CHAPTER 6 Transportation. © 2008 Prentice Hall 6-2 Learning Objectives F To relate the mode of transport to the user’s shipping volume F To understand

CHAPTER 6

TransportationTransportation

© 2008 Prentice Hall 6-2

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


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


The Domestic Transportation System

Key Terms

– Broker

– Bulk cargo

– Consignee

– Freight classification

Key Terms– Freight

forwarder

– Intermodal transportation

– LTL

– Nodes



Key Terms– Parcels

– Parcel carriers

– Private transportation

– Project cargo

Key Terms– Routing guides

– Shippers’ cooperatives

– Terminal TL (truckload) rate

– Ton-mile



Transportation is the movement of goods and people between two points– Nodes– Links– Air, water, motor carriage, rail, pipeline– Intermodal transportation– Routing guides


Figure 6-1: Switching Milk

Cans from a Farmer’s

Buggy to a Truck on a

Rural Road in North Carolina,

1929


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


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


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


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


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


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


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


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


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



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



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


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


Large Bulk Shippers

Bulk cargo (continued)– Dry Bulk-Handling Systems

Coal car unloading facility Taconite loading facility Grain elevator

– Vehicle and Vessel Equipment Choice


Figure 6-2: Cross-Section of a Coal Car-

Dumping Building in St. Louis, Missouri


Figure 6-4: Export Grain Elevator at the Port of Seattle

George

Figure covers globe...please fix.


Unique Cargo

Project cargo is a one-time unique movement of substantial volume– Examples include oil refineries, wood-pulp

processing plant Oversized moves Hazardous materials


Comparison of Modes

Costs per ton-mile

Speed

On-time delivery


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


Transportation Regulation and Deregulation

Other types of regulation– Vehicle operations– Vehicle dimensions– Safety of operators– Safety of general public


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)



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



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


Figure 6-7: Page from National

Motor Freight Classification

Documents

CHAPTER 6 Transportation. © 2008 Prentice Hall 6-2 Learning Objectives F To relate the mode of transport to the user’s shipping volume F To understand