58 True/False questions
-
Transportation Structure → Consists of rights-of-way, vehicles (conveyances) , and carriers operating within five basic modes
-
Pipeline accounts for about 68 percent of all crude and petroleum ton-mile movements in US → 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 -
Broker: → 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
-
Economy of Distance: → 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. -
AIR → 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 -
Economy of Scale: → 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. -
Fundamental Transport Principles → Consignor (Shipper)
Consignee (Receiver)
Carrier and Agents
Government
Internet
Public -
Rates: → 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. -
Product can also be stored in transport equipment at → -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 -
Specialized carriers → serve the public at published rates between locations without discrimination.
-
Intermodal → 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. -
Contract Carriers - → serve the public at published rates between locations without discrimination.
-
Who Uses Airfreight and Why? → - carry the majority of goods shipped. Includes common carriers.
-
Stowage Planning → 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. -
Commodities are evaluated and grouped based on four characteristics: → 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) -
General freight carriers → not subject to economic regulation. Typically transport goods for the company owning the carrier.
-
Exempt Carriers - → serve the public at published rates between locations without discrimination.
-
Characteristics of parcel → 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 -
Owner operator: → 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 -
Characteristics: → 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. -
Truck-load (TL) → 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)
-
Hours of Service (HOS) Rules STOP HERE → 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 -
Transportation Regulation → 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 -
NVOCC (Non-Vessel Operating Common Carrier) → 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.
-
2001 - Patriot Act → Increased inspections at ports, airport security, and increased security at border crossings
C-TPAT, CSI, etc. -
A mode identifies → 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. -
Transportation Deregulation → 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 -
Parcel → 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 -
Diversion occurs when → serve the public at published rates between locations without discrimination.
-
Steamship Line → 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 -
Two important aspects of transportation are: → Economy of Scale and Distance
-The goal is to maximize the size of the load and distance shipped while still meeting service expectations -
Transportation consumes time, finances, and environmental resources. Transportation: → Restrictive Element — in-transit inventory is "captive", usually inaccessible during transportation
Flexible Element — inventory can be diverted during shipment to a new destination -
2000 - Electronic Signatures in Global & National Commerce Act → Fines for artificial underpricing and "dumping" of foreign goods in U.S. markets. Repealed effective October 1, 2007
-
Motor carrier has expanded rapidly since the end of world war II → -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. -
Rail → 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 -
Less-than-truckload (LTL) → 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.
-
More AIR shit → 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. -
Economic Regulation → 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 -
Staggers Rail Act deregulated the rail industry → 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. -
2000 - Continued Dumping and Subsidy Offset Act → Fines for artificial underpricing and "dumping" of foreign goods in U.S. markets. Repealed effective October 1, 2007
-
Transportation Regulation Pro's and Con's → Social and Economic regulation
-
Transportation Functionality → Social and Economic regulation
-
Asset-based: → 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. -
Ocean → 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. -
Social Regulation → 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 -
Drayage → 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 -
Ocean mode is the oldest form of US transport dating back to the birth of our nation → -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 -
Air-shipped products are generally: → 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 -
Private Carriers - → not subject to economic regulation. Typically transport goods for the company owning the carrier.
-
Regulation time period → 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 -
Transport Participants → Consignor (Shipper)
Consignee (Receiver)
Carrier and Agents
Government
Internet
Public -
1995 ICC Termination Act and the 1998 Ocean Shipping Reform Act → ICC was eliminated and a requirement for ocean carriers to file rates ended
-
Rail ish more → 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 -
1984 -- Shipping Act → Increased inspections at ports, airport security, and increased security at border crossings
C-TPAT, CSI, etc. -
Common Carriers - → serve the public at published rates between locations without discrimination.
-
1920 - Merchant Marine Act → 1984 - Shipping Act
Allowed ocean carriers to pool shipments, assign ports, publish rates, and enter into contracts with shippers -
Water/Ocean - Rates → 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 -
Transportation security → Social and Economic regulation