ballou 06 transport
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Transport Fundamentals inPlanning Triangle
PLANNING
ORGANIZING
C
ONTROLLING
Transport StrategyTransport fundamentalsTransport decisions
Customer
service goalsThe productLogistics serviceOrd . proc. & info. sys.
Inventory StrategyForecastingInventory decisionsPurchasing and supply
scheduling decisionsStorage fundamentalsStorage decisions
Loc ation StrategyLocation decisionsThe network planning process
PLANNING
ORGANIZING
C
ONTROLLING
Transport StrategyTransport fundamentalsTransport decisions
Customer
service goalsThe productLogistics serviceOrd . proc. & info. sys.
Inventory StrategyForecastingInventory decisionsPurchasing and supply
scheduling decisionsStorage fundamentalsStorage decisions
Loc ation StrategyLocation decisionsThe network planning process
CR (2004) Prentice Hall, Inc.
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Transport System Defined
CR (2004) Prentice Hall, Inc.
Performance- Average transit time- Transit time variability- Loss and damage- Other factors including availability, capability,
frequency of movement, and various lesstangible services
Cost- Line haul- Terminal/local- Accessorial or special charges
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Transport Choices
CR (2004) Prentice Hall, Inc.
Primary interci ty carriers-Air
-Truck-Rail
-Water
-Pipe
Coord inated services-Piggyback
-Birdyback
-Fishyback
Smal l shipm ent carr iers-UPS-Federal Express-Postal services-Bus Package Express
Agents-Freight forwarders-Shipper associations
Others-
Autos-Bicycles-Taxis-Human-Electronic
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Performance OverviewAir generally fast over long distances and a fair
degree of relative variability
Water is very slow and moderately reliable
Pipe is very slow but reliable
Truck is moderately fast and reliable
Rail is slower and less reliable than truck
Relative Costs of Performance
CR (2004) Prentice Hall, Inc.
Price,Mode /ton-mile
Rail 2.28Truck 26.19Water 0.74Pipeline 1.46
Air 61.20
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Foreign (Free) Trade Zone
Products from
abroad
Products to
foreign
markets
No duties paid
Custom
s
To domestic
markets
Duties paid
Manufacturing
and/or storage
Duty free zone
Products from
abroad
Products to
foreign
markets
No duties paid
Custom
s
To domestic
markets
Duties paid
Manufacturing
and/or storage
Duty free zone
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Rate TypesLine haul rates
-Class>Freight classification of items
>Rate tables of tariffs
-Contract rates
-Drayage (local delivery)Commodity and contract rates
-Specific rates for given shipment sizes for specificproducts moving between designated points
Special service charges-Extra charges
-Stop-off privilege example
Private carr ier cost ing
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Should always check to see if shipment can be declared at thenext higher weight break for a lower rate and lower total charges
Table 6-5
Table 6-4
Suppose we wish to ship 15,000 lb. (150 cwt.) of wheat
flour from New York to Los Angeles by truck. Thetrucker offers a 40% discount from the published tariff.What is the transportation charge?
From the freight classification table, this is item number
1090--00. It shows a minimum weight of 36,000 lb.,which is less than this shipment size. Therefore, theclass rating is 55, or less-than-truckload. From theclass 100 tariff, the rate is 6065, or $60.65 per cwt.
With a 40% discount, the effective rate is (1- .40) x60.65 = $36.39. The shipment charges are 0.55 x36.39 x 150 = $3,002.18.
Class Rate Example
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Break Weight
where:
Break Weight = Weight above which the next higher weight break rateshould be used for lower transport costs
RateNext = Rate for next higher weight breakWeightNext = Minimum weight of next higher weight breakRateCurrent = Rate for true weight of shipment.
Question Suppose 9,000 lb. of Class 100 merchandise is to
be shipped from New York to Dallas. From Table 6-4, therate would be $52.21/cwt. However, should the shipment bepriced at the next higher weight break rate of $40.11/cwt. fora lower cost?
CR (2004) Prentice Hall, Inc.
Current
NextNext
Rate
xWeightRatehtBreak Weig
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Break Weight(Contd)
lb.7,682or,82.7621.52
10011.40WeightBreak
x
Since the 9,000 lb. shipment size exceeds thebreak weight of 7,682 lb., size as if a 10,000 lb.,shipment for a total cost of $40.11x 100 = $4,011.
Otherwise, the shipment would have cost$52.21x90 = $4,699.
Answer
CR (2004) Prentice Hall, Inc.
Calculate break weight
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Stop-Off Privilege Example
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Suppose 3 shipments of J=8,000 lb., K=12,000 lb.,and L=10,000 lb. originating at Iare to be deliveredin the following way.
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Stop-Off Privilege Example(Contd)First, we compare the costs without the stop-off privilege. This would be to
price as if each shipment is a separate shipment from I. Suppose we knowthe rates. Hence,
Now, we price with the stop-off privilege. We assume that all the volume(30,000 lb.) is to be delivered to the farthest stop and we use the rate tothat point ($3.00/cwt.). A small stop off charge of $15.00 is made for eachstop including the last stop. Hence,
The betterchoice
All volume tothe farthest stop
Load, lb. Points Rate, $/cwt. Charges
8,000 I to J 3.05 $244.00
12,000 I to K 3.35 402.0010,000 I to L 3.60 360.00
Total $1006.00
Load, lb. PointsRate,$/cwt. Charges
30,000 I to L 3.00 $900.00
3 stops at$15 each 45.00
Total $945.00CR (2004) Prentice Hall, Inc.
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Rate ProfilesBy distance
Rates vary with the distance between originand destination in the following manner
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Rate Profiles(Contd)By vo lume
Rates by shipment size have the followingcharacteristic
CR (2004) Prentice Hall, Inc.
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