Logistics opportunity costs: A mining case study

Abstract

This study highlighted the importance of determining the impact that an ineffective mode of transport has on a firm’s transportation model and costs. The main focus of this study was to determine the logistics opportunity costs of using road transport within a mining firm. A case study approach was followed, as the investigation aimed to analyse a complex problem experienced by one company and present it in an easily understandable format. From the results of this study, it was apparent that the logistics opportunity costs associated with the mode of transport was substantial. This highlighted the need for firms to revise their choice of transport mode on a regular basis, as it has a major impact not only on their transportation costs, but also on their inventory holding and carbon emissions. The results also have implications for South Africa’s only freight railway, Transnet Freight Rail, which should not only focus on expanding its existing capacity, but also on improving its customer service delivery whilst containing tariff increases.