Using an inventory theoric approach for modal choice: A case study

In this paper, the choice between different freight transportation modes is analyzed from the viewpoint of a shipper/receiver. The analysis is based on the concept of total logistics costs. This means that, when comparing different transportation modes, not only the cost of transportation itself should be considered by the shipper, but also all other costs in the supply chain that are affected by the choice of transportation mode. The concept of total logistics costs is illustrated by means of a case study, in which a comparison is made between road haulage and inland navigation for the transport of bulk goods. The trade-off between transportation costs and inventory costs is made explicit, i.e. while inland navigation has lower transportation costs than road haulage, its inventory costs are higher. Due to the fact that the goods considered are of relatively high value, the lower transportation costs of inland navigation are more than offset by its higher inventory costs.