission costs are considered alongside fixed and variable location and production costs. The relationship between CO₂ emissions and vehicle weight is modeled using a concave function leading to a concave minimization problem. As the direct solution of the resulting model is not possible, Lagrangian relaxation is used to decompose the problem into a capacitated facility location problem with single sourcing and a concave knapsack problem that can be solved easily. A Lagrangian heuristic based on the solution of the subproblem is proposed. When evaluated on a number of problems with varying capacity and cost characteristics, the proposed algorithm achieves solutions within 1% of the optimal. The test results indicate that considering emission costs can change the optimal configuration of the supply chain, confirming that emission costs should be considered when designing supply chains in jurisdictions with carbon costs.