Chapter 7 Transportation ManagementLearning ObjectivesTransportation ManagementSlide 4Rate (Pricing) ConsiderationsSlide 6Slide 7Page from National Motor Freight ClassificationNational Motor Freight ClassificationSlide 10Example of the Class Rate SystemSlide 12Figure 7-2: Motor Carrier Classification Docket Proposal for Changing the Classification of SparkplugsTransportation RatesRate and Service NegotiationsTable 7-1: Representative Rate and Service Items in the Carrier-Shipper Negotiation ProcessRate Regulatory BodiesModal and Carrier SelectionTable 7-2: Possible Carrier Selection CharacteristicsSlide 20DocumentationFigure 7-4: A Long-Form Bill of LadingFigure 7-5: A Preprinted Short-Form Bill of LadingSlide 24Making and Receiving ShipmentsConsolidation of ShipmentsSlide 27Freight Payment and Audit ServicesDemurrage and DetentionDiversion and ReconsignmentRoutingTransportation of Hazardous MaterialsSpecialized Container with Sump to Capture Hazardous Waste Leaks from BarrelsTracing and ExpeditingLoss and DamageTransit PrivilegesReparationsTransportation Service QualityExample of a Carrier Performance ScorecardCase 7-1 Chippy Potato Chip CompanySlide 41Slide 42Case 7-2 Nurnberg Augsburg Maschinenwerke (N.A.M.)Slide 44Slide 45Slide 46Slide 47Slide 48Chapter 7Transportation ManagementLearning Objectives•To examine the background of the transportation management function•To discuss the functions of transportation management•To identify the role negotiations play in the transportation management function•To examine the new options available for private carriage•To understand the purpose of freight consolidation© 2008 Prentice Hall 7-2Transportation Management•Key Terms–Amodal shipper–Bill of lading–Class rate system–Commodity rate–Demurrage and detention–Density–Diver–Documentation–Expediting•Key Terms–Freight bill–Freight claims–Hazardous material–Reconsignment–Routing–Routing Guide–Stowability–Tracing–Private transportation–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 7-2: 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 7-1: Representative Rate and Service Items in the Carrier-Shipper Negotiation Process© Pearson Education, Inc. publishing as Prentice Hall13-16Rate Regulatory Bodies•U.S. Department of Commerce Foreign Trade Zone Board•Department of Transportation committees•House of Representatives subcommittees© 2008 Prentice Hall 7-17Modal 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 Hall13-18Table 7-2: Possible Carrier Selection Characteristics© Pearson Education, Inc. publishing as Prentice Hall13-19Modal 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 Hall13-20Documentation•Documentation –Serves practical function
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