Chapter 13 Transportation ManagementLearning ObjectivesTransportation Management Key TermsTransportation ManagementRate (Pricing) ConsiderationsSlide 6Slide 7Page from National Motor Freight ClassificationNational Motor Freight ClassificationSlide 10Example of the Class Rate SystemSlide 12Figure 13-2: Motor Carrier Classification Docket Proposal for Changing the Classification of SparkplugsTransportation RatesRate and Service NegotiationsTable 13-2: Representative Rate and Service Items in the Carrier-Shipper Negotiation ProcessModal and Carrier SelectionTable 13-3: Possible Carrier Selection CharacteristicsSlide 19DocumentationFigure 13-4: A Long-Form Bill of LadingFigure 13-5: A Preprinted Short-Form Bill of LadingSlide 23Making and Receiving ShipmentsConsolidation of ShipmentsSlide 26Figure 13-8: Specialized Container with Sump to Capture Hazardous Waste Leaks from BarrelsSlide 28Transportation Service QualityExample of a Carrier Performance ScorecardCase 13-1 Chippy Potato Chip CompanySlide 32Case 7-1 Chippy Potato Chip CompanyChapter 13Transportation ManagementLearning Objectives•To learn about contemporary transportation management•To understand how rates are determined•To learn about modal and carrier selection•To distinguish among various transportation documents•To understand select activities associated with making and receiving shipments•To learn about transportation quality© 2008 Prentice Hall 7-2Transportation ManagementKey Terms–Amodal shipper–Bill of lading–Class rate system–Commodity rate–Concealed loss or damage–Demurrage –Density–Detention–Documentation–Expediting–FOB destination–FOB origin–Freight bill–Freight claims–Rate–Routing–Routing Guide–Stowability–Tracing–Transportation Management–Weight break7-3Transportation Management13-4•Transportation management refers to the buying and controlling of transportation service by either a shipper or consignee.Source: John J. Coyle, Edward J. Bardi, and Robert A. Novack, Transportation, 6th ed. (Mason, OH: South-Western, 2006).•Transportation is the most costly logistics activity•Transportation managers can help:–Marketing–Manufacturing–Outbound shipping–PurchasingRate (Pricing) Considerations•Rate Determination–Often located on carrier Web sites–Transportation rates based on three factors•Product•Weight •Distance–Three factors are defined numerically and then tied to a rate of cents per hundredweight (cwt)© Pearson Education, Inc. publishing as Prentice Hall13-5Rate (Pricing) Considerations•Rate Determination–Commodity rate •One specific rate for every possible combination of product, weight, and distance–Class rate system•System to simplify rate determination•Freight classification used to simplify the number of commodities•National Motor Freight Classification (NMFC)© Pearson Education, Inc. publishing as Prentice Hall13-6Rate (Pricing) Considerations•Rate Determination–Factors used for determine product’s freight classification•Density (higher classification for low-density)•Stowability (how easy to pack into a load)•Ease of handling•Liability to damage and theft© Pearson Education, Inc. publishing as Prentice Hall13-7Page from National Motor Freight Classification6-86-9•National Motor Freight Classification Procedures–http://www.nmfta.org/Documents/CCSB/CCSB%20Procedures%202009.pdf•Find classification online–http://freight88.com/NMFC-Codes-Freight_class.htmlNational Motor Freight ClassificationRate (Pricing) Considerations•Rate Determination–Weight groups are used to simplify shipment weight–Weight group examples:•<500 lbs (highest rate)•500-999 lbs•1000-1,999 lbs–Distances are simplified through rate basis numbers•Zip codes are replacing rate basis numbers© Pearson Education, Inc. publishing as Prentice Hall13-10Example of the Class Rate System13-11Rate (Pricing) Considerations•Rate Determination–Commodity Classification Standards Borad 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 commodity’s classification© Pearson Education, Inc. publishing as Prentice Hall13-12Figure 13-2: Motor Carrier Classification Docket Proposal for Changing the Classification of Sparkplugs© Pearson Education, Inc. publishing as Prentice Hall13-13Transportation Rates•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© 2008 Prentice Hall 6-14Rate and Service Negotiations•Both rates and service levels may be negotiated•Long-term relationships are encouraged•Negotiations are subject to antitrust laws•Allows transportation managers to take advantage of trade-offs between price and service© 2008 Prentice Hall 7-15Table 13-2: Representative Rate and Service Items in the Carrier-Shipper Negotiation Process© Pearson Education, Inc. publishing as Prentice Hall13-16Modal and Carrier Selection•Two-step process–First determine appropriate mode(s) –Then 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 factors© Pearson Education, Inc. publishing as Prentice Hall13-17Table 13-3: Possible Carrier Selection Characteristics© Pearson Education, Inc. publishing as Prentice Hall13-18Modal and Carrier Selection•Amodal 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 service.•Research indicates shippers are more interested in transportation metrics than in modes© Pearson Education, Inc. publishing as Prentice Hall13-19Documentation•Documentation –Serves practical function (what, where, and how much is being transported–Potentially provides legal recourse•Bill of lading–Straight bill of lading–Order bill of lading–Long-form bill of lading–Preprinted short-form bill of lading•Freight bill•Freight claims© Pearson Education, Inc. publishing as Prentice Hall13-20Figure 13-4: A Long-Form Bill of Lading© 2008 Prentice Hall 7-21Figure 13-5: A Preprinted
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