Transportation is the largest cost element of logistics, mainly due to the cost of fuel. The five primary modes of transportation are road, rail, air, water, and pipeline. A sixth method, multimodal, also known as intermodal, refers to the practice of combining transportation modes. Multimodal is the most common type of transport. For example, a company may ship via road to a rail station where the shipment is transferred onto a train, then ship to a port and transferred onto a cargo ship. It may travel overseas to a port where it is unloaded back onto a train, and ultimately back onto a truck for final delivery. Road is very effective for pickup from or delivery to street addresses. It can offer competitive cost when shipping full truck loads over long distances and transporting a wide variety of products. Road may typically be the first and final mode when shipping multimodal. Rail and water are similar in that they are appropriate for large bulky loads, traveling long distances over land or sea respectively, resulting in cost efficiency. Rail is subject to the constraint of carrying loads that fit in a box car, tanker car, or on a flatbed car. Water is subject to the constraints of ocean storms, piracy, and delays in port due to backlog built up. Air is the fastest means of transport, yet also the most expensive. It is typically reserved for emergency shipments needed overnight. It may also be appropriate for small, high value items such as diamonds. The cost of air freighting diamonds versus the holding cost of inventory via a long water route would justify the air shipment. Air also has the advantage of high schedule adherence and reliability. Pipeline is a very specialized mode for the transport of gases, fluids, chemicals, and slurries. There is a high upfront cost to build pipelines, but once in place they have a low maintenance cost and tend to have high reliability.
