Vittorio Maniezzo - University of Bologna - Transportation Logistics 1/55 Transportatio n planning...

Vittorio Maniezzo - University of Bologna - Transportation Logistics 1/55

Transportation planning

Vittorio ManiezzoUniversity of Bologna


Relevance of transportation

On the average each (italian) citizen uses 6-8 kg of goods each day.

Each day (in Italy) about 3.6 millions of tons of freight are transported, i.e., about 60 kg per citizen per day.Freight transportation accounts for 1/8 of total world oil consumption, with an increase in the last 10 years of about 70%, nearly doubling its CO2 emissions.Some foodstuffs require many transport phases, due to the necessary materials and processings. In Denmark it has been estimated that a bottle of Ketchup (including packaging) requires 52 phases of production and transportation, involving 8 different countries.


Relevance of transportation In the UK, in 1997, • 126 millions of liters of milk were

imported, 270 were exported; • 23000 tons of powdered milk were

imported and 153000 tons were exported, • 61400 tons of chicken meat were imported

and 33100 were exported, ...energy ratio ER = (energy outputs) / (energy inputs)The ER between the energy contained in a food and that used in its production and distribution decreased by a factor of 100 when entering into the industrial age.

The ER of fresh fruit and vegetables varies between 2 and 0.1, for greenhouse vegetables during winter it is about 0.002; for meat it is between 0.1 and 0.003


Transportation systems

• Facilities include terminals, tracks, bridges, tunnels, signals, roadways, waterways and docks.

• Equipment includes containers, cars, tractors, trailers, locomotives, aircraft and vessels.

• People resources include loading and unloading crew, maintenance workforce, operating crew and other administrative and support staff.

The primary components of any transportation system are facilities, equipment and people.


Long-haul versus short-haul transportation

• In long-haul freight transportation, goods are moved over relatively long distances, between terminals or other facilities. Commodities may be transported by truck, rail, ship or any combination of modes.

• In short-haul freight transportation, goods are transported, usually by truck, between pick-up and delivery points situated in the same area. Such tasks are of short duration, shorter than a work shift.


Transportation modes Even though often forced, the choice of the transportation mode can be, for long distances, a critical choice.

Mode fixed/variable costs

Applications

Road Low/medium Light industries, retail distribution

Railway High/low Extractors, Agricultural products

Water Medium/low Minerals, chemicals, some agricoltural commodities

Air Medium/high Emergencies, perishable products


•multimodal transport: a transport which makes use of at least two modes, with a single contract, made by a single operator (multimodal operator, MTO)

Multiple modes

•Intermodal transport: a transport which passes a single KSU from a mode to another

•combined transport: an intermodal transport which is regulated by a single contract, and uses for most of the path railways or ships, while initial and final parts are on road

Vittorio Maniezzo - University of Bologna - Transportation Logistics 10/55http://www.confetra.com/it/centrostudi/statistiche.htm

Freight transport modes

EUR 15 – FREIGHT TRANSPORTHistory of mode usage

(tkm in %)

Mode

Road

Railway

Internalnavig.

Pipeline

Total


Land transport

This is a transport mode which is always present, as it is a necessary integration of air, sea or railway transport.

Combined transportation (intermodal or multimodal) makes use of containers, swap bodies or other structures which can be moved on and out of trains or ships, in order to reduce costs, pollution and transport times.


ContainersDEFINITION:

A permanent transportation element with volume > 1m3

It can be stacked, picked from above and anchoredTEU (EVP) = Twenty feet equivalent unit (equivalent vingt pieds)

MATERIALS:Steel, aluminum , wood, plasticsTYPES:Generic (for pallets), refrigerated, tank, bulk, for cattle, ...

ISO containers are metal parallelepipeds whose measures were established in 1967. They have a common width of 8 ft (cm 244) and height of 8 ft 6 in (cm. 259), but two possible lengths: 20 and 40 ft (cm.610 and cm 1220).


Containers (8 x 106 TEUs in the world, 1988)Length

(m/ft)Width

(m)Height

(m)Internal

area (m2)

int. volume

(m3)

Weight (kg)

n. pallet 80x120

Area pallet

12.2/40 2.4 2.6 27.9 61.4 30000 25 24

9.12/30 2.4 2.6 20.8 45.7 25000 18 17.3

6.06/20 2.4 2.6 13.7 30.0 20000 11 10.5

2.99/10 2.4 2.6 6.7 14.3 10000 5 4.8

Length (m/ft)

Width (m)

Height (m)

Internal area (m2)

int. volume

(m3)

Weight (kg)

n. pallet 80x120

6.25 2.4 2.6 15.62 34.7 15000 15

7.82 2.4 2.6 22,05 43.26 16000 19

9.12 2.4 2.6 22,8 50.76 36000 22

12.5 2.4 2.6 31,25 69.65 34000 30

13.6 2.4 2.6 34.0 75.85 36000 32 v

Swap bodies


Lorries (trucks) are vehicles which can autonomously carry goods. They are single transport means: when they are coupled with trailers or semitrailers they become tractor / trailer trucks or semi-trailer trucks, and they usually follow a specific normative.

Max length: 12 m;

Max weight: 3 to 12 ton

Truck types


A tractor - trailer is a convoy made by a vehicle (usually a tractor unit) and a separated trailer, that is an engine-less vehicle where goods can be uploaded.

Max length: 18.75 m;

Tractor - trailers


A semi-trailer truck (also known as a transfer truck, 18-wheeler, in the U.S. and Canada; articulated lorry (artic) in the UK, Ireland, and New Zealand) is an articulated truck or lorry consisting of a towing engine (tractor in the U.S., truck in the UK, Canada and New Zealand), and a semi-trailer (plus possible additional trailers) that carries the freight.

Max length: 16.5 m

Semi-trailer truck


Railway trains are the land transport means energetically most efficient.

Tracks induce a very low friction, and the front section, which is very small in relation to the train weight, induce a very low penetration coefficient.

A train uses from 50 to 70% less energy than trucks to transport the same weight of freight.

Railway transport


Despite all potential advantages, the percentage of freight transport on railways is decreasing everywhere, mainly because of infrastructural problems.

Trains ensure a better usage of internal space and, in a given time, a two-tracks train line can transfer more tons of freight than a 4-lanes highway.Trains are safer than any other transport means because vehicles do not interact among themselves.

Railway transport


During the last years, sea transports in the Mediterranean increased by more than 100%New generation ships can carry up to 8000 containers

Sea transport

PRODUCTS 1994 1996 1998 2000

Bananas 10.8 11.7 12.4 13.7

Meat 8.9 10.3 12.0 14.0

Citrus fruits

7.3 7.8 8.4 8.8

Fish 5.5 5.5 5.6 6.0

Diary prods.

1.2 1.4 1.6 1.9

Other 4.6 5.1 5.7 6.1

TOTAL 38.3 41.8 45.8 50.6

Goods transported in refrigerated holds (T/106 per year, world 1995)

Transfer times 5-6 weeks: quality problems


Transportation control indicesAll the phases of the logistic

processes need to be evaluated for effectiveness and efficiency, transportation all the more so since it is often outsourced.The controls that can provide an effective management of transport operations can be classified in controls of:• Productivity

• Level of service

• Cost


Possible productivity indices can be derived from administrative duties and monitoring of relevant operations. For example:• loading / unloding times;

• number of orders serviced per day;

• number of KSU distributed per day;

• number of vehicles used for distribuiton;

• number drivers used for distribution;

• …

Transportation control: productivity


LOS indices come from administration but also from monitoring client remarks. For example:• number of complaints per route;

• punctuality of deliveries;

• product temperature and humidity (in/out);

• % of orders delayed;

• % of orders partially delayed;

• …

Transportation control: LOS


Transportation control: costs

Possible cost items are evaluated differently depending on whether transportation was outsourced or not.

Examples:• total cost per km;

• total cost per unit of volume;

• additional packing costs;

• …


Costs of transportation services

The costs incurred in transportation services are associated with three elements: routes, terminals and vehicles.

• A route is the path over which the carrier operates and includes any roadbed and tracks or other physical facilities that are needed to travel. The nature of a route varies with the mode of transportation.

• Terminals are places where vehicles load and unload goods, make connections between points, make connections between routes within their own system and with other carriers and where vehicles are routed and dispatched.

• Vehicles of one kind or another are used in all modes of transportation. Unlike routes and terminals, vehicles are usually provided by the operators, not by the government.


Costs of transportation services

Costs can be broken down into many cost categories: fixed, variable, attributable and non-attributable

Fixed costs are unaffected by increases or decreases in the volume of traffic carried, they are called fixed costs because they are incurred regardless of whether any traffic is carried.

They include expenses for facilities, equipment, administration, interest on investment, insurance and taxes. For example, locks and dams must be maintained and manned without regard to volume of river traffic.


Variable costsVariable costs are proportional to traffic volume.

Variable costs are incurred solely to produce transportation services needed to carry traffic. They include not only directly measurable costs but also those arising from wear and tear on the equipment used in performing transportation service.

Examples of variable costs include direct labor cost, fuel costs and operating supplies.

When a system has high fixed costs there is a good opportunity for economies of scale. Railroads, barge lines and pipelines have a very high fixed cost whereas trucks and airlines have a very high variable cost.


Attributable costsAttributable and non-attributable costs are used in cost responsibility determination related to highway transportation.

Attributable cost items are related to vehicle characteristics but not to functions of travel distances. Examples of attributable costs include bridge construction costs, highway sign structure costs, pavement construction costs, pavement or bridge rehabilitation costs and so on.

Non-attributable costs are also known as common costs, they refer to expenditures which result from non-traffic-related causes such as the action of environmental forces and expenditures that are incurred based upon safety or aesthetic considerations. These costs cannot be attributed specifically to any particular group of user classes. Examples of non-attributable cost items for highways are snow removal, street lighting and cleaning, traffic signals, drainage maintenance, guardrails and so on.


Transportation cost modeling

Total transportation cost is the sum of fixed, variable and overhead costs. A certain profit margin is added to the total cost to determine the transportation rate or price for the service.

Transportation providers consider only the fixed and variable costs associated with providing the service and charge their customers based only on these costs. However, there are other cost elements that need to be considered if one tries to estimate the true cost of providing the service.


Further long-haul cost components

These cost components are as follows:• capital cost - the costs of providing initial plant and equipment

and additions to or betterment of those facilities, such as initial roads construction, railroad tracks construction, ports construction, etc;

• operating cost - the remaining costs of providing transportation services;

• equipment cost - investment in vehicles;• facilities maintenance cost - the cost of maintaining roadway

and track, pavement and sub grade, rivers and harbors, channels and dams, pipelines, and so on.

• equipment maintenance cost - all costs of maintaining motive power and rolling stock such as cars, locomotive, trucks, airplanes, etc.

• transport cost - the costs of conducting transportation, such as power and fuel, the wages of the vehicle crew and the wages of those directing vehicle movements;

• traffic cost - the costs of traffic solicitation, the wages of highway safety officers, advertising, publishing rates and tariffs and administration;

• general cost - the costs of general office expenses, legal advice, accounting and the salaries of general officers and their staffs.


Pricing internal transp. services

Several large companies have separate transportation departments and own their vehicle fleet. All related costs of owning and operating the fleet for providing the necessary services come from the transportation department budget. It is very important to price appropriately the transportation service provided to the users within the company. Three major methodologies can be used for pricing an internal transportation service: cost-based, market-based and a combination of the two.


Cost-based transfer pricing

Cost-based pricing can be done in three different ways.

• One approach is to charge the actual full cost to the internal user. In this case, the user pays for all actual costs, fixed and overhead. Also, since actual costs are charged, operating inefficiencies are passed on to the user.

• The second approach is to charge only the standard full cost, in which case operating inefficiencies are not passed on to the users.

• The third approach is known as the marginal or prime cost method. In this case, fixed costs are treated as overheads and only variable costs are charged. This approach is useful when excess capacity exists.


Market-based transfer pricing

This methodology can be implemented in two ways.

• The first approach is to charge what a competitive outside carrier would charge for a similar service. The market price may be higher or lower than the actual cost. Excess capacity in the market place may lower price. Under this approach market price must be monitored constantly.

• The second approach is to charge an adjusted market price (market price - cost savings). The adjusted market price may be lower if the in-house transportation department is more efficient and may be higher otherwise.


Pricing: transport ratesWeight-based ratesThese rates vary with the weight of the freight shipped and not with distance. Most of the costs in this type of service are handling related: the rate changes occur at certain weight break points. In most cases there is a minimum charge; when the total freight charge is less than the minimum charge, the minimum charge is levied.Distance-related ratesIn this case the rates vary with distance and weight. For a given weight, the rates vary with distance. Most of the line haul rates vary directly with distance since the key expenses are related to fuel and labor; fuel varies with distance and labor varies with time, which depends upon distance.When handling costs are included, transportation rates increase at decreasing rates since handling costs are spread over the entire distance.


Pricing: transport rates

Demand-related ratesThese rates depend neither on weight nor on distance. They are dictated by external market conditions.Contract ratesThese are specially agreed upon rates between a shipper and a carrier. They are usually based on the promised volume and duration of business, service reliability, historical data on actual business provided, type of commodity, traffic corridor involved and image of the shipper.


Trip costsTrip costs are computed by adding three cost components: load-based cost, time cost and distance-based costs.

cost per trip = (costs per load) + (functional costs per hour) x (total trip hours) + (functional costs per Km) x (total trip Km)

The cost per load is estimated by using historical overhead costs and loads. The functional cost per hour is computed by adding driver wages, interest, depreciation and lease expenses and facility expenses and dividing the sum by the total hours spent by crew and equipment usage. The functional cost per Km is calculated by adding the costs of fuel and oil, equipment maintenance, tires and tubes and of insurance and accident cover and dividing the sum by the number of loaded and empty Km.


Transp. decision problems

Common decision problems include:•At the strategic level, a broad definition of

the operating strategy of the system, the design of the physical network (if any exists) and the acquisition of expensive resources, such as airplanes.

•The tactical level covers the allocation of existing resources (vehicles crews, etc.) as well as the purchase of additional capacity to cope with variations in demand.

•At the operational level, the focus is on adjusting vehicle and crew schedules in order to take into account last-minute events, such as order modifications, equipment failures, strikes and unfavorable weather conditions.


Decision problems• Privately operated transportation systems. The decisions

to be made are relatively simple. If demand varies over the year, one must determine the optimal mix between owned and hired vehicles. On a short-term basis, decisions have to be made on order consolidation and on shipment scheduling. The objective is usually to minimize total cost while meeting a pre established service level.

• Consolidation-based transportation systems. At the strategic level a carrier has to decide what kind of commodities to transport and which origin-destination pairs to serve. Moreover, the number of terminals (e.g. crossdocks or railway terminals) to be used and their locations must be determined. In addition, the features of the terminals (shape, number of doors, etc.) have to be determined.

At the tactical level, an important decision is the design of the network (the service network): determining the characteristics (frequency, number of intermediate stops, etc.) of the routes to be operated, the way traffic is routed, the operating rules for each terminal, as well as the repositioning of empty vehicles and containers.


Freight traffic assignment

Freight traffic assignment problems (TAPs) consist of determining a least-cost routing of goods over a network of transportation services from their origins to their destinations. From a mathematical point of view, TAPs can be cast as Network Flows problems. TAPs can be classified as static or dynamic. Static models are suitable when the decisions to be made are not affected explicitly by time. They are formulated on a directed graph (or multi graph) G = (V, A), where the vertex set V often corresponds to a set of facilities and the arcs in the set A represent possible transportation services linking the facilities. Some vertices represent origins of transportation demand for one or several products, while others are destinations, or act as a transshipment points. Let K be the set of traffic classes (or simply, commodities). With each arc is associated a cost (possibly dependent on the amount of freight flow on the arc) and a capacity.


Short-haul freight transportation

Short-haul freight transportation concerns the pick-up and delivery of goods in small areas (a city or a county) using a fleet of trucks. As a rule, vehicles are based at a single depot, and vehicle tours are performed in a single work shift and may include several pick-up and delivery points.Short-haul transportation is relevant to:• distribution companies that have to supply retail

outlets or customer orders from a warehouse using small vans. I

• local fast couriers transporting loads between origin-destination pairs situated in the same area.

• long-haul carriers need to collect locally outbound parcels before sending them to a remote terminal as a consolidated load, and to locally distribute loads coming from remote terminals.

• garbage collection, mail delivery, appliance repair services, dial-a-ride systems (providing transportation services to the elderly and the handicapped), and emergency services (fire fighting, ambulance …).


Decision problemsShort-haul transportation often involves a large number of customers. For instance, in soft drink and beer distribution, the average number of customers visited daily can be up to 600, while in sanitation applications the number of sites visited daily is often between 200 and 1000. At a strategic level, the main decision is related to warehouse location. At a tactical level, the main issue is fleet sizing. Finally, at an operational level, the main problem (usually referred to as the vehicle routing and scheduling problem (VRSP) is to build vehicle routes in order to satisfy user requests.


Operational constraints A number of operational constraints have to be taken into account. In some settings. vehicle routes can be planned on a regular basis as all data are known beforehand. This is the case of a company devising daily its distribution plan on the basis of the customer orders collected the day before. Another example arises in sanitation applications, where vehicle routes are designed two or three times a year as the amount of garbage to be collected daily is the same over several months. In contrast to such static environments, there are settings where vehicle routes are built in an on-going fashion as customer requests arrive. This is the case of long-distance carriers whose pick-up requests arise during the day of operations and have to be serviced the same day whenever possible.


VMR

Another class of operational problems arises in vendor-managed distribution systems which are quite common in the petrochemical and gas industry as well as in the soft drink business. Vendor-managed resupplying (VMR) requires that the distribution companies estimate customer inventory levels so that replenishment can occur before they run out of stock.


ICT

Due to recent advances in information and communication technologies, vehicle fleets can be managed in real time. Devices like GIS, GPS, traffic flow sensors and cellular telephones are able to provide relevant real-time data, such as current vehicle locations, new customer requests and up-to-date estimates of road travel times. These data can be used to devise revised vehicle routes.


VRPVRPs asks to determine the routes to be used by a fleet of vehicles to serve a set of users.

VRPs can be defined on a mixed graph G = (V, A), where V is a set of vertices, A is a set of arcs (or edges). A vertex 0 represents the depot at which m vehicles are based, while a subset S of V of required vertices represent the users.

VRPs amount to determining a least-cost set of m tours based at a depot, and including the required vertices.

Arcs correspond to road segments, and vertices correspond to road intersections. Users are represented by required vertices.


Operational constraints The most common operational constraints are•the number of vehicles m can be fixed or can be a decision variable, possibly subject to an upper bound constraint;

•the total demand transported by a vehicle at any time must not exceed its capacity;

•the duration of any route must not exceed a work shift duration

•customers require to be served within pre-established time windows

•some customers must be served by specific vehicles;. the service of a customer must be performed by a single vehicle or may be shared by several vehicles;

•customers are subject to precedence relations.


Precedence constraints

Precedence constraints arise when some goods have to be transported between specified pairs of pick-up and delivery points. In such problems, a pick-up and delivery pair is to be serviced by the same vehicle (no transshipment is allowed at the depot) and each pick-up point must be visited before the associated delivery point.

Another kind of precedence relation has to be imposed whenever vehicles have first to perform a set of deliveries (linehaul customers) and then a set of pick-up (backhaul customers), as is customary in some industries (VRPs with backhauls).


Real-world complexities•General objective function: A general objective function is a combination of different parts and makes it possible to achieve different aims depending on the short-term operational circumstances.

•Mixed deliveries or collections: the same vehicles used for goods delivery are also used to collect pallets, empty bottles, etc. for return to the depot.

•Multiple-commodities: If more than one commodity is to be delivered, they often have to be loaded into separate vehicle compartments.

•Customer-vehicle incompatibilities: Some customers may object to certain types of vehicle because of access restrictions, etc.

•Vehicle-commodity incompatibilities: Some vehicles may not be able to carry certain types of products.


• Commodity-commodity incompatibilities: Certain pairs of commodities cannot coexist on any vehicle, for example, because of possible contamination.

• Multiple-day trips/multiple-trips per day: Routes (or trips) may extend over more than one day and/or a vehicle may perform more than one trip in a day returning to the depot several times for reloading.

• Multiple interacting depots: There may be more than one distribution depot and these depots may be interacting in a way that makes it impossible to consider anyone in isolation. Vehicles may leave from one depot, supply some customers, return to a second depot to reload, visit another set of customers and finally arrive back at the first depot .

Real-world complexities


A 3-depot distribution inst.1

x =14y =10

2x=1 1

3y=1 0

A 1A

1

A 1A

1

A2

A2

A2

C1

C 1

C 1

C2

C2

C 2

D 1

D1 D

1

D 1

D1

D1

B1

B 1

B1

B1

B1

8x

2 x

3 x

3 x

6 y 6 y

8 y

0

4 y

5 y

4 y

3 y2x

4 x

6 x 6x

4 y1 x4 y

5 x

9x 2 x

1 x

1 x

3 x

2 x

Vittorio Maniezzo - University of Bologna - Transportation Logistics 1/55 Transportatio n planning...

Documents

Transcript of Vittorio Maniezzo - University of Bologna - Transportation Logistics 1/55 Transportatio n planning...