CHAPTER 6

1. CHAPTER 6 Transportation

2. Learning Objectives • To relate the mode of transport to the user’s shipping volume • To understand the use of routing guides • To realize the role of freight forwarders and other intermediaries • To understand the difference between LTL and TL motor carriers © 2008 Prentice Hall

3. Learning Objectives • To appreciate the use of terminals as transfer points for bulk materials • To appreciate trade-offs when using vehicles with self-loading/unloading equipment • To learn about project cargo • To learn the basics of freight rate determination © 2008 Prentice Hall

4. Key Terms Broker Bulk cargo Consignee Freight classification Key Terms Freight forwarder Intermodal transportation LTL Nodes The Domestic Transportation System © 2008 Prentice Hall

5. Key Terms Parcels Parcel carriers Private transportation Project cargo Key Terms Routing guides Shippers’ cooperatives Terminal TL (truckload) rate Ton-mile The Domestic Transportation System © 2008 Prentice Hall

6. The Domestic Transportation System • Transportation is the movement of goods and people between two points • Nodes • Links • Air, water, motor carriage, rail, pipeline • Intermodal transportation • Routing guides © 2008 Prentice Hall

7. Figure 6-1:Switching Milk Cans from a Farmer’s Buggy to a Truck on a Rural Road in North Carolina, 1929 © 2008 Prentice Hall

8. The Domestic Transportation System • Supply chain success requires transportation • Transportation costs are affected by node location • Inventory requirements are influenced by mode • Packaging requirements are dictated by mode • Materials handling equipment and design of the docks are dictated by mode • Maximum consolidation of loads achieved with order-management technology reduces costs • Customer service goals influence carrier choice © 2008 Prentice Hall

9. Small-Volume Shippers • Parcels are packages weighing up to 150 pounds • Parcel carriers are firms that specialize in small packages (≤ 150 pounds) • UPS • FedEx • Other carriers include • USPS • Passenger carriers—air and bus © 2008 Prentice Hall

10. LTL Shippers • Less-than-truckload (LTL) • 150 to 10,000 pounds • Too big to be handled manually, too small to fill a truck • LTL trucks carry shipments from many shippers • Most large firms are LTL carriers • Yellow Freight • Roadway Express • ABF Freight System © 2008 Prentice Hall

11. LTL Shippers • Less-than-truckload (LTL) (continued) • Process • Local pick-up • Origin terminal used to load aboard line haul • Line haul to terminal near destination • Destination local delivery on smaller trucks • Consignee receives © 2008 Prentice Hall

12. LTL Shippers • Air Cargo • Can be given directly to airline • Can be given to freight forwarder • Most carried on passenger airlines • Types of products • High in value • Perishable • Require urgent delivery • Shipped in air containers made to fit fuselage © 2008 Prentice Hall

13. LTL Shippers • Freight forwarders • buy space at TL (truckload) rate and sell at somewhat less than LTL rate • pick-up and deliver; motor carriers or railroads do line-haul • function as transportation departments of small firms • may specialize in specific cargoes © 2008 Prentice Hall

14. LTL Shippers • Air forwarders • Consolidate shipments • Tender to airlines in containers ready for loading • Forwarders provide retailing function • Airline provides wholesaling function • Shipper’s cooperatives • Similar to air and freight forwarders but are not-for-profit organizations • Membership (shippers) receives any monies earned in excess of costs © 2008 Prentice Hall

15. LTL Shippers • 3PLs • May have equipment—trucks, trailers, terminals • May deal in information only • May operate Internet-based auctions • Brokers • A facilitator who brings together a buyer and seller • May consolidate LTL shipments and then give to truckers, forwarders, or shippers’ associations © 2008 Prentice Hall

16. Truckload and Carload Shippers • Shipments of 20,000 to 30,000 pounds • Fill one truck • Cost less per pound than LTL shipments • The shipper loads and consignee unloads the trailer • Load goes from shipper to consignee without passing through a terminal • Paperwork, billing, and control costs are the same © 2008 Prentice Hall

17. Truckload and Carload Shippers • Rate per haul may be negotiable • Largest TL companies • Schneider National Van Carriers • J.B. Hunt Transport • Many firms are smaller, without national presence • Smaller firms may be owner-operators © 2008 Prentice Hall

18. Truckload and Carload Shippers • Private transportation is when the shipper provides and operates its own equipment • Dedicated equipment is carrier-owned but assigned to serve specific customers for indefinite periods • Shippers and consignees using railroad service need sidings on their property © 2008 Prentice Hall

19. Large Bulk Shippers • Bulk cargo • Travels in loose rather than in packaged form • Handled by pumps, scoops, conveyor belts, or the force of gravity • Has various handling characteristics • Moves by • Truckload • Railroad • Water carrier • Pipeline © 2008 Prentice Hall

20. Large Bulk Shippers • Bulk cargo (continued) • Dry Bulk-Handling Systems • Coal car unloading facility • Taconite loading facility • Grain elevator • Vehicle and Vessel Equipment Choice © 2008 Prentice Hall

21. Figure 6-2:Cross-Section of a Coal Car-Dumping Building in St. Louis, Missouri © 2008 Prentice Hall

22. Figure 6-4:Export Grain Elevator at the Port of Seattle © 2008 Prentice Hall

23. Unique Cargo • Project cargois a one-time unique movement of substantial volume • Examples include oil refineries, wood-pulp processing plant • Oversized moves • Hazardous materials © 2008 Prentice Hall

24. Comparison of Modes • Costs per ton-mile • Speed • On-time delivery © 2008 Prentice Hall

25. Transportation Regulation and Deregulation • Exceptions to economic deregulation • Rail service to captive shippers • Household goods movers • Many petroleum pipelines • Many natural gas pipelines • Some inland waterway traffic • Some water transport between mainland U.S. and Hawaii, Puerto Rico, and Alaska © 2008 Prentice Hall

26. Transportation Regulation and Deregulation • Other types of regulation • Vehicle operations • Vehicle dimensions • Safety of operators • Safety of general public © 2008 Prentice Hall

27. Transportation Rates • Rate structure deals with three factors • Relationships between different products • Relationships between shipments of different weights • Relationships between different distances • Three factors are defined numerically and then tied to a rate of cents per hundredweight (cwt) © 2008 Prentice Hall

28. Transportation Rates • Negotiated between carrier and shipper • Quoted as percentage discounts from published rates • Four factors determine freight classification • Density • Stowability • Ease or difficulty of handling • Liability to damage and theft © 2008 Prentice Hall

29. Transportation Rates • To find LTL rates usually need: • Origin and destination zip codes • Weight of shipment • Classification of shipment • Supplemental services needed • Discount awarded to shipper by carrier • Rates may be on carrier Web sites © 2008 Prentice Hall

30. Figure 6-7:Page from National Motor Freight Classification © 2008 Prentice Hall