Transportation is a key element in successful supply chain management. For some manufacturing firms, transportation costs can be as much as 20 percent of total production costs. For service companies involved in the distribution of retail items such as catalog sales, it can be even higher. In one year L. L. Bean ships approximately 11 million packages, 650,000 in a week, which is about 19 tractor-trailer loads. During the Christmas season, it will fill a 40-foot UPS trailer every 20 minutes.
Transportation costs depend largely on where a company is located relative to its suppliers, warehouses, distribution centers, and customers. The level of customer service--speed and frequency of delivery--required by a company's customers can determine the mode of transportation and costs. Inventory levels within a company's supply chain are affected by the mode of transportation used and how close it is to the company's physical facilities. The transportation mode selected by a company can dictate the type of material handling, packaging, loading, and order processing systems used