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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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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.
