1、Contemporary LogisticsTwelfth EditionChapter 13Transportation ManagementLearning Objectives13.1 To discuss how rates are determined13.2 To learn about modal and carrier selection13.3 To distinguish among various transportation documents13.4 To illustrate select activities associated with making and
2、receiving shipments13.5 To learn about transportation service qualityTransportation Management(1 of 2)Transportation management Refers to the buying and controlling of transportation service by either a shipper or consignee1 Transportation is the most costly logistics activity1John J.Coyle,Edward J.
3、Bardi,and Robert A.Novack,Transportation,6th ed.(Mason,OH:South-Western,2006).Transportation Management(2 of 2)Transportation managers also involved in other operations of the firm:Marketing Manufacturing Outbound shipping PurchasingRate(Pricing)Considerations(1 of 10)Rate determination One key resp
4、onsibility of transportation managers Rate Price charged for freight transportation Fare Prices charged for passenger transportationRate(Pricing)Considerations(2 of 10)Rate determination Weight x rate=transportation cost Transportation rates based on three factors:Product Weight DistanceRate(Pricing
5、)Considerations(3 of 10)Rate determination Commodity rate One specific rate for every possible combination of product,weight,and distance Class rate system System to simplify rate determination Simplifies each of the three primary factors:product,weight,and distance National Motor Freight Classifica
6、tion(NMFC)Figure 13.1:Page from National Motor Freight ClassificationSource:Reprinted from the National Motor Freight Classification ATA 2013.Rate(Pricing)Considerations(4 of 10)Rate determination Factors used to determine products freight classification Density Stowability Ease of handling Liabilit
7、y to damage and theftRate(Pricing)Considerations(5 of 10)Rate determination Factors used for determine products freight classification Density Refers to how heavy a product is in relation to its size Viewed as primary factor for setting a products classification Stowability Refers to how easy the co
8、mmodity is to pack into a load Possible considerations involve the commoditys ability to be loaded with hazardous materials and ability to load freight on top of the commodityRate(Pricing)Considerations(6 of 10)Rate determination Factors used for determine products freight classification Ease of dif
9、ficulty of handling Refers to challenges to handling that might be presented by a commoditys size,weight,and so on Liability for loss and damage Considers,among others,a commoditys propensity to damage other freight,its perishability,and its valueRate(Pricing)Considerations(7 of 10)Rate determinatio
10、n Weight groups are used to simplify shipment weight Weight group examples:Less than 500 pounds(highest rate)500999 pounds 10001,999 pounds Distances are simplified through rate basis numbers Zip codes are replacing rate basis numbersTable 13.1:Example of the Class Rate SystemRate(Pricing)Considerat
11、ions(8 of 10)Rate determination Commodity Classification Standards Board develops and maintains commodity freight classifications Shippers prefer lower classification number(lower rate)Carriers prefer higher classification number(higher rate)Transportation managers can appeal a commoditys classifica
12、tionFigure 13.2:Motor Carrier Classification Docket Proposal for Changing the Classification of Soft Contact Lenses(1 of 2)CCSB DOCKET 2015-1 SECTION I SUBJECT 3 2014 National Motor Freight T raffic Association,Inc.Subject 3,Page 2 of 4About Magnesium Rakes or Lutes Magnesium rakes or lutes are tool
13、s primarily used in the spreading and leveling of asphalt or concrete.They may also be used to level dirt,rock,gravel or snow.The proponents products consist of a fiberglass or magnesium handle,metal connector bracket and a magnesium rake or lute head.Some handles will exceed eight feet in length.Ex
14、amples of the involved parts and assembled product are shown in the photos below.Transportation Characteristics DensityThe proponent submitted a total of 89 density observations,including data on all of its models of magnesium rakes or lutes and the individual parts.The densities range from 9.41 to
15、28.46 pcf,with an average density of 18.73 pcf.A frequency distribution is shown below.0.00%10.00%20.00%30.00%40.00%0.00%0.00%0.00%0.00%0.00%2.25%4.49%22.47%32.58%38.20%0.00%of Figures in IntervalDensity Intervals(pcf)Frequency Distribution2014 National Motor Freight Traffic Association,Inc.Figure 1
16、3.2:Motor Carrier Classification Docket Proposal for Changing the Classification of Soft Contact Lenses(2 of 2)CCSB DOCKET 2015-1 SECT ION I SUBJECT 3 2014 National Motor Freight Traffic Association,Inc.Subject 3,Page 3 of 4 When the data is evaluated based on the handling units length,the following
17、 density ranges and averages emerge.Handling Unit Length Density Range(pcf)Average Density(pcf)Exceeding 96 inches 9.41 16.57 13.39 Not exceeding 96 inches 11.63 28.46 20.38 HandlingAs shown in the photo on the right,the proponents magnesium rakes or lutes are shipped in fiberboard boxes secured on
18、lift truck skids or pallets.Individual components(i.e.handles,connector brackets or heads)of magnesium rakes or lutes may be shipped in boxes on the same handling unit.Data furnished by the proponent indicates that handling units can exceed 96 inches in length.Generally,freight that exceeds 96 inche
19、s in length will require extra care and attention during handling.StowabilityThe proponent states that the involved products are stackable.However,depending on the shipment configuration,its magnesium rakes or lutes may or may not provide a regular load-bearing surface for top freight.In addition,ha
20、ndling units that exceed 96 inches in length may complicate the carriers ability to structure a load and maximize vehicle utilization.LiabilityThe involved articles are not perishable,hazardous in nature,unusually susceptible to theft,unusually liable to damage and would not appear likely to damage
21、other freight.The proponent provided the list prices for various models of its magnesium rakes or lutes.The list price ranges from$12.58 to$13.48 per pound,with an average price per pound of$13.16.The individual parts range in list price from$12.00 to$19.43 per pound,with an average price per pound
22、of$14.33.The proponent states that no claims have been filed for a one-year period.Relationship to CCSB Policies and Guidelines CCSB policy calls for classification provisions to reflect a commoditys known transportation characteristics.The proponent asserts that the provisions of item 185653 for“Ra
23、kes,hand,having tines constructed of magnesium”are not reflective of the transportation characteristics of its products.Information provided by the proponent includes 89 density observations ranging from 9.41 to 28.46 pcf,with an average density of 18.73 pcf.An average density of 18.73 pcf is genera
24、lly associated with a class 70,which under CCSB guidelines calls for a minimum average density of 15 pcf.However,CCSB policies further state that unusual or significant negative handling,stowability or liability characteristics may be contributing factors in the assignment of classes.In this regard,
25、it is noted that some of the involved magnesium rakes or lutes exceed 96 inches in length,which present additional handling and stowability considerations.In such situations,classification precedent has been to assign a class higher than that called for under the CCSB density guidelines.Surfa Slick
26、has proposed classes accordingly,as outlined in the table on the following page.CCSB DOCKET 2015-1 SECT ION I SUBJECT 3 2014 National Motor Freight Traffic Association,Inc.Subject 3,Page 4 of 4 This proposal would cancel item 185653 with reference to a new item for“Rakes or Lutes,hand,consisting of
27、magnesium heads with detached handles of same or other material;or Handles or Parts thereof,NOI,”at class 70 when the length does not exceed 96 inches,consistent with the respective density guideline.Handling units exceeding 96 inches in length would be assigned a class 92.5,one class higher than th
28、at called for by the respective density guideline.This proposal is in keeping with CCSB policies and precedent.Handling Unit Length Average Density(pcf)CCSB Minimum Average Density Guideline(pcf)Class Based on CCSB Guidelines Class Adjustment Based on Handling and Stowability Considerations Exceedin
29、g 96 inches 13.39 12 85 92.5 Not exceeding 96 inches 20.38 15 70-2014 National Motor Freight Traffic Association,Inc.Rate(Pricing)Considerations(9 of 10)Rate and service negotiations Both rates and service levels may be negotiated due to economic deregulation Allows transportation managers to take a
30、dvantage of trade-offs between price and serviceTable 13.2:Representative Rate and Service Items in the CarrierShipper Negotiation ProcessAdjustment to RatesArbitrationArticles and Commodities CoveredAudit rightsBasis for chargesBilling proceduresCarrier equipment and driversCarrier insuranceCarrier
31、 notification requirementsDetention timeDuration of agreementEstimated transportation volumeHow loss and damageclaims are handledLead timesPallet loadingProof of deliveryRenegotiation and reopening of contractSchedule of rates and chargesTermination of agreementTransportation service levelWaiver of
32、termsRate(Pricing)Considerations(10 of 10)Rate and service negotiations Domestic terms of sale When freight charges are paid for a particular domestic shipment Transportation cost analysis Especially valuable in the shipment consolidation decision Facilitated by advances in information technologyMod
33、al and Carrier Selection(1 of 2)Two-step process1.Determine appropriate mode(s)2.Select carrier(s)within the chosen mode(s)Carrier selection is more challenging Difficult to be aware of every possible carrier Lack of agreement on the number of relevant factorsModal and Carrier Selection(2 of 2)Amoda
34、l shipper Refers to a transportation manager who purchases a prespecified level of transportation service and is indifferent to the mode(s)and/or carrier(s)used to provide the actual transportation serviceResearch indicates shippers are more interested in transportation metrics than in modesDocument
35、ation(1 of 6)Documentation Serves practical function What,where,and how much is being transportedPotentially provides legal recourseTransportation department is responsible for completing all documents needed to transport the firms productsDocumentation(2 of 6)Bill of lading Most important single tr
36、ansportation document Functions as a delivery receipt when products are tendered to carriers Bills of lading types:Straight bill of lading(white paper)Order bill of lading(yellow paper)Documentation(3 of 6)Bill of lading Additional classifications:Long-form Short PreprintedFigure 13.3:A Long-Form Bi
37、ll of LadingCredit:Burlington Northern Santa Fe RailroadDocumentation(4 of 6)Freight bill Invoice submitted by the carrier requesting to be paid Freight bill-paying service Automated service in attempt to pay carriers within a specific number of working daysDocumentation(5 of 6)Freight bill Internal
38、 audits Conducted to:Detect current errors that result in overcharges Correct these errors in the future External audits Work is performed by an independent third party to detect errors in freight billsDocumentation(6 of 6)Freight claims Refers to a document that notifies a carrier of wrong or defec
39、tive deliveries,delays,or other delivery shortcomings Concealed loss or damage difficult for shippers and carriers Refers to situation where loss or damage is not apparent until after a shipment has been unpacked and inspectedMaking and Receiving Shipments(1 of 5)Key area of decision making in trans
40、portation management involves making and receiving shipments Refers to tactical planning and control of shipments along with supervision of freight loading and unloading22John E.Tyworth,Joseph L.Cavinato,and C.John Langley,Traffic Management:Planning,Operations,and Control(Prospect Heights,IL:Wavela
41、nd Press,1991).Making and Receiving Shipments(2 of 5)Consolidating small shipments Shipments more than 50 pounds and less than 500 pounds To get a lower rate,shipment consolidation may occur:aggregating customer orders across time or placeFigure 13.4:The Transportation Manager Consolidates Shipments
42、 Whenever PossibleMaking and Receiving Shipments(3 of 5)Demurrage and detention Demurrage Penalty payment made to the railroad for keeping a railcar beyond the time when it should be released back to the carrier Detention Same concept as demurrage except it usually refers to the trucking industryMak
43、ing and Receiving Shipments(4 of 5)Routing Process of determining how a shipment will be moved between origin and destination3 Routing guide Example of routing Document that can provide a variety of shipment-related information3http:/www.cscmp.org/sites/default/files/user_uploads/resources/downloads
44、/glossary.pdfMaking and Receiving Shipments(5 of 5)Tracking and expediting Tracking Refers to determining a shipments location during the course of its move Expediting Involves the need to rapidly move a shipment to its final destinationTransportation Service Quality Macroenvironmental changes have
45、caused organizations to demand higher levels of service quality Economic deregulation allowed for both price and service competition resulting in a need to measure their carriers performance Can measure performance through the use of performance scorecardsTable 13.3:Example of a Carrier Performance
46、ScorecardKey Terms(1 of 2)Amodal shipper Bill of lading Class rate system Commodity rate Concealed loss or damage Demurrage Density Detention Documentation Expediting FOB destinationKey Terms(2 of 2)FOB origin Freight bill Freight claims Rate Routing Routing guide Stowability Tracking Transportation Management
