Transportation Management: Carriers’ Perspective

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th Ed.10 Documentation: Domestic Bill of Lading Freight Bill Claims F.O.B. Terms of Sale

Chapter 9Management of Business Logistics, 7 th Ed.11 Figure 10-2 Bill of Lading

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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.

Chapter 9Management of Business Logistics, 7 th 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

Chapter 9Management of Business Logistics, 7 th Ed.16 Fundamentals of Class Rates Rate Basis Tariff Classification Tariff Table of class rates Example – National Motor Freight Classification

Chapter 9Management of Business Logistics, 7 th Ed.17 Table 10A-1 Table of Rate Basis Numbers

Chapter 9Management of Business Logistics, 7 th Ed.18 Table 10A-2 National Motor Freight Classification

Chapter 9Management of Business Logistics, 7 th Ed.19 Table 10A-3 Class Tariff

Chapter 9Management of Business Logistics, 7 th Ed.20 Table 10A-4 Exception Tariff

Chapter 9Management of Business Logistics, 7 th Ed.21 Table 10A-5 Commodity Tariff Commodity Rates in Cents per 100 Pounds ItemCommodityFromTo TL Rate Min. Wt. 493PAINTS GROUP, as described in NMFC Items to , rated Class 35 Reading...PABaltimore….MD Beltsville….MD Washington…DC M 30M