1. Chapter 12. Moving Freight 1. Describe the role of freight movement in the economy 2. Explain why certain commodity tend to move on specific transport modes 3. Topics 3 and 4 are not covered in CE361. Only the topic related to the power needed to move a train will be covered in CE361. Chapter objectives covered in CE361: By the end of this chapter the student will be able to:

2. Chapter 12 2 Freight Movement and Commodity Anything that is not moving people is considered “freight movement.” Anything that is not moving people is considered “freight movement.” Commodity = Commodity = A product of agriculture & miningA product of agriculture & mining An article of commerceAn article of commerce Something useful or valuedSomething useful or valued Logistics = the flow of goods to and from companies: movement vs. holding (warehousing) Logistics = the flow of goods to and from companies: movement vs. holding (warehousing)

3. Chapter 12 3 12.1 Freight – The Movement Behind Economic Well-Being

4. Chapter 12 4 12.1.1 Logistics or Physical Distribution The cost of transport (including inventory holding costs – time related costs) can account for as much as 20% of the sale price of a given consumer products. The cost of transport (including inventory holding costs – time related costs) can account for as much as 20% of the sale price of a given consumer products. Warehouses vs. Distribution Centers Warehouses vs. Distribution Centers Distribution Centers can reduce space for in-store inventory Distribution Centers can reduce space for in-store inventory Just-in-time method – reduce warehousing but increase truck traffic (for distribution) Just-in-time method – reduce warehousing but increase truck traffic (for distribution)

5. Chapter 12 5 12.1.1 continued The traffic manager seeks the best strategies for: The traffic manager seeks the best strategies for: Moving raw materials to his manufacturing plantMoving raw materials to his manufacturing plant Storing goods en route or maintaining an inventoryStoring goods en route or maintaining an inventory Moving the finished product to the market.Moving the finished product to the market. This figure was removed for the 2 nd edition.

6. 12.1.2. Regional Trade Promotes Economic Growth Example 12.1: People want less expensive products Example 12.1: People want less expensive products (see the link right below the link to the course notes PP file in the Schedule page of the course website for today.) Chapter 12 6

7. 12.1.3 Commodity Flow Data Chapter 12 7

8. 12.1.4 Factors Affecting Freight Mode Choice Chapter 12 8 1.Cargo type 2.Cargo value 3.Perishable goods 4.Cargo size, weight, or density 5.Reliability 6.Access, Flexibility, and Terminal Requirements 7.Cost structure and rates 8.Length of haul 9.Energy use

9. Chapter 12 9 Transportation of dry-bulk commodities Because of their excellent price structure for hauling bulk freight, rail and barge share a major amount of the movement of dry-bulk commodities, mainly coal and grain. Because of their excellent price structure for hauling bulk freight, rail and barge share a major amount of the movement of dry-bulk commodities, mainly coal and grain. Trucks are used for short-distances, usually for delivery from a rail yard to a receiver that does not have rail access. Trucks are used for short-distances, usually for delivery from a rail yard to a receiver that does not have rail access.

10. Chapter 12 10 Moving Freight Trucks (12.2) Trucks (12.2) Railroads (12.3) Railroads (12.3) Barges and waterways (12.4) Barges and waterways (12.4) Shipping on the Great Lakes (12.4) Shipping on the Great Lakes (12.4) International shipping and US ports International shipping and US ports Oil and gas pipelines (12.5) Oil and gas pipelines (12.5) Moving freight by air (12.6) Moving freight by air (12.6)

11. Chapter 12 11 12.2 Moving Freight by Truck Terms related to trucks:  “Weight out” = reach their gross weight limit  “Cubed out” = reach their volume limit  A fifth wheel = the device on the truck that connects with the semi-trailer

12. Chapter 12 12 12.3 Moving Freight by Rail Railroads comeback: Higher efficiency/productivity Lower price Still higher rate of return The Staggers Act of 1980: deregulated the railroad industry. To be covered by one more separate lecture.

13. Chapter 12 13 12.4 Moving Freight by Barges on Inland Waterways Source: http://www.k-sea.com/DoubleHull.htmhttp://www.k-sea.com/DoubleHull.htm “The inland waterway system consists of 26,000 miles of navigable rivers and canals within the U.S.” “The inland waterway system opens the coalfields of West Virginia to the ports on the Gulf of Mexico.”

14. Chapter 12 14 US Waterways

15. Chapter 12 15 12.4 International Shipping and U.S. Ports Locks and Dams: The Panama Canal Great site to learn about the Panama Canal History: http://www.canalmuseum.com/ http://www.canalmuseum.com/

16. Chapter 12 16 12.4 International Shipping and U.S. Ports (continued) In 1998: 750 billion tons of freight imports, 400 billion tons of freight exports In 1998: 750 billion tons of freight imports, 400 billion tons of freight exports In 2001: All freight modes, $925 billion imports, $600 billion exports; mode shares are 30% air, 30% land, 40% water. In 2001: All freight modes, $925 billion imports, $600 billion exports; mode shares are 30% air, 30% land, 40% water. The water mode’s $600 billion share was split into $165 exports versus $435 imports The water mode’s $600 billion share was split into $165 exports versus $435 imports RankLocationRankLocation 1 South Louisiana, LA 6 Beaumont, TX 2 Houston, TX 7 Baton Rouge, LA 3 New York, NY & NJ 8 Plaquemine, LA 4 New Orleans, LA 9 Long Beach, CA 5 Corpus Christi, TX 10 Valdez, AK Table 12.10 Top 10 US Water Ports (1 st Edition)

17. Chapter 12 17 12.4 Relative Cargo Capacity of Three Freight Modes Each truck needs a driver. Labor cost is high. Hence, commodities carried by trucks have higher dollars per ton-mile costs.

18. Chapter 12 18 12.5 Oil and Gas Pipelines The Alaska Pipeline – from Prudhoe Bay to Valdez 800 miles http://www.pbs.org/wgbh/amex/pipeline/ Click this website to see a short video:

19. Chapter 12 19 12.5 Movement of Oil (continued) About 94% of the movement of oil is by water or pipeline. About 94% of the movement of oil is by water or pipeline.

20. Chapter 12 20 Why were Hurricane Rita’s Damages so Serious to Oil Distribution? Gulf coast ports handle the majority of oil import and distribution.RankLocationRankLocation1 South Louisiana, LA 6 Beaumont, TX 2 Houston, TX 7 Baton Rouge, LA 3 New York, NY & NJ 8 Plaquemine, LA 4 New Orleans, LA 9 Long Beach, CA 5 Corpus Christi, TX 10 Valdez, AK Hurricane Rita, 2005

21. 12.6 Moving Freight by Air Chapter 12 21 “… Not so much for the tonnage that is carried but for the speed at which it moves.” Smaller & more valuable Time is major factor More care needed