Ballou 06 Transport

8/11/2019 Ballou 06 Transport

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6-2

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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6-3

Transport System Defined


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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6-4

Transport Choices


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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6-7

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


Price,Mode /ton-mile

Rail 2.28Truck 26.19Water 0.74Pipeline 1.46

Air 61.20


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6-9

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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6-10

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

CR (2004) Prentice Hall, Inc. 6-11


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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?


Current

NextNext

Rate

xWeightRatehtBreak Weig

6-12


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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


Calculate break weight

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6-14

Stop-Off Privilege Example


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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6-16

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


Ballou 06 Transport

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