Modes of Transportation in Logistics

Water Transport

It is the oldest mode of transportation. First it was the sailing vessels, which was replaced by steamboats in early 1800’s and by diesel power in the 1920’s.

Domestic water transportation – involves the Great Lakes, canals, and navigable rivers. In every country, fewer system miles exist for inland water than any other transportation mode.

The main advantage of water transportation is the capacity to move extremely large shipments. Water transport employs 2 types of vessels. Deep-water vessels, which are generally designed for Ocean and Great Lakes use, & are restricted to deep-water ports for access. In contrast, diesel-towed barges, which generally operate on rivers and canals, have considerably more flexibility.

Water transport ranks between rail and motor carrier in the fixed cost aspect. Although water carriers must develop and operate their own terminals, the right-of-way is developed and maintained by the government and results in moderate fixed costs as compared to railways and highways.

The main disadvantage of water transport is the limited range of operation and speed. Unless the origin and destination are adjacent, supplement haul by rail or truck is required. The capability to carry very high cargo at an extremely low variable cost places this mode of transport in demand when low freight rates are desired and speed of transit is a secondary consideration.

But, water transport on the other hand isn’t all that flexible. Labour restrictions on loading and unloading at docks create operational problems and tend to reduce the potential range of available traffic. Also, a highly competitive situation has developed between railroads and inland water carriers in areas where parallel routes exist.

Great lakes are concentrating towards transportation of bulk products while Deep-water vessels transport a significant high volume of non-bulk items. Containerized cargo facilitates vessel loading and unloading and enhances intermodal capability by increasing the efficiency of cargo transfer between highway, rail and water.

Inland and great lakes will continue to be a viable option in future logistical systems while the slow passage of inland river transport can provide a form of warehousing in transit integrated into overall system design.


Surprisingly, Pipelines are also one of the major form of transportation medium throughout the world. In 1989, in USA over 53% of all crude and petroleum ton-mile movements were through Pipelines.

In addition to Petroleum, other important product transported by pipeline is the natural gas. Pipelines are owned and operated privately in most of the countries and many gas companies act as both gas distributors and contract transportation providers. Pipelines are also utilized for transport of manufacturing chemicals, pulverized dry bulk materials such as cement, flour via hydraulic suspension, and sewage and water within cities and municipalities.

Pipelines are very unique in nature compared to other types of transport, such as; they operate on 24-hour basis, seven days a week, and are limited by commodity changeover and maintenance. Unlike other modes, there is no empty “Container” or “vehicle” that must be returned.

Pipelines have highest fixed cost and lowest variable cost among transport modes. High fixed costs result from right-of-way, construction and requirements for control stations, and pumping capacity. Since pipelines are not labor-intensive, the variable operating cost is extremely low once the pipeline has been constructed. An obvious disadvantage of these pipelines is that they are not flexible and are limited with respect to commodities that can be transported.

Experiments regarding transport of solid products are still going on. Coal slurry pipelines are proving to be economical over long distances but it concerns environmentalists, as it requires massive quantities of water.

Air Transport

Air transport is the newest and the least utilized mode of transport. Its major advantage being its speed, which is accompanied by high costs. A coast-to-coast shipment via air requires only a few hours contrast to days taken by other mean of transportation. The high cost of transport can be traded off for high speed, which allows other elements of logistical design, such as warehousing, inventory to be reduced or eliminated. But still air transport remains more of a potential opportunity than a reality because it is very much under utilized.

The high cost of jet aircraft, coupled with erratic nature of freight demand, has limited the assignment of dedicated planes to all-freight operations. However premium carriers provide planes dedicated for freight operations. This premium service started off with documents and has moved onto large parcels, which is an ideal service for firms with a large number of high-value products and time-sensitive service requirements.

The fixed cost of air transport is low as compared to rails, water and pipeline. In fact, air transport ranks second only to highway with respect to low fixed cost. Airways and airports are maintained by public funds and terminals are by local communities. The fixed costs of airfreight are associated with aircraft purchase and the requirement for specialized handling systems and cargo containers. But the air freight variable cost is extremely high as a result of fuel, maintenance, and labor intensity of both in-flight and ground crews.

Since they require wide-open space, airports are generally not integrated with other means of transport. However more “all freight” airports are being developed so as to reduce conflict with passenger operations.

No particular commodity dominates the traffic carried by airfreight operations. These operations are carried more on emergency basis than routine basis. Firms usually utilize scheduled or non-scheduled air cargo movements when the situation justifies high cost. Products with greatest potential for regular air movements are those having high value or extremely perishable. When the marketing period for an item is extremely limited, air transport comes into the picture, as it may be the only practical method for logistical operations.