<p> TRANSPORTATION ======</p><p>Provides PLACE and TIME utility (primarily PLACE)</p><p>The single largest cost component of physical distribution in many companies</p><p>CARRIER SELECTION DECISIONS</p><p>Mode Selection</p><p>Carrier Selection</p><p>SELECTION CRITERIA</p><p>1. Transportation costs</p><p>2. Transit time</p><p>3. Reliability</p><p>4. Accessibility</p><p>5. Capability</p><p>6. Security</p><p>7. Impact on inventory and stockouts</p><p>8. Product differentiation</p><p>ALTERNATIVE MODES OF TRANSPORTATION</p><p>1. AIR</p><p>Viewed by many shippers as a premium, emergency service Time in transit is minimized Primarily long-haul movements Important in international distribution Typically high value and low density products High consistency and reliability High in cost (or rates) per unit weight</p><p>2. MOTOR (ROAD, TRUCK)</p><p>Most widely used mode Competes with air for small shipments and rail for large shipments LTL means "less-than-truckload" and TL means "truckload" Primarily short and medium-haul movements More flexible than other modes (point-to-point or door-to-door, not necessarily terminal-to-terminal) More versatile (carries a variety of goods) than most Provides best market coverage 3. RAIL</p><p>Typically low-value and high density products Lower is cost (or rates) than motor Terminal-to-terminal service Quite versatile</p><p>4. WATER</p><p>Competes primarily with private carriage Primarily heavy, bulky, low-value-per-unit commodities Low in cost (or rates) Important in international distribution</p><p>5. PIPELINES</p><p>Limited number of products High level of service at low cost Important in the transportation of energy</p><p>USING MODAL COMBINATIONS</p><p>Piggyback</p><p>TOFC (Trailer on flat car) COFC (Container on flat car)</p><p>Fishyback Trailers, containers, or rail cars on water carrier</p><p>Inter-modal companies (IMC)</p><p>Land bridge</p><p>INDIRECT AND SPECIAL CARRIERS</p><p>>>>>>Shipment consolidation</p><p>FREIGHT FORWARDERS: Transportation service wholesalers SMALL PACKAGE CARRIERS: UPS Federal Express: hub package distribution center SHIPPERS ASSOCIATIONS---> made up of members BROKERS--> Intermediaries LEGAL FORMS OF TRANSPORTATION CARRIERS</p><p>Common Carriers</p><p>Offer their services to any shipper to transport products between designated points using published rates >>> the backbone of transportation</p><p>Contract Carriers</p><p>For-hire carrier that serves one or a limited number of shippers under specific contractual arrangements Popular among shippers who operate in a JIT environment Negotiation is important. The negotiated rate act of 1993 defines what constitutes a legal contract of carriage with a motor carrier</p><p>Exempt Carriers</p><p>Not subject to economic regulation due to exempt status (determined by type of commodity hauled)</p><p>Private Carriers</p><p>A shipper firm is providing its own transportation Primary business of firm should not be transportation Generally not-for-hire and not subject to government economic regulation</p><p>TRANSPORTATION REGULATION</p><p>Act to Regulate Commerce of 1887</p><p>From the mid-70's : trend toward deregulation</p><p>Motor Carrier Act of 1980</p><p>Staggers Rail Act of 1980</p><p>Airline Deregulation Acts of 1977 and 1978</p><p>BASES FOR TRANSPORTATION RATES</p><p>1. Distance</p><p>Uniform Tapering Key Points</p><p>2. Volume (weight)</p><p>Any Quantity Rates LTL/TL LCL/CL 3. Value of Service</p><p>Upper limit What traffic will bear</p><p>4. Cost of Service</p><p>Floor Various costs</p><p>TRANSPORTATION SERVICES (may charge an additional fee):</p><p>TERMINAL SERVICES</p><p>Consolidation Break bulk Loading and Unloading [Demurrage (for rail) and Detention (for trucks)] Shipment monitoring (weighing) Tracing Expediting Electronic tracing Global positioning system</p><p>LINE-HAUL SERVICES</p><p>Reconsignment and Diversion Pooling Stopping in Transit Transit Privilege</p><p>SOME IMPORTANT TERMS</p><p>F.O.B (Free-on-board) TERMS OF SALE</p><p>SHIPPER------>------RECEIVER ex-factory destination specific location specific location</p><p>Determines: Who will pay freight charges Who is responsible for shipment Who will file liability claim in the event of loss/damage Claims Loss Damage Delay Overcharge</p><p>IS IT WORTH FILING A CLAIM?</p><p>COST OF FILING CLAIM vs. PROBABLE BENEFIT FROM FILING CLAIM </p>