Two Operation Modes in Coal Chemical Logistics: Comparison of Decentralized and Centralized Modes

Abstract

With the development of Coal Chemical Industry in Ordos, the task of its transportation has instantly increased. Due to limited railway transportation capacities, transportation problem becomes the bottleneck of coal chemical industry in this place. The article attempts to help the coal chemical enterprises to choose an optimal storage and transport mode. In the paper, we first present two operation modes in logistics, centralized and decentralized operation modes separately, then compare quantitatively the two modes from coal chemical enterprises point of view, results show that centralized mode is better than the decentralized mode for coal chemical enterprises in cost. 1. BACKGROUND The coal resources in Ordos, which are located in Inner Mongolia Autonomous Region accounts for about one-sixth of the total reserves in our country. In recent years, Ordos has focused on development of coal chemical industry since it began to bring greater profit along the related Industry chain than just selling coal resources. It can be estimated that with the rapid development of coal chemical industry, the transportation tasks have been increased. However the transportation capacity is limited. Therefore the transportation becomes the bottleneck for the development of coal chemical industry. This paper provides a new storage and transportation mode for enterprises to ease parts of transportation pressure. The situation we considered is a number of enterprises located in a coal chemical industry park. The enterprises face two options, one is decentralized operation mode: each firm builds special railway line, stores and transports their products separately, which is the status quo; the other mode is centralized storage and transportation by a professional third party logistics enterprise located in the coal chemical industry park. This mode is called as centralized mode (Beijing Jiaotong University subject group 2009). The paper tries to compare the advantages and disadvantages of these two modes, especially use quantitative analysis method, to help enterprises select an optional model from the cost perspective.