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- - carry the majority of goods shipped. Includes common carriers.
- carriers
are used when you have enough to fill the truck, or you don't want
other suppliers cargo on your truck (security, faster delivery)
- Consists of rights-of-way, vehicles (conveyances) , and carriers operating within five basic modes
- Total on-duty hours = 14 hours
Consecutive days hours = 11 hours
Mandatory break = 30 mins after 8 hours
On-duty "retstart" = 34 consectutive off duty hours
Penalities for not following rules for both DRIVERS and COMPANIES - seeks to make transportation equally accessible and economical to all without discrimination
Government created infrastructure (roads, canals, ports, etc.)
Intended to prevent carriers from taking advantage of shippers while ensuring long-term financial stability for carriers - Provided railroad management with freedom necessary to revitalize the industry
Rail carriers were authorized to use selective pricing to meet competition and cover operating costs
Carriers were given increased flexibility with respect to surcharges
Contract rate agreements between individual shippers and carriers were legalized
Rail management given liberal authority to proceed with abandonment of poorly performing rail service, i.e., eliminate unprofitable routes. - Commonly
used to mean the transportation of containerized cargo by specialized
trucking companies between ocean ports or rail ramps and shipping docks
in intermodal freight transport.
- ex: Walmart
Carrier having their own tractors and trailers and responsible for maintenance of all their equipment. Traditionally, truckload carriers look to replace tractors every 3-4 years and trailers every 7-8 years. - a shipment destination is changed / re-routed after a product is in transit
- -81% US Freight expense
-Nearly 1 million miles of highways in U.S.
Key benefits include
-Speed of transit
-Ability to operate door-to-door
-More efficient than rail for small shipments over short distances
-Dominate freight moves under 500 miles and from manufacturing to wholesalers to retailers
-Many companies run their own truck fleets as well (e.g., Walmart)
Most flexible mode of transportation.
Carries > 80% of U.S. Freight.
Competes with Rail and Air for short-to-medium hauls. - Expensive relative to other modes of transportation
Cannot carry extremely heavy or bulky cargo.
Mostly for light, high value goods over long distances quickly.
Half of the goods transported by air are carried by freight-only airlines, e.g., FedEx.
Paired with trucks for door-to-door delivery
Shipment size is > 150 lbs (70 KG)
Parcel/Express is < 150 lbs
Palletized
Parcel is never on a pallet - Restrictive Element — in-transit inventory is "captive", usually inaccessible during transportation
Flexible Element — inventory can be diverted during shipment to a new destination - Each carrier has a minimum charge for LTL.
Some have one overall minimum charge, but many carriers are more specific for minimum charges for hard to reach destinations. - Not bound to serve the public. Serve customers under contractual agreements.
- Increased inspections at ports, airport security, and increased security at border crossings
C-TPAT, CSI, etc. - Parcel Shipments are usually packages that weigh < 150 lbs
There are multiple service levels
Next Day, 2nd Day Air, 3rd Day Air, and Ground (1 - 5 days - is the act of allocating space to containers on board a container ship in the order of the discharge ports.
-Scheduled list of ports that the ship will be calling at, in the order of rotation
-A summary of the number of containers - size/type/weight of containers per port that are planned to be loaded on the ship
-A summary of the number of hazardous, reefer and of dry containers per port that are planned to be loaded on the ship
-A list and summary of containers that are on board after discharge of the containers at your port - -Product can also be stored in transport equipment at origin or destination (trailers, containers, railcars, pipeline, etc.)
-Usually more expensive than traditional
warehousing
-Must pay rental or demurrage charges on transport
equipment used for storage
-Less secure
-Special handling, i.e. cold chain, could be an issue - The cost per unit weight decreases as the size of the shipment increases
At least until you totally fill the conveyance (i.e. "max out" or "cube out").
Cost decreases because the fixed cost of the carrier is allocated over a larger weight of shipment. - Asset
based company operating the ships with whom both cargo owners
(sometimes called BCO - Beneficial Cargo Owner) and NVOCCs contract with
for the carriage of goods.
Note, a steamship line cannot handle a LCL (less than container load) booking directly. A Freight Forwarder would need to be involved. - Max Freight Weight: ~45,000 pounds
Entire truck weight cannot exceed 80,000 pounds
Typical tractor weighs 35,000 pounds
Standard trailer: 53' Long x 8'6" Wide x 9' High
Max Cube Utilization: 3,509 cube
Max Pallets: 60 (assuming 40"L x 48"W x 48"H)
Booking a shipment requires at least 24 hours advance notice
Team Service: roughly 10% - 15% up charge on standard rate (depending on the carrier)
Rate structure - flat rate or cost per mile
Drop trailers vs. live load/unload - 1976 - Railroad Revitalization and Regulatory Reform Act
Railroads could change rates without ICC approval
1977 - Air freight deregulated
1980 - Motor Carrier Act deregulated the motor carrier industries
Entry restrictions for new businesses were relaxed
Restrictions for types of freight and range of services were abolished
Individual carriers were given the right to price their services
Trucking industry's collective rate-making practices were abolished - Fines for artificial underpricing and "dumping" of foreign goods in U.S. markets. Repealed effective October 1, 2007
- not subject to economic regulation. Typically transport goods for the company owning the carrier.
- serve the public at published rates between locations without discrimination.
- Percentage of ton-miles has stayed between 19 and 30% since 1960's
Ranks between rail and truck in fixed cost
Right of way (canals and rivers) maintained by Federal government - 1984 - Shipping Act
Allowed ocean carriers to pool shipments, assign ports, publish rates, and enter into contracts with shippers - 2001 - Aviation and Transportation Security Act created the Transportation Security Administration (TSA)
2003 - Department of Homeland Security (DHS) was created to provide overall U.S. security leadership. - Consignor (Shipper)
Consignee (Receiver)
Carrier and Agents
Government
Internet
Public - interchange
of equipment between differing modes of transportation to execute a
single transport, which includes: rail, truck, or ocean.
Rail and motor carriers or rail and water carriers can offer point-to-point pickup and delivery service
Water and motor can offer point to point service for overseas manufacturers
-RO-ROs or roll-on-roll-off containership truck trailers and containers can be directly driven on and off the ship without the use of cranes - FCL (Full Container Load) is a cost per container.
LCL (Less than Container Load) is a cost based on whichever is greater, the space in cubic meters or the weight in metric tons
Demurrage = Holding a container at port beyond a certain time limit and incurring a penalty charge such as a daily rent after the free time ends. This is commonly referred to as storage when container is held at a rail yard.
Per Diem = Holding a container off port beyond a certain time limit and incurring a penalty charge such as daily rent after the free time ends.
Fuel (BAF) = Bunker is the type of fuel burned by vessels. BAF, or Bunker Adjustment Factor is a per container fee charged by the carriers for this fuel. - The cost per unit weight decreases as distance increases
Often called the tapering principle
Longer distances allow the fixed cost of the carrier to be spread over more miles, lowering the per mile / per unit charge. - Density (Primary) - Space in relation to its weight
Stowing - Ability to load other freight in the same trailer
Handling - How difficult it is to actually handle the freight
Liability (value and risk) - Potential claims from damage or loss
18 classes: (50-500) - Social and Economic regulation
- FedEx:
-Has 2 separate operations
-One for air
-One for ground
-Drivers are independent contractors
UPS:
-Has one operation for both air and ground
-All drivers are UPS employees - Compete for transportation when the distance is long and the shipments are heavy or bulky.
Rail is slow and inflexible
Rail carriers have begun purchasing motor carriers and can now offer point-to-point pickup and delivery service known as trailer-on-flatcar (TOFC) service.
Rail companies use each other's rail cars. Keeping track of rail cars and getting them where needed can be problematic.
Railroad infrastructure and aging equipment are also problems for the railroads.
Paired with trucks for door-to-door delivery - Exempt from regulation of services and rates if they transport exempt products like produce, livestock, coal, or newspapers.
- Economy of Scale and Distance
-The goal is to maximize the size of the load and distance shipped while still meeting service expectations - 1.) Primarily consists of product movement services
Product movement is the transfer of inventory to specified destinations.
2.)Secondarily consists of product storage services while product is in a vehicle / conveyance
-In-Transit Inventory is captive in the transport system
--Managers strive to reduce in-transit inventory to a minimum - High value
High priority
Extreme perishability - carriers
move small shipments, when you don't have enough to fill a truck. Stop
at depots and transfer locations to match load to the final location.
- Inexpensive
Slow and inflexible
Competes with rail and pipeline.
Includes inland waterway, coastal and intercostal, and deep-sea.
Inland waterway transportation is used for heavy, bulky, low-value materials (e.g., coal, grain). Barge
Paired with trucks for door-to-door delivery. - Pro's
- Regulation tends to assure adequate transportation service throughout
the country. Protects consumers from monopoly pricing, ensures safety,
and creates liability.
Con's - Regulation discourages competition and does not allow prices to adjust based on free market demand or through negotiation.
-U.S. transportation industry remains mostly deregulated - Person who owns his own tractor and is responsible for the maintenance and upkeep of his tractor.
Types of owner operators:
Sole source
Free agents - Lowest per unit cost for transportation
Highest fixed cost. Lowest variable cost of all modes
Most reliable form of transportation
Can operate 24 hours a day, 7 days a week
No emissions
No empty container or vehicle to return
Little maintenance needed once the pipeline is running.
Not flexible. Limited in the variety of commodities they can carry.
-Materials are transported in a liquid or gaseous state - Social regulation which takes measures to protect public safety and the environment
-Department of Transportation (DOT) (1966) took an active role in hazardous material safety and driver safety
-Hazardous Materials Transportation Uniform Safety Act (1990) took precedence over state and local regulations - Gave digital signatures legal status
- Medical Device & Diagnostics (MD&D)
-Normal supply chain
-Inventory levels
-Product value supports the cost
Pharmaceuticals
-Normal supply chain
-Risk in transit
-Freight characteristics
-Product value supports the cost
Consumer Products
-Exception basis
-Risk to customer launch/promotions
-Unexpected demand - Rail has historically handled the largest number of ton-miles within continental US 9% total freight expense.
-Track mileage has declined by over half since 1970 (until 2005 and then stabilized)
-Traffic shifted from broad range of commodities to hauling specific freight in traffic segments (bulk items, heavy items)
-Carload
-Intermodal
-Container
-New technologies include articulated cars, unit trains and double-stack cars
HIGH FIXED COSTS and LOW VARIABLE COSTS - 1800's
- The rise of steamships and railroads created immense wealth and
monopolies (e.g., Commodore Vanderbilt and the railroad "barons")
1870's - Granger laws regulated the Railroads
1887 - Interstate Commerce Act created the Interstate Commerce Commission (ICC) to oversee interstate transportation
Primarily to stop the railroad monopolies
1920 - Transportation Act changed the Interstate Commerce Act
1935 - Motor Carrier Act brought motor carriers under Interstate Commerce Commission control.
1940 - Transportation Act established Interstate Commerce Commission control over domestic water transportation
1958 - Federal Aviation Act created air traffic and safety regulations and the national airport system.
1966 - Department of Transportation Act established to coordinate all transportation-related matters.
By 1970, ICC had oversight of
100% of rail and air
80% of pipeline
43% of trucking
6% of water carrier operations - A
company (often a forwarding agent) who does not own or operate the
carrying ship, but who contracts with a shipping line for the carriage
of the goods.
- NEWEST AND LEAST UTILIZED only 1%
Accounts for only 1% of intercity ton-miles
Fastest of all the modes
Fixed cost is 2nd lowest
Variable costs are extremely high - - transport commodities like liquid petroleum, household goods, building materials, and other types of specialized items.
- -a basic transportation method or form
Motor Carrier / Truck
Rail
Air
Pipeline
Water
Intermodal - Person
or company who does not own their own equipment. They contract with an
asset-based carrier (or an owner operator) for the carriage of goods
- ICC was eliminated and a requirement for ocean carriers to file rates ended
- -Accounts for more than 60% of the total cost of logistics
-Is one of the largest consumers of oil and gas
-Negatively impacts traffic congestion, noise and air pollution - Only U.S.-built ships operating under a U.S. flag with U.S. crews can ship goods directly from a U.S. port to another U.S. port
The thought at one time was that such a law would promote U.S. shipping by providing preferential treatment of US vessels over "foreign" vessels.