1. CHAPTER 6 Transportation

2. © 2008 Prentice Hall 6-2 Learning Objectives F To relate the mode of transport to the user’s shipping volume F To understand the use of routing guides F To realize the role of freight forwarders and other intermediaries F To understand the difference between LTL and TL motor carriers

3. © 2008 Prentice Hall 6-3 Learning Objectives F To appreciate the use of terminals as transfer points for bulk materials F To appreciate trade-offs when using vehicles with self-loading/unloading equipment F To learn about project cargo F To learn the basics of freight rate determination

4. © 2008 Prentice Hall 6-4 The Domestic Transportation System F Key Terms –Broker –Bulk cargo –Consignee –Freight classification F Key Terms –Freight forwarder –Intermodal transportation –LTL –Nodes

5. © 2008 Prentice Hall 6-5 The Domestic Transportation System F Key Terms –Parcels –Parcel carriers –Private transportation –Project cargo F Key Terms –Routing guides –Shippers’ cooperatives –Terminal TL (truckload) rate –Ton-mile

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

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

8. © 2008 Prentice Hall 6-8 The Domestic Transportation System F 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

9. © 2008 Prentice Hall 6-9 Small-Volume Shippers F Parcels are packages weighing up to 150 pounds F Parcel carriers are firms that specialize in small packages (≤ 150 pounds) –UPS –FedEx F Other carriers include –USPS –Passenger carriers—air and bus

10. © 2008 Prentice Hall 6-10 LTL Shippers F 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 u Yellow Freight u Roadway Express u ABF Freight System

11. © 2008 Prentice Hall 6-11 LTL Shippers F Less-than-truckload (LTL) (continued) –Process u Local pick-up u Origin terminal used to load aboard line haul u Line haul to terminal near destination u Destination local delivery on smaller trucks u Consignee receives

12. © 2008 Prentice Hall 6-12 LTL Shippers F Air Cargo –Can be given directly to airline –Can be given to freight forwarder –Most carried on passenger airlines –Types of products u High in value u Perishable u Require urgent delivery –Shipped in air containers made to fit fuselage

13. © 2008 Prentice Hall 6-13 LTL Shippers F 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

14. © 2008 Prentice Hall 6-14 LTL Shippers F Air forwarders –Consolidate shipments –Tender to airlines in containers ready for loading –Forwarders provide retailing function –Airline provides wholesaling function F 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

15. © 2008 Prentice Hall 6-15 LTL Shippers F 3PLs –May have equipment—trucks, trailers, terminals –May deal in information only –May operate Internet-based auctions F Brokers –A facilitator who brings together a buyer and seller –May consolidate LTL shipments and then give to truckers, forwarders, or shippers’ associations

16. © 2008 Prentice Hall 6-16 Truckload and Carload Shippers F Shipments of 20,000 to 30,000 pounds F Fill one truck F 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

17. © 2008 Prentice Hall 6-17 Truckload and Carload Shippers F Rate per haul may be negotiable F Largest TL companies –Schneider National Van Carriers –J.B. Hunt Transport F Many firms are smaller, without national presence F Smaller firms may be owner-operators

18. © 2008 Prentice Hall 6-18 Truckload and Carload Shippers F Private transportation is when the shipper provides and operates its own equipment F Dedicated equipment is carrier-owned but assigned to serve specific customers for indefinite periods F Shippers and consignees using railroad service need sidings on their property

19. © 2008 Prentice Hall 6-19 Large Bulk Shippers F 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 u Truckload u Railroad u Water carrier u Pipeline

20. © 2008 Prentice Hall 6-20 Large Bulk Shippers F Bulk cargo (continued) –Dry Bulk-Handling Systems u Coal car unloading facility u Taconite loading facility u Grain elevator –Vehicle and Vessel Equipment Choice

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

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

23. © 2008 Prentice Hall 6-23 Unique Cargo F Project cargo is a one-time unique movement of substantial volume –Examples include oil refineries, wood-pulp processing plant F Oversized moves F Hazardous materials

24. © 2008 Prentice Hall 6-24 Comparison of Modes F Costs per ton-mile F Speed F On-time delivery

25. © 2008 Prentice Hall 6-25 Transportation Regulation and Deregulation F 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

26. © 2008 Prentice Hall 6-26 Transportation Regulation and Deregulation F Other types of regulation –Vehicle operations –Vehicle dimensions –Safety of operators –Safety of general public

27. © 2008 Prentice Hall 6-27 Transportation Rates F Rate structure deals with three factors –Relationships between different products –Relationships between shipments of different weights –Relationships between different distances F Three factors are defined numerically and then tied to a rate of cents per hundredweight (cwt)

28. © 2008 Prentice Hall 6-28 Transportation Rates F Negotiated between carrier and shipper F Quoted as percentage discounts from published rates F Four factors determine freight classification –Density –Stowability –Ease or difficulty of handling –Liability to damage and theft

29. © 2008 Prentice Hall 6-29 Transportation Rates F 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 F Rates may be on carrier Web sites

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