Transportation Management: Carriers’ Perspective

Transportation Management:Carriers’ Perspective

Chapter 9Management of Business Logistics, 7th

Ed. 2

Legal Classifications of Carriers: Common Carrier

For-hire carrier that serves the general public at reasonable rates and without discrimination.

Stringent economic regulation designed to protect the public.

Must transport all commodities offered... Commodities are limited to those that the

carrier’s equipment will handle.


Ed. 3

Legal Classifications of Carriers: Common Carrier

Carrier is liable for damages to products carried.

Exceptions to liability include acts of God, acts of the public enemy, acts of public authority, acts of the shipper and defects inherent in the goods.

Continued service is assisted by ceiling and floor limits on the rates charged.

Backbone of the transportation industry.


Ed. 4

Legal Classifications of Carriers: Regulated Carrier Regulated carriers are found in motor and

water carriage. The ICC Termination Act of 1995 eliminated

most of the common carrier economic regulation for these two modes, including entry controls, reasonable rates, and nondiscrimination provisions.

When acting as a contract carrier, not subject to STB economic regulations.

Must provide safe and adequate service.


Ed. 5

Legal Classifications of Carriers: Contract Carriers

For-hire carrier that does not have to serve the general public.

May serve one or a few shippers exclusively.

May offer specialized equipment. Not subject to regulation on services;

rates usually lower than common or regulated carriers.


Ed. 6

Legal Classifications of Carriers: Contract Carriers

Other aspects of the carrier/shipper relationship are made a part of the contract between the two parties.

Becoming more popular as logistics managers use contract carriage to assure rates and service levels.


Ed. 7

Legal Classifications of Carriers: Exempt Carriers

For-hire carrier exempt from economic regulation regarding rates and services.

Limited entry controls; low rates. Usually haul agricultural

products, but there are special rules as to what may be hauled by each mode of transportation, e.g., rail piggyback is exempt..

Limited number of carriers restricts availability.


Ed. 8

Legal Classifications of Carriers: Private Carriers

Private carriage is the firm’s own transportation.

Not for-hire and not subject to Federal regulations.

May not be the firm’s primary business but can charge a intracompany fee for transportation services.

Almost exclusively motor, but some rail, air and water also exist.


Ed. 9

Legal Classifications of Carriers: Private Carriers

Firms gain ultimate control over shipments and achieve maximum flexibility in moving goods.

Backhauls are usually empty or return materials to the firm’s plants and/or warehouses.

Requires a large capital investment. Requires management time and expertise.


Ed. 10

Documentation: Domestic

Bill of Lading Freight Bill Claims F.O.B. Terms of

Sale


Ed. 11

Figure 10-2 Bill of Lading


Ed. 12

Documentation: Domestic Bills of Lading

Shows title to the goods, name and address of the consignor and consignee.

Summarizes the goods in transit and their class rates.

Electronic bills now appearing where the carrier and shipper have an established strategic alliance.


Ed. 13

Documentation:Domestic Freight Bills

Carrier’s invoice for charges for a given shipment.

Credit terms are stipulated by the carrier and can vary extensively.

Credit may be denied if the charges are worth more than the freight.

Bills may also be either prepaid or collect. Freight bills are typically audited

internally or externally.


Ed. 14

Documentation: Domestic Claims

A document filed with the carrier to recover monetary losses due to losses, damage, delay or overcharges by the carrier.

Typically, claims are filed within 9 months, claimant in notified by receipt within 30 days, and settlement or refusal within 120 days.

Claims terms can be stipulated in the contract of carriage agreement and may be atypical.


Ed. 15

Documentation:Domestic F.O.B. Terms of Sale

Determines which party is to pay the freight bill, which party has title to the goods, and which party controls the movement of the goods.

F.O.B. origin - buyer pays freight, owns goods once loaded, controls movement of the goods

F.O.B. destination - seller pays freight, owns goods until delivered, controls movement of the goods


Ed. 16

Fundamentals of Class Rates

Rate Basis Tariff Classification Tariff Table of class rates Example – National Motor Freight

Classification


Ed. 17

Table 10A-1 Table of Rate Basis Numbers


Ed. 18

Table 10A-2 National Motor Freight Classification


Ed. 19

Table 10A-3 Class Tariff


Ed. 20

Table 10A-4 Exception Tariff


Ed. 21

Table 10A-5 Commodity Tariff

Commodity Rates in Cents per 100 Pounds

Item

Commodity

From ToTLRate

Min.

Wt.493 PAINTS

GROUP, as described in NMFC Items 149500 to 150230, rated Class 35

Reading...PA

Baltimore….MDBeltsville….MDWashington…DC

798282

23M30M30M

Documents

Transportation Management: Carriers’ Perspective