CHAPTER 6
Transportation
Learning Objectives

To relate the mode of transport to the user’s shipping
volume

To understand the use of routing guides

To realize the role of freight forwarders and other
intermediaries

To understand the difference between LTL and TL
motor carriers
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Learning Objectives

To appreciate the use of terminals as transfer points
for bulk materials

To appreciate trade-offs when using vehicles with
self-loading/unloading equipment

To learn about project cargo

To learn the basics of freight rate determination
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The Domestic Transportation
System
 Key
Terms
 Key
– Broker
– Bulk cargo
– Consignee
– Freight classification
Terms
– Freight
forwarder
– Intermodal
transportation
– LTL
– Nodes
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The Domestic Transportation
System
 Key
Terms
– Parcels
– Parcel carriers
– Private
transportation
– Project cargo
 Key
Terms
– Routing guides
– Shippers’
cooperatives
– Terminal TL
(truckload) rate
– Ton-mile
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The Domestic Transportation
System
 Transportation
is the movement of goods
and people between two points
–
–
–
–
–
Nodes
Links
Air, water, motor carriage, rail, pipeline
Intermodal transportation
Routing guides
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Figure 6-1:
Switching Milk
Cans from a
Farmer’s Buggy
to a Truck on a
Rural Road in
North Carolina,
1929
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The Domestic Transportation System
 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
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Small-Volume Shippers
 Parcels
are packages weighing up to 150
pounds
 Parcel carriers are firms that specialize in
small packages (≤ 150 pounds)
– UPS
– FedEx
 Other
carriers include
– USPS
– Passenger carriers—air and bus
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LTL Shippers
 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
 Yellow
Freight
 Roadway Express
 ABF Freight System
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LTL Shippers
 Less-than-truckload
(LTL) (continued)
– Process
 Local
pick-up
 Origin terminal used to load aboard line haul
 Line haul to terminal near destination
 Destination local delivery on smaller trucks
 Consignee receives
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LTL Shippers
 Air
–
–
–
–
Cargo
Can be given directly to airline
Can be given to freight forwarder
Most carried on passenger airlines
Types of products
 High
in value
 Perishable
 Require urgent delivery
– Shipped in air containers made to fit fuselage
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LTL Shippers
 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
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LTL Shippers
 Air
–
–
–
–
forwarders
Consolidate shipments
Tender to airlines in containers ready for loading
Forwarders provide retailing function
Airline provides wholesaling function
 Shipper’s
cooperatives
– Similar to air and freight forwarders but are notfor-profit organizations
– Membership (shippers) receives any monies
earned in excess of costs
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LTL Shippers
 3PLs
– May have equipment—trucks, trailers, terminals
– May deal in information only
– May operate Internet-based auctions
 Brokers
– A facilitator who brings together a buyer and seller
– May consolidate LTL shipments and then give to
truckers, forwarders, or shippers’ associations
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Truckload and Carload Shippers
 Shipments
of 20,000 to 30,000 pounds
 Fill one truck
 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
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Truckload and Carload Shippers
 Rate
per haul may be negotiable
 Largest TL companies
– Schneider National Van Carriers
– J.B. Hunt Transport
 Many
firms are smaller, without national
presence
 Smaller firms may be owner-operators
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Truckload and Carload Shippers
 Private
transportation is when the shipper
provides and operates its own equipment
 Dedicated equipment is carrier-owned but
assigned to serve specific customers for
indefinite periods
 Shippers and consignees using railroad
service need sidings on their property
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Large Bulk Shippers
 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
 Truckload
 Railroad
 Water
carrier
 Pipeline
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Large Bulk Shippers
 Bulk
cargo (continued)
– Dry Bulk-Handling Systems
 Coal
car unloading facility
 Taconite loading facility
 Grain elevator
– Vehicle and Vessel Equipment Choice
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Figure 6-2:
Cross-Section
of a Coal CarDumping
Building in St.
Louis, Missouri
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Figure 6-4: Export Grain Elevator at the
Port of Seattle
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Unique Cargo
 Project
cargo is a one-time unique
movement of substantial volume
– Examples include oil refineries, wood-pulp
processing plant
 Oversized
moves
 Hazardous materials
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Comparison of Modes
 Costs
per ton-mile
 Speed
 On-time
delivery
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Transportation Regulation and
Deregulation
 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
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Transportation Regulation and
Deregulation
 Other
–
–
–
–
types of regulation
Vehicle operations
Vehicle dimensions
Safety of operators
Safety of general public
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Transportation Rates
 Rate
structure deals with three factors
– Relationships between different products
– Relationships between shipments of different
weights
– Relationships between different distances
 Three
factors are defined numerically and
then tied to a rate of cents per
hundredweight (cwt)
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Transportation Rates
 Negotiated
between carrier and shipper
 Quoted as percentage discounts from
published rates
 Four factors determine freight classification
–
–
–
–
Density
Stowability
Ease or difficulty of handling
Liability to damage and theft
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Transportation 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
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Figure 6-7:
Page from
National
Motor Freight
Classification
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