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Session-3
Source: adapted from Global Insight, Inc., TRANSEARCH database, and U.S. Department of Transportation Freight Analysis Framework data 3
Economies of scale
Empty travel Capacity, limitations, operational conditions Capacity, limitations, operational conditions Tariffs, restrictions, safety, ownership
Distance
10
Product density
11
12
Transportation Costs
Product related density stowability ease or difficulty of handling liability
Market related intramode/intermode competition location of markets nature and extent of regulation balance/imbalance of freight traffic seasonality of product movements domestic vs. international
Pricing Structures
Cost-of-service: cost plus method Value-of-service: market based method Combination: a middle of the road approach using cost (minimum) and value (maximum) Net Rate Pricing: All-inclusive prices specific to customers needs (not discount-based)
Limits on Rates
maximum demand value of service
rate level minimum cost of service fully allocated average variable out-of-pocket supply
Maritime
Source: adapted from J. Cortright (2001) Transportation, Industrial Location and the New Economy: How Will Changes in Information Technology Change the Demand for Freight Transportation and Industrial Location? Impresa Inc., March
18
Factors
Distance and accessibility Packaging, weight, perishable Shipment size
Example Long distance rates Seafood; time sensitive goods Container vs less than container Wine ship Natural disasters Air cargo; rail bulk; distance
Economies of scale
Trade imbalance Empty travelback haul rates Infrastructure Mode Quality of Surface Capacity, limitations,
Factors
High value versus Low value goods Uniform rate to capture business Quality of surface
Transportation Rates
Rate from Chennai to rest of India for Vegetables and Fruits Weight(tonne) Bangalore 1 2 5 9 12 14 Trivandrum Hyderabad Vijaywada
unit weight rate /per kilometer charge for FTL Minimum charge n surcharge Ancillary value added services
Transportation Rates
Ancillary value added services COD Collect payment on delivery Inside deliverydeliver product inside a building Marking or tagging mark or tag a product as it is transported Notify before delivery make appointments before delivery Reconsignment of deliveryredirect shipments to a new destination while in transit Redelivery attempt a second delivery Residential delivery deliver at a residence with out a truck dock Sorting and segregation sort commodity prior to delivery Storage store commodity prior to deliver
Tailored Transportation
The use of different transportation networks and modes based on customer and product characteristics Factors affecting tailoring:
Customer distance and density Customer size Product demand and value
14-26
Transportation Administration
Operation n Fleet Mgt Freight Consolidation Rate Negotiation Freight Control
29