1. The Domestic Transportation System
Chapter 6

2. What is Transportation?
The movement of goods and people between two points

3. 5 Modes of Transportation
Truck
Rail
Air
Water
Pipeline

4. Intermodal Transportation
Occurs when two modes or more work together on a regular basis, utilizing the advantages of each
Refers to carriage when using a container that can be transferred from the vehicle of one mode to a vehicle of another mode without the contents being relocated or disturbed

5. Routing or Shipping Guides
Contain instructions for choice of mode and carrier to handle each shipment
Computerized so that decision on how to ship is determined at the time of order processing
Sometimes supplied to vendors indicating how goods must be routed

6. Nodes or Terminals Points to and from which shipments are made
Integral part of the transportation and logistics system
Represents points where one achieves access to or exit from a transportation system

7. Types of Shippers Small shippers LTL - Less-Than-Truckload Carriers
Parcel carriers
LTL - Less-Than-Truckload Carriers
TL/CL - Truckload and Carload Shippers
Large Bulk Shippers

8. Small-Volume Shippers
Parcel carriage
Packages weighing up to 100 to 150 pounds
Parcel post
A service of the U.S. Postal Service
Charges are based on weight and distance and are relatively low

9. Small-Volume Shippers
UPS
FedEx
Passenger Carriers
Buses

10. UPS Best-known parcel carrier Very reliable
Rates include both pickup and delivery
Provides computer software to assist with documentation so customers may learn of the status of their shipment

11. FedEx Specialty is overnight delivery
Uses large fleet of aircraft to carry parcels to and from several major hubs each night

12. Passenger Carriers Carry small packages
Packages carried in the belly of passenger aircraft

13. LTL - Less-Than-Truckload
150 to 5,000 or 10,000 pounds
Shipments are to big to handle manually, yet they do not fill a truck
Trucks that carry LTL freight have space for and plan to carry shipments of other customers at the same time

14. LTL Bobtail truck picks up freight and carries to terminal
Freight then loaded aboard line-haul trucks
Line-haul trucks driven to terminal near freight’s destination
Freight loaded from line-haul trucks, moved through terminal, loaded onto bobtail truck for delivery

15. Consignees Receivers of Freight
Usually specify that all shipments made to them be routed via a specific LTL or parcel carrier

16. LTL by Air
2 Methods
Freight tendered directly to the airline
Freight given to a freight forwarder for consolidation
Products that are air freighted tend to be high in value and are often of a perishable nature or otherwise require urgent delivery

17. Air Freight Air freight moves in air cargo containers
Air cargo containers have varying shapes, designed to take into account the plane’s interior contours

18. Freight Forwarders 2 types Consolidators of freight
Surface
Air
Consolidators of freight
Give volume discounts to customers shipping large quantities of freight at one time
Offer pickup and delivery service but do not perform line-haul service

19. Airlines & Freight Forwarders
Airlines encourage freight forwarder traffic because it results in an agreeable division of labor
Forwarder provides retail function dealing with the customer
Airline provides wholesale function by moving the forwarder’s containers between major cities

20. Forwarder - Air Carrier Relationship Elements
Honoring of space commitments made by forwarder
Fixed, competitive rates
Honored rebates, based on forwarder performance
As little bulk as possible, tender whole containers

21. Forwarder - Air Carrier Relationship Elements
Airline guarantees lift
Improved on-time delivery by airlines
Preferred access to capacity during peak periods
No competition at the retail level

22. Shippers’ Cooperatives
Same function as surface and air freight forwarders, except do not operate as profit-making organization

23. Broker A facilitator that brings together a buyer and seller
Some handle LTL shipments by consolidating shipments and turning them over to truckers, forwarders, or shippers’ associations

24. Published Rates Used for parcels and LTL shipments Based on 3 factors:
The size of the shipment
The distance traveled
The product’s handling characteristics

25. TL/CL Truckload & Carload Shippers
20,000 to 30,000 pounds
Carloads tend to be heavier than truckloads
Use intermodal surface containers
102 inches wide X 8.5 feet high X 40 feet long

26. 3 Reasons TL Cost Less Than LTL
The shipper loads & the consignee unloads the trailer
The load goes directly from the shipper to consignee without passing through terminals
Paperwork, billing, & control costs are no more for a truckload than they would be for 10-pound LTL shipment

27. TL Rate
Negotiable
Price is a function of supply and demand for transportation

28. TL Freight Haulers
Specialize in truckload lots, using their own equipment or contracting with owner-operators
Example firms
Schneider National Van Carriers - largest
J.B. Hunt Transport
Advertise less because do not need to maintain a nationwide presence

29. Private Transportation TL Shipping
The shipper provides and operates its own equipment

30. Dedicated Equipment TL Shipping
Carrier owned but assigned to serve specific customers for an indefinite period

31. Chartered Cargo Aircraft
Charter or rent an entire aircraft to handle specific shipments
Expensive as compared with other modes of transportation
Example - Averitt Air Charter - BNA

32. Large Bulk Shippers Bulk Materials Loose rather than in packaged form
Handled by pumps, scoops, conveyor belts, or by the force of gravity
An ideal equipment configuration for one bulk cargo may not be able to handle another
Particle size is always a question

33. Methods Bulk Cargo is Transported
Truckload hauls
Railroads
Water carriers
Pipelines
Slurry Systems

34. Truckload Hauls
2 Kinds
For-hire trucks - retained for a specific haul or for a span of time or for a task
Private trucks

35. Railroads
Multiple-car shipments encouraged because the railroad can switch and haul a number of cars as easily as one
Unit train
handle the largest of rail hauls
a train of permanently connected cars that carries only one product from origin to destination

36. Water Carriers Domestic movement Interland waterways - barge system
Ocean going vessels between the mainland states and Alaska, Hawaii, and Puerto Rico

37. Pipelines 2 types of oil pipelines
Crude - transport petroleum from wells to refineries
Product - carries gasoline or aviation fuel to tank farms located nearer to consumers

38. 2 Types of Crude Pipelines
Gathering lines - start at each well and carry the product to concentration points
Trunk lines - larger and carry crude oil from concentration points to the oil refineries

39. Slurry Systems Involve:
Grinding the solid material to a certain particle size
Mixing it with water to form a fluid, muddy substance
Pumping the substance through a pipeline
Decanting the water and removing it, leaving the solid material

40. Dry Bulk-Handling Systems
Often large and custom engineered to fit specific needs
Book examples
Coal car unloading facility
Taconite loading facility
Large grain elevator

41. Project Cargo
Recurring shipments usually lend themselves to logistics analysis that results in either lower-cost shipments or a more efficient method of handling the shipment, or both

42. Oversized Moves
Some products are assembled at the factory to determine functionality then disassembled for shipment due to size
Cost is reduced if the time required for disassembly and assembly is less, hence oversized moves via high-weight trucks and heavy dollies

43. 3 Limitations of Oversized Moves
Weight
Height of bridges or tunnels
Curvature of the road or steepness of grade

44. Hazardous Materials
Have the potential of endangering the carrier’s equipment, other products, people, and the environment
Can be transported by any mode
Usually move in special dedicated or shipper-owned equipment
Regulated by both state and federal governments

45. 3 Reasons Railroads Haul More Hazardous Materials
Their equipment
Their routes
Their relatively low incidence of accidents

46. Hazardous Regulations
Include:
Employee training programs
Special packaging
Special marking
The most stringent regulations deal with tank vessels operating within 200 nm of the United States

47. Mode Comparison Ton-mile - one ton of freight carried one mile
Pipeline 1.3 cents per ton-mile (slow)
Water 1.7 cents per ton-mile
Rail 2.9 cents per ton-mile
Truck 36 cents per ton-mile
Air cents per ton-mile (fast)

48. Transportation Regulation
A government agency approves or disapproves the services offered and the rates charged
Carriers were allowed to operate as monopolists or oligopolists and in return assumed the common carrier obligation

49. 4 Specific Obligations of Common Carriers
To serve
To deliver
To charge reasonable rates
To avoid discrimination

50. Transportation Deregulation
Began in late 1970s
Continued into 1990s
Nevertheless, some regulation still exists
Traffic manager must be able to operate in both environments

51. Carriers Still Subject to Economic Regulation
Railroad service to captive shippers - those that have no viable alternative means of transport
Household goods movers
Petroleum pipelines
Natural gas pipelines

52. Inland waterway traffic
Water transport & some joint motor-water transport between the mainland, Hawaii, Puerto Rico, and Alaska

53. Transportation Rates Complex 3 Factors of Rate Structures
Relationships between different products, in terms of their handling characteristics
Relationships between shipments of different weights
Relationships between different distances the products are carried

54. Ratemaking Must define all 3 relationships in numeric form
Then must devise methods of tying those numbers into a rate of so many cents per hundredweight for a specific haul
Rates are found with the help of a classification tariff

55. 4 Factors to Determine Freight Classification
Density of the product
Stowability
Ease or difficulty of handling
Liability to damage and theft

56. Rate Determination
Once the class is determined, it is necessary to establish the rate bases number from the applicable tariff
This number is the approximate distance between the cities of origin & destination

57. Rate Determination
With the class & and the rate base number, the specific rate per hundred pounds can be located in another tariff
To establish the specific cost of moving commodity A between City B & C, use:
Weight X Rate = Charge

58. Computerized Freight Rates & Tariffs
Most shippers & carriers have computerized many aspects of their freight-moving activities
Buyers, sellers, & carriers regularly exchange data via electronic means
Internet widely used to find or book rates as well as track freight

59. 2 Forms of Computerization
Internal
External

60. Internal Computerization
Implies that a firm will own or lease its own computer facilities
The entire rate-retrieval operation will be performed by employees of the company

61. External Computerization
Use of an outside company
The computer & rate-retrieval programs are operated & continually updated by the contracting company
Advantages over internal:
Less expensive to start up
Can be operational in less time

62. End of Chapter 6