Transportation Pricing
Classification Formula
Product Weight/Product Volume (in cubic feet)
Types of Mode Rates
Published (Retail) Rate, Discounted Rates, Contract Rates
Spot Market
Used for infrequent shipping (Not enough for contract) or expedited shipping
Marginal Cost
Variable transportation costs; cost of one more load
Transportation prices are largely determined by...
market forces
Competitive market consists of
mode-specific, route-specific, commodity-specific, shipment size-specifc
Price Model
B/w Market Price & Avg Cost (profit zone); B/w Avg Cost & Marginal Cost (Extended profit zone); Below Marginal Cost (Loss zone)
NMFTA Classification
Based on: Product Density (Weight & Volume), Stowability (uniformity, ease of storage), Handling (Ease of loading/Unloading), & Liability (Value, Insurance)
Base Freight Costs
Distance, mode rates, Weight/Volume & Goods Classification/Value
Value for service
Market price
Average Cost
Total cost of transportation; requires profit forecast