At a recent warehousing conference, David Baker, a supply chain consultant, says that due to rising fuel cost companies must utilize other modes of transportation. Companies should especially use other modes of transportation when transporting things over 200 miles. This will not only hopefully reduce fuel costs, but also help keep some of the congestion down on main roads and highways. There is also growing political pressure to use more efficient transportation operations.
Baker says that the best way to utilize more modes of transportation is to move Distribution Centers near ports and railroads if possible. He says a company can save a lot of money in transporting goods if the build their DC’s near ports and especially if there is also a railroad system nearby. The benefits of having these two extra types of transportation modes nearby allows for a company to easily use the different types of transportation and therefore save money by using less trucks in order to transport goods.
Baker states that it will be more beneficial for companies to use a port-centralized DC model instead of a Demand-centralized model. While the Demand-centralized model is a good model, it requires a larger amount of transportation to be done by truck, which can be costly. While the port-centralized model will reduce the amount of transportation done by truck, but it will however increase the distance to the customer most likely. But, Baker claims the Port-centralized model is more cost efficient with the current rates of rising fuel prices.