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Transportation Management: Carriers’ Perspective. Legal Classifications of Carriers: Common Carrier. For-hire carrier that serves the general public at reasonable rates and without discrimination.

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Transportation Management: Carriers’ Perspective

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Transportation Management:Carriers’ Perspective


Legal Classifications of Carriers: Common Carrier

  • For-hire carrier that serves the general public at reasonable rates and without discrimination.

  • Stringent economic regulation designed to protect the public.

  • Must transport all commodities offered...

  • Commodities are limited to those that the carrier’s equipment will handle.

Management of Business Logistics, 7th Ed.


Legal Classifications of Carriers: Common Carrier

  • Carrier is liable for damages to products carried.

  • Exceptions to liability include acts of God, acts of the public enemy, acts of public authority, acts of the shipper and defects inherent in the goods.

  • Continued service is assisted by ceiling and floor limits on the rates charged.

  • Backbone of the transportation industry.

Management of Business Logistics, 7th Ed.


Legal Classifications of Carriers: Regulated Carrier

  • Regulated carriers are found in motor and water carriage.

  • The ICC Termination Act of 1995 eliminated most of the common carrier economic regulation for these two modes, including entry controls, reasonable rates, and nondiscrimination provisions.

  • When acting as a contract carrier, not subject to STB economic regulations.

  • Must provide safe and adequate service.

Management of Business Logistics, 7th Ed.


Legal Classifications of Carriers: Contract Carriers

  • For-hire carrier that does not have to serve the general public.

  • May serve one or a few shippers exclusively.

  • May offer specialized equipment.

  • Not subject to regulation on services; rates usually lower than common or regulated carriers.

Management of Business Logistics, 7th Ed.


Legal Classifications of Carriers: Contract Carriers

  • Other aspects of the carrier/shipper relationship are made a part of the contract between the two parties.

  • Becoming more popular as logistics managers use contract carriage to assure rates and service levels.

Management of Business Logistics, 7th Ed.


Legal Classifications of Carriers: Exempt Carriers

  • For-hire carrier exempt from economic regulation regarding rates and services.

  • Limited entry controls; low rates.

  • Usually haul agricultural products, but there are special rules as to what may be hauled by each mode of transportation, e.g., rail piggyback is exempt..

  • Limited number of carriers restricts availability.

Management of Business Logistics, 7th Ed.


Legal Classifications of Carriers: Private Carriers

  • Private carriage is the firm’s own transportation.

  • Not for-hire and not subject to Federal regulations.

  • May not be the firm’s primary business but can charge a intracompany fee for transportation services.

  • Almost exclusively motor, but some rail, air and water also exist.

Management of Business Logistics, 7th Ed.


Legal Classifications of Carriers: Private Carriers

  • Firms gain ultimate control over shipments and achieve maximum flexibility in moving goods.

  • Backhauls are usually empty or return materials to the firm’s plants and/or warehouses.

  • Requires a large capital investment.

  • Requires management time and expertise.

Management of Business Logistics, 7th Ed.


Documentation: Domestic

  • Bill of Lading

  • Freight Bill

  • Claims

  • F.O.B. Terms of Sale

Management of Business Logistics, 7th Ed.


Figure 10-2 Bill of Lading

Management of Business Logistics, 7th Ed.


Documentation: Domestic Bills of Lading

  • Shows title to the goods, name and address of the consignor and consignee.

  • Summarizes the goods in transit and their class rates.

  • Electronic bills now appearing where the carrier and shipper have an established strategic alliance.

Management of Business Logistics, 7th Ed.


Documentation:Domestic Freight Bills

  • Carrier’s invoice for charges for a given shipment.

  • Credit terms are stipulated by the carrier and can vary extensively.

  • Credit may be denied if the charges are worth more than the freight.

  • Bills may also be either prepaid or collect.

  • Freight bills are typically audited internally or externally.

Management of Business Logistics, 7th Ed.


Documentation: Domestic Claims

  • A document filed with the carrier to recover monetary losses due to losses, damage, delay or overcharges by the carrier.

  • Typically, claims are filed within 9 months, claimant in notified by receipt within 30 days, and settlement or refusal within 120 days.

  • Claims terms can be stipulated in the contract of carriage agreement and may be atypical.

Management of Business Logistics, 7th Ed.


Documentation:Domestic F.O.B. Terms of Sale

  • Determines which party is to pay the freight bill, which party has title to the goods, and which party controls the movement of the goods.

  • F.O.B. origin - buyer pays freight, owns goods once loaded, controls movement of the goods

  • F.O.B. destination - seller pays freight, owns goods until delivered, controls movement of the goods

Management of Business Logistics, 7th Ed.


Fundamentals of Class Rates

  • Rate Basis Tariff

  • Classification Tariff

  • Table of class rates

  • Example – National Motor Freight Classification

Management of Business Logistics, 7th Ed.


Table 10A-1 Table of Rate Basis Numbers

Management of Business Logistics, 7th Ed.


Table 10A-2 National Motor Freight Classification

Management of Business Logistics, 7th Ed.


Table 10A-3 Class Tariff

Management of Business Logistics, 7th Ed.


Table 10A-4 Exception Tariff

Management of Business Logistics, 7th Ed.


Table 10A-5 Commodity Tariff

Management of Business Logistics, 7th Ed.


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