Transport Modes & Routing

Selecting the appropriate mode and optimizing routes ensures that goods are delivered to the right place, at the right time, and at the right cost. Misalignment in mode selection or inefficient routing can result in delays, excess cost, and service failures—making this a critical area for logistics optimization.

Concept Explanation (Theory)

Transport modes refer to the various methods used to move goods through the supply chain. Each mode has unique characteristics in terms of speed, cost, flexibility, and environmental impact. The most common transport modes include:

1. Road (Truck): Most flexible for short to medium distances; ideal for regional delivery, last-mile, and time-sensitive shipments.
2. Rail: Cost-effective for bulk goods and long-distance inland transport; less flexible in route availability.
3. Air: Fastest but most expensive; used for high-value or time-critical products.
4. Sea (Ocean Freight): Most economical for large volumes and international shipping; long lead times and less predictability.
5. Intermodal: Combines multiple modes (e.g., rail + truck) to balance cost and service.

Routing involves determining the most efficient path a shipment should take from origin to destination, considering constraints such as delivery time windows, vehicle capacity, traffic conditions, and road networks. Good routing answers two fundamental questions: which route and when to move the goods.

Operationalization

In real-world supply chain operations, transport mode and routing decisions are influenced by multiple dynamic variables:

• Product Characteristics: Perishable, fragile, or high-value items may require air or controlled road transport.
• Customer Expectations: Expedited delivery times drive the use of faster modes; longer lead-time orders can be consolidated for slower modes.
• Cost Structure: Mode costs vary significantly; strategic routing may use slower, cheaper routes to save cost on non-urgent shipments.
• Geography and Infrastructure: Availability of rail hubs, port access, and road conditions influence feasible routing options.
• Capacity and Scheduling: Routing must account for vehicle availability, warehouse operating hours, and loading/unloading constraints.

Strategically, companies often develop mode selection matrices and routing policies based on shipment urgency, size, and distance. These rules can be codified into transportation management systems (TMS) or even manual planning tools for smaller operations.

Excel for Mode and Routing Planning

Although advanced systems like SAP TM or Oracle TMS automate routing, Excel can effectively support transport mode evaluation and basic routing decisions. Here’s how:

1. Mode Comparison Matrix

• Create a table with transport modes as columns and key criteria (cost per kg, speed, reliability, CO₂ emissions) as rows.
• Assign weightings to each criterion based on business priorities.
• Use Excel's SUMPRODUCT function to score each mode and select the best-fit option.

2. Route Distance and Cost Calculator

• Use a distance matrix (origin-destination pairs) with associated transport rates per mode.
• Input delivery requirements (e.g., weight, volume, deadline).
• Use formulas to calculate:
  • Total Cost = Distance × Rate × Weight
  • Transit Time = Distance / Avg Speed
• Apply conditional formatting to highlight optimal routes based on time or cost thresholds.

3. Solver for Optimal Routing (Small Scale)

• Define multiple origin-destination pairs, shipment sizes, and vehicle constraints.
• Use Solver to minimize total route cost subject to:
  • Capacity constraints
  • Route limitations (e.g., max stops)
  • Delivery deadlines

To extend functionality, integrate Power Query to import route data from GPS providers or Excel VBA to simulate route options dynamically.

🤖Leveraging ChatGPT for Enhanced Productivity

Prompt for Mode Selection:

“Compare transport modes (road, rail, air, sea) for a shipment from Germany to India. Prioritize cost and lead time. Provide a decision matrix.”

Prompt for Route Optimization in Excel:

“Help me design an Excel model to calculate the best delivery route for a truck delivering to 10 retail stores, given distance and delivery time windows.”

Prompt for Scenario Analysis:

“Create a scenario plan comparing road vs. intermodal transport for a cross-country delivery, including cost breakdown, CO₂ emissions, and expected lead times.”

Final Thoughts

Transport mode and routing optimization isn’t just a logistics task—it’s a strategic lever that affects working capital, service levels, and sustainability. Businesses that make dynamic, data-driven decisions in this area outperform those that rely on static, cost-only-driven strategies.

Do your transport decisions reflect total supply chain value—or are they limited by operational habit? Rethinking your transport and routing logic might unlock significant performance gains.