Project: Summer Placement 03 - Whole-journey freight costs

Reference: STP 8/11/14

Last update: 15/12/2005 10:49:07

Objectives

To create a technique to identify whole-journey freight cost including in-transit handling and inventory costs.
To identify a number of specific case study traffics and to:
Use the technique to produce a putative whole-journey cost by the currently used chain of modes.
then use the technique to cost alternative combinations of freight chain, size of consignment, etc
establish the nature of the cost differences
and so assess the probability of various policy effects being able to modify modal choice.

To provide a test-bed to examine the feasibility of transferring particular freights from one mode to another.
To identify the effects of traffic flows and densities upon costs and upon the decisions made upon the basisof comparative cost.
Hence to determine how best to strive for the Government's policy of "making the logistics industry efficient, resilient, environmentally friendly and safe".
To identify the nature of "better links between the different forms of freight transport".
Hence to determine the feasibility of "winning more freight onto rail".
And to assess the feasibility of "promoting sustainable development of shipping ports and inland distribution systems".

Description

DfT contribution to the principles of the Treasury "Adding it Up" initiative "Summer Placements in Whitehall" which is intended to give academia access to Whitehall policy makers and an insight into these mechanisms not normally available.
The output from this project would provide useful input into the current work of the Freight Logistics research programme.

Contractor(s)

No contractors specified.

Contract details

Cost to the Department: £14,000.00

Actual start date: 30 June 2003

Actual completion date: 08 June 2004

Summary of results

  1. GOODSIM: estimating freight costs

    Whole freight costs
    The GOODSIM model is designed to estimate the full costs of a journey through a freight transport system including all the handling and the financing of stock-in-transit. It enables the user to specify a number of alternative routes, modes and equipments and will produce costs comparisons. These costs are, in each case broken down into twelve categories given by the various combinations of three sets of costings.
    First:
    . handling (defined as moving goods through micro-distances in loading and unloading)
    . haulage (defined as moving goods over long distances)
    Second, within both handling and hauling:
    . the cost of actually moving the goods
    . the inventory costs whilst they are moved
    . the inventory costs whilst they wait to be moved
    Third, those costs in terms of:
    . cash
    . elapsed time
    . aggregate unit-time, that is elapsed time weighted by the volume of goods in transit

    Rhythms and stocks
    The distinction between the inventory costs of stock-in-transit and stock-on-hold may appear to be rather precious. It stems from a concept of transport rhythms which provides a theoretical underpinning to the project.
    Some forms of transport run continuously or very frequently delivering small but frequent payloads. The extreme examples are pipelines or conveyor belts able to deliver material at a more or less continuous flow. However, equipment such as fork-lift trucks, although delivering intermittently, show the same general pattern of small payloads at short headways. At the other end of the spectrum, large ships or block trains deliver large cargos but much less frequently. The importance of the concept of modal rhythms lies, not in the rhythms themselves but in the need to consolidate and then disperse loads: at every break of rhythm there has to be a buffer store which incurs inventory and, probably, extra handling costs.
    It follows that the movement of freight door-to-door involves the line haul, the handling of loading and unloading and, perhaps, trans-shipment but, at every interface there has to be storage. This incurs extra inventory costs and maybe extra handling costs into and out of a temporary store. These extra costs may be severe: if a block train is used, the complete train load has to be built up and cargo has to wait whilst this is done.

    GOODSIM Model:
    The project was not research in the sense of finding new facts but was designed to create a new tool to help in making decisions about which mode would be the most efficient in terms of resource expenditure. The result is a simulation called GOODSIM.

    GOODSIM has two major inputs:
    o a standard database describing the physical characteristics of freight equipment and the costs of using it.
    o a user defined freight flow.

    Freighting equipment is classified into:
    . Trays. These are equipments able to carry goods but do not have wheels. Pallets, stillages, containers are all examples.
    . Chassis. These have wheels but no power source. Railway wagons, cages, and trailers are examples
    . Shifters. Have power and are able to move goods either in their own right or in combination with chassis and trays. Lorries are clearly shifters but locomotives, fork lifts and conveyors belts are less obvious examples.
    . Ways. These are tracks or load bearing hardstandings necessary for the movement of shifters.
    . Miscellaneous. These are fridge units, lorry-borne cranes, etc
    The freight to be shifted is defined by the user in two ways:
    o the number and size of the units to be shifted together with their weight and value
    o the means by which they are to be shifted
    The units to be carries may be uniquely described by the user in term of their physical dimensions or they may be described by reference to a tray (such as a pallet) or a chassis (such as a cage). The nature of the cargo does not have to be specified, just the size, weight and value of the component units.
    The flow of these units must be described as the number of units per specified length of time. This is very important since the flow is constant through the system irrespective of whether it is carried in large but infrequent agglomerations needing consolidation time or very frequent but smaller aggregations or even single units. In other words, no freight joins or leaves the flow as it makes its way through the system.
    The means by which it is to be shifted is a user-defined sequence of stages. The first stage describes the flow as it enters the freight system in terms of units per time, and the size, value and weight of the units. The last stage describes the rate at which the units leave the system.
    The intermediate stages are either line-haul or handling. Line haul is described by the user as a set of equipment drawn from the equipment data base, the distance to be hauled and the mean speed. Handling is described by the handling equipment. This may be humans (they appear in the equipment database as freighting equipment), fork lifts, etc.
    For handling GOODSIM simulates the handling, dividing trays, etc into slots related to the size of the freighting units and using the specified equipment to fill the slots building cash- and time-cost profiles as it does so.
    GOODSIM allows the user to specify one or more routes and combinations of mode and will produce spreadsheets of costings to enable the routes to be compared. The sheets are in the form shown in Appendix 1.

    Conclusion
    The aim of GOODSIM is to estimate the costs measured in cash and time of moving a user-specified traffic by one or more freight chains. It does so by simulating the handling and drawing on a database of equipment capacities and costs. It also includes the inventory costs of the traffic whilst it is in transit, being handled or waiting.