63 True/False questions

1. Commodity Rates → are for a large quantity of product which moves between two locations on a regular basis
   -Typical for most rail freight today

   True        False

2. Detention (motor) → -charge for holding a truck for more than a few hours before unloading

   True        False

3. Reactive approach → replace the 18 traditional freight classifications of the National Motor Freight Classification (NMFC) with five cube groupings

   True        False

4. Auditing → involves the shipper notifying carrier that it needs a specific shipment to move quickly and with no delays

   True        False

5. 1. Economic Drivers: Liability → -Liability includes product characteristics that can result in damage
   -Carriers must pay for liability insurance or accept financial responsibility

   True        False

6. Administrative Activities: Control → Control responsibilities include tracing, expediting and driver hours of service administration
   -Tracing
   -Expediting
   -Tracking driver Hours of Service (HOS)

   True        False

7. 4. Rates and Rating Mechanics → is based on the classification rating, shipment origin, and destination

   True        False

8. Documentation → Primary purpose of documentation is to protect all parties involved in the transaction
   -Bill of Lading
   -Freight Bill
   -Shipment manifest

   True        False

9. Pricing Practices → Pricing practices have a direct impact on logistical operations
   -Traditionally, logistics pricing was "BUNDLED" into the price for a product or service
   -Trend has been to DE-BUNDLE these charges so they become separate and visible to the customer
   -Focus is still on DELIVERING VALUE to the customer

   True        False

10. Demurrage (rail) → represents a carrier's method of charging for transportation services rendered
    Can be prepaid or collect

    True        False

11. Freight Forwarders: → businesses that consolidate small shipments from various customers into bulk shipment for a common carrier to transport

    True        False

12. 1. Economic Drivers: Market Factors → -Volume is important because vehicles are typically constrained more by cubic capacity than by weight loaded
    -Cost per unit of weight declines as product density increases
    -Higher density products allowed fixed transport costs to be spread over more weight

    True        False

13. Transit Services → can be negotiated if a shipper needs to use a combination of carriers

    True        False

14. -Joint costs have a significant impact on transportation charges because → -carrier quotations must include implied joint costs.
    -Either a back-haul shipper must be found
    -Or the joint cost must be covered by the original shipper from A to B and built into the quote.

    True        False

15. -Cube Rates → are the price in dollars and cents per hundredweight to move a specific product (i.e., class) between two locations

    True        False

16. 1. Economic Drivers: Density → Weight is the second major factor for most transportation costs
    
    -Cost per pound decreases as weight increases until the carrier vehicle is full
    -Relationship starts again for the next vehicle load
    -Small loads should be consolidated into larger loads to maximize scale economies

    True        False

17. Tracing → is procedure to locate lost or late shipments
    i.e., tracking with RFID and GPS systems
    Proof of delivery

    True        False

18. Freight-All-Kind (FAK) → rates allow a mixture of different products to be transported under a negotiated rating

    True        False

19. tapering principle → Pricing practices have a direct impact on logistical operations
    -Traditionally, logistics pricing was "BUNDLED" into the price for a product or service
    -Trend has been to DE-BUNDLE these charges so they become separate and visible to the customer
    -Focus is still on DELIVERING VALUE to the customer

    True        False

20. Product storage services → -Demurrage (rail) charge for holding a railcar for more than 48 hours before unloading
    -Detention (motor) charge for holding a truck for more than a few hours before unloading

    True        False

21. -Class Rates → can be negotiated if a shipper needs to use a combination of carriers

    True        False

22. An effective logistics strategy must recognize four interrelated topics → 1.) Economic Drivers
    2.) Costing Methods
    3.) Carrier Pricing Strategy
    4.) Rates and Rating Mechanics

    True        False

23. -Density → refers to the ability of product to be placed in itself or collapsed for better stowability

    True        False

24. Exception Rates → replace the 18 traditional freight classifications of the National Motor Freight Classification (NMFC) with five cube groupings

    True        False

25. 1. Economic Drivers: Distance → -Volume is important because vehicles are typically constrained more by cubic capacity than by weight loaded
    -Cost per unit of weight declines as product density increases
    -Higher density products allowed fixed transport costs to be spread over more weight

    True        False

26. 3. Carrier Pricing: Net-Rate Pricing Strategy → -Net-rate is a simplified pricing format made possible by deregulation
    -Established discounts and accessorial charges are rolled into one all-inclusive price
    -Pricing is tailored to the individual customer's needs

    True        False

27. -Tracking driver Hours of Service (HOS → ) to comply with federal regulations

    True        False

28. 3. Carrier Pricing: Combination Strategy → -Combination price is set at a value between cost-of-service minimum and value-of-service maximum
    -Most carriers use some form of combination pricing
    Common in highly volatile markets and changing competitive situations

    True        False

29. Joint Rates → replace the 18 traditional freight classifications of the National Motor Freight Classification (NMFC) with five cube groupings

    True        False

30. Key elements of operational management → -Equipment Scheduling and Yard Management
    -Load Planning and Routing
    -Advance Shipment Notification (ASN)
    -Movement Administration
    -Transportation Management System (TMS)
    -An integral information technology solution to help oversee day-to-day activities

    True        False

31. Shippers can reduce their risk of liability by → -Liability includes product characteristics that can result in damage
    -Carriers must pay for liability insurance or accept financial responsibility

    True        False

32. Administrative Activities: Auditing & Claims Administration → Auditing and claims administration is needed when services are not performed as promised

    True        False

33. Transportation Administration Activities → Operational Management
    Consolidation
    Negotiation
    Control
    Auditing and Claims Administration

    True        False

34. Special Rates and Services (continued) → -Diversion and re-consignment allows changing the destination and/or consignee prior to arrival at the original destination
    -Split delivery is delivering portions of a shipment to multiple destinations

    True        False

35. 2. Costing Methods: Fixed Costs → -Fixed costs must be paid even when the carrier is not operating its equipment
    -Fixed costs are not influenced by shipment volume
    -Includes vehicles, terminals, rights-of-way, information systems, and support equipment
    -Must be covered by contribution above variable costs on a per shipment basis

    True        False

36. Special Rates and Services → -Diversion and re-consignment allows changing the destination and/or consignee prior to arrival at the original destination
    -Split delivery is delivering portions of a shipment to multiple destinations

    True        False

37. 1. Economic Drivers Influence Rates → Distance
    Weight
    Density
    Stowability
    Handling
    Liability
    Market

    True        False

38. Claims can be → -Loss and damage resulting from poor performance
    -Overcharge/undercharge when amount billed is different from expected

    True        False

39. Shipment Manifest → lists the individual stops or consignees when multiple shipments are placed on a single vehicle

    True        False

40. Freight Bill → refers to the ability of product to be placed in itself or collapsed for better stowability

    True        False

41. Administrative Activities: Consolidation → -Seeking win-win agreements where both shippers and carriers share transportation consolidation and productivity gains
    -Collaborative negotiation: Both parties seek the lowest total logistical cost consistent with the shipper's needed service level (i.e. delivery time)

    True        False

42. Special Rates and Servicess → include (see next few slides)
    FAK rates, Joint rates, Transit services, Split delivery, etc.

    True        False

43. Shipper Associations and Agents → : groups of shippers who employ an agent to consolidate purchases and shipments for them

    True        False

44. -Classification → are the price in dollars and cents per hundredweight to move a specific product (i.e., class) between two locations

    True        False

45. Brokers: → is procedure to locate lost or late shipments
    i.e., tracking with RFID and GPS systems
    Proof of delivery

    True        False

46. 2. Costing Methods: Variable Costs → -Variable costs change in a predictable, direct manner in relation to some level of activity
    -Variable costs in transportation are only incurred if you operate the vehicle
    -Transport rates must cover these at the very least!
    -Generally measured per mile or per unit weight or both
    e.g., per ton-miles transported

    True        False

47. Expediting → is checking freight bills to ensure accuracy
    Pre-audit determines proper charges prior to payment
    Post-audit does the same after payment
    Pay particular attention to accessorial charges !

    True        False

48. Bill of Lading (BOL) → is the basic document utilized in purchasing transport services
    Serves as a receipt and documents products and quantities shipped
    Specifies terms and conditions of carrier liability

    True        False

49. 1. Economic Drivers: Stowability → -Liability includes product characteristics that can result in damage
    -Carriers must pay for liability insurance or accept financial responsibility

    True        False

50. Nesting → refers to the ability of product to be placed in itself or collapsed for better stowability

    True        False

51. 3. Carrier Pricing Strategies → -Combination price is set at a value between cost-of-service minimum and value-of-service maximum
    -Most carriers use some form of combination pricing
    Common in highly volatile markets and changing competitive situations

    True        False

52. 1. Economic Drivers: Weight → Weight is the second major factor for most transportation costs
    
    -Cost per pound decreases as weight increases until the carrier vehicle is full
    -Relationship starts again for the next vehicle load
    -Small loads should be consolidated into larger loads to maximize scale economies

    True        False

53. Administrative Activities: Negotiation → Control responsibilities include tracing, expediting and driver hours of service administration
    -Tracing
    -Expediting
    -Tracking driver Hours of Service (HOS)

    True        False

54. 3. Carrier Pricing: Cost-of-Service Strategy → -Value-of-service price is based on value as perceived by the shipper rather than the carrier
    -Higher margins than cost-of-service pricing
    -Depends on the value of the goods being shipped
    -Used for high value goods or when no competition exists
    e.g., 1980's FedEx overnight delivery

    True        False

55. -Rate Determination → is based on the classification rating, shipment origin, and destination

    True        False

56. 2. Costing Methods: Common Costs → -Joint costs are unavoidably created by the decision to provide a particular service
    -For example, when a carrier elects to haul a truckload from point A to point B, there is an implicit decision to incur a joint cost for the back-haul from point B back to point A.

    True        False

57. Pricing Fundamentals of F.O.B. pricing → Delivered pricing — the seller includes transportation in the product price
    
    Single Zone delivered pricing
    Buyer pays a single price regardless of where they are located
    Example, USPS First class letters
    
    Multiple Zone pricing
    Seller charges different prices for different geographic areas
    Parcel carriers use this
    
    Base Point pricing
    Final delivered price is determined by the product's list price plus transportation cost from a designated base point

    True        False

58. 2. Costing Methods: Joint Costs → -Fixed costs must be paid even when the carrier is not operating its equipment
    -Fixed costs are not influenced by shipment volume
    -Includes vehicles, terminals, rights-of-way, information systems, and support equipment
    -Must be covered by contribution above variable costs on a per shipment basis

    True        False

59. 3. Carrier Pricing: Value-of-Service Strategy → -Combination price is set at a value between cost-of-service minimum and value-of-service maximum
    -Most carriers use some form of combination pricing
    Common in highly volatile markets and changing competitive situations

    True        False

60. 4. Rates and Rating Mechanics → is based on the classification rating, shipment origin, and destination

    True        False

61. Pricing Fundamentals of Delivered Pricing → F.O.B (freight on board) pricing aka "free-on-board"
    
    F.O.B. Origin — seller states price at point of origin, and agrees to load a carrier, but assumes no further responsibility. Buyer selects carrier and mode, pays transportation and assumes the risk for in-transit loss or damage
    F.O.B. Destination — seller arranges for transportation and adds charges to the sales invoice. Title does not pass to the buyer until delivery is completed

    True        False

62. Proactive → is procedure to locate lost or late shipments
    i.e., tracking with RFID and GPS systems
    Proof of delivery

    True        False

63. 1. Economic Drivers: Handling → -Volume is important because vehicles are typically constrained more by cubic capacity than by weight loaded
    -Cost per unit of weight declines as product density increases
    -Higher density products allowed fixed transport costs to be spread over more weight

    True        False