Logistics Quiz #3

LTL

"Less- than- truckload" traffic - Shipments range from about 150 to 10,000 pounds - Often too big to be handled manually, yet do not fill an entire truck - Have space for and plan to carry shipments of many other customers simultaneously - Operate through a system of terminals

TL

"Truckload" traffic - Focus on shipments of greater than 10,000 pounds (Close to the amount that would physically fill a truck trailer) - Tend to move directly from the shipper's location to the consignee's location These rates are lower than LTL rates for three reasons: 1.) The shipper loads the goods, and the consignee unloads the trailer 2.) The load goes directly from shipper to consignee without passing through terminals 3.) Paperwork, billing, and other administrative costs are little more for a 25,000 pound shipment than they would be for a 250 pound shipment

Unit Load Devices

(ULD's) - Airfreight containers constructed of lightweight metals and come in different sizes - Have somewhat irregular shapes

"Hundredweight"

(cwt) = 100 lbs.

Common Carrier

- Has agreed to serve the general public - Four specific obligations: 1.) To serve 2.) To deliver 3.) To charge reasonable rates 4.) To avoid discrimination in pricing and service

Weight Groups

-- Less than 500 lbs. -- 500 -999 lbs. -- 1,000 - 1,999 lbs.

Attractiveness of a particular mode of transportation depends on the following attributes:

1.) Cost (Price that a carrier charges to transport a shipment) 2.) Speed (Elapsed transit time from pickup to delivery) 3.) Reliability (Consistency of delivery) 4.) Capability (Amount of different types of product that can be transported) 5.) Capacity (Volume that can be carried at one time) 5.) Flexibility (Ability to deliver the product ot the customer)

Four Factors Used to Determine a Product's Freight Classification:

1.) Density 2.) Stowability 3.) Ease of handling 4.) Liability to damage and theft

Six Possible Payment Options (Terms of Sale):

1.) FOB Origin, Freight Collect 2.) FOB Origin, Freight Prepaid 3.) FOB Origin, Freight Prepaid and Charged Back 4.) FOB Destination, Freight Collect 5.) FOB Destination, Freight Prepaid 6.) FOB Destination, Freight Prepaid and Charged Back

Four Benefits to the Effective and Efficient Utilization of Information:

1.) Greater knowledge and visibility across the supply chain, which makes it possible to replace inventory with information 2.) Greater awareness of customer demand via point- of- sale data, which can help improve planning and reduce variability in the supply chain 3.) Better coordination of manufacturing, marketing, and distribution through enterprise resource planning (ERP) tools 4.) More sustained order processing and reduced lead times enabled by coordinated logistics information systems

Six Types of Information Systems:

1.) Office Automation System 2.) Communication System 3.) Transaction Processesing System (TPS) 4.) Management Information System (MIS) and Executive Information System (EIS) 5.) Decision Support System (DSS) 6.) Enterprise System

Transportation Rates Based on Three Primary Factors:

1.) Product 2.) Weight 3.) Distance

TEU

20- foot equivalent unit - Volumes of intermodal traffic are commonly expressed in this meaning they would fill that many 20 ft. containers

Gathering Lines

6 in. or smaller in diameter - Start at each well and carry crude oil to concentration points

Information

A body of facts in a format suitable for decision making

Freight Claims

A document that notifies a carrier of wrong or defective deliveries, delays, or other delivery shortcomings

Terminals

A facility where freight is shifted between vehicles

Demurrage

A penalty payment made by the shipper or consignee to a railroad for keeping a railcar beyond the time when it should be released back to the carrier - Also collected by inland water carriers if their barges are kept by the shipper or consignee for a longer period than allowed - Pipelines are also involved if oil stored in tanks at destination is not removed within specified time limits

Slurry Systems

Allow bulk commodities to become liquefiable by grinding the solid material to a certain particle size, mixing it with a liquid to form a muddy substance, pumping that substance through a pipeline, and then decanting the liquid and removing it, leaving the solid material

Freight Bill

An invoice submitted by the carrier requesting to be paid - Since a manager must approve each freight bill before it is paid, and carriers must be paid within a specific number of working days, many transportation managers now participate in _____ _____ Paying Services

Automatic Identification Technologies

Another type of logistics- related TPS - Include optical character recognition (Which can read letters, words, and numbers), machine vision (Which can scan, inspect, and interpret what it views), voice- entry data (Which can record and interpret a human voice), RFID (Can be used where there is no line of sight between scanner and label ), and magnetic strips

Detention

Basically the same concept as demurrage, except that it usually refers to the trucking industry or airline industry

Free- on- Board (FOB) Origin

Buyer assumes control of a shipment at the point of pickup

Trunk Lines

Carry crude oil form gathering line concentration points to the oil refineries - Diameter varies from 3 to 48 in. (8- 10 in. pipe is the most common size)

Transaction Processing Systems (TPS)

Collects and stores information about transactions and may also control some aspects of transactions

Brokers

Companies that look to match a shipper's freight with a carrier to transport it - Look to secure the best transportation rate and service package available for shippers, while attempting to ensure that carriers operate as close as possible to maximum capacity

Parcel Carriers

Companies that specialize in transporting "parcels," which are often referred to as packages that weigh up to 150 lbs.

Liability for Loss and Damage

Considers a commodity's propensity to damage other freight, its perishability, and its value

Dimensional Weight (A.k.a "Dim Weight")

Considers a shipment's density (The amount of space occupied in relation to actual weight) to determine a shipment's billable weight

Air Carriers

Consolidate shipments and tender them in containers that are ready for aircraft loading. This results in significant ground- handling savings for the airlines

Batch Processing

Data are collected and stored for processing at a later time, with the later time perhaps being based on schedule (Ex. process every six hours) or volume (Ex. Process once 25 transactions have accumulated) considerations

Tracing

Determining a shipment's location during the course of its move

Documentation

Documents associated with transportation shipments - Serves a practical function (Ex. What, where, and how much is being transported), as well as potentially providing legal recourse if something goes awry with a particular shipment

Civil Aeronautics Board (CAB)

Economic regulatory authority over air transportation

Interstate Commerce Commission (ICC)

Economic regulatory authority over rail, motor, inland water, and oil pipelines - Legislated out of existence in 1995 and remaining functions were transferred to a new agency ==> The Surface Transportation Board (STB)

Wireless Communication

Emerged as the measuring stick for logistics information technology in the first decade of the 21st century

Private Carriers

Exempt form any economic regulation - Primary business is other than transportation and provide their own transportation service by operating trucks, railcars, barges, ships, or airplanes (Ex. Walmart) - One benefit is that trucks serve as rolling billboards advertising company

Barge

Flatboard boat used to transport heavy products

Exempt Carriers

For- hire carriers that have been exempted from economic regulation through provisions in various pieces of legislation - The appropriate rates and services must be negotiated directly between the carrier and user

Bill of Lading

Functions as a delivery receipt when products are tendered to carriers

Surface Carriers

Give volume discounts to customers shipping large quantities of freight at one time

Federal Railroad Administration (FRA)

Has primary responsibility for safety in the U.S. railway industry

Short- form Bill of Lading

Has the following statement on its face, "Every service to be performed hereunder shall be subject to all the terms and conditions of the Uniform Domestic Straight Bill of Lading"

Communication Systems

Help various stakeholders work together by interacting and sharing information in many different forms

Weight Break Formula:

Higher Volume Rate x Minimum Weight = Lower Volume Rate x Weight Break

Federal Motor Carrier Safety Administration (FMCSA)

Holds primary responsibility for developing, monitoring, and ensuring compliance with the commercial driver's license program for operators of commercial motor vehicles

Density

How heavy a product is in relation to its size - Viewed as the primary factor for setting a product's classification, in part because of the opportunity costs associated with it - Cost per unit of weight declines as product density increases (Higher density products allow fixed transport costs to be spread over more weight)

Federal Aviation Administration (FAA)

In charge of air transportation safety and regulation

U.S. Coast Guard

In charge of safety regulation for inland water carriers

Land Bridge Services

Involve the use of surface transportation - Usually rail transportation - Between the origin and destination port

Expediting

Involves the need to rapidly move a shipment to its final destination

Container

Large reusable steel boxes used for intermodal shipments - Generally 8 ft. wide, 8 ft. high, and between 10 and 53 ft. long

Long- form Bill of Lading

May be either an order or straight bill - Contains the standard information on the face of the bill, and on the reverse side it contains the entire contract between carrier and shipper printed in extremely small print

Real- time Processing

Means that transactions are processed as they are received

Freight Forwarders

Not modes, but form a shipper's viewpoint are analogous to other carriers - Two types of domestic _______ ________ (Surface and air) and can best be thought of as consolidators of freight - Exists by offering a service to shippers that must use LTL rates because they do not generate enough volume to use TL rates

Contract Carrier

Offers a specialized service to customers on a contractual basis, and the contract specifies the compensation to be received, the services to be provided, and the type of equipment to be used, among others

Routing Guide

One example of routing - A document that can provide a variety of shipment- related information such as shipment preparation, freight invoicing, a list of preferred carriers, and a list of which carrier or carriers to use for shipments moving between two points

Commodity Rate

One specific rate for every possible combination of product, weight, and distance

Shipper's Associations

Perform basically the same function as surface and airfreight forwarders, except that they do not operate as profit making organizations - Are a membership cooperative where membership can be based on different considerations such as shipping a particular commodity or commodities, belonging to a particular industry, or being located in a particular area

Rate Negotiator Shipper's Associations

Primarily focused on achieving the lowest rates for their members

Surface Transportation Board

Primarily responsible for resolving rail-road rate and service disputes and reviewing potential rail mergers - Has some jurisdiction over motor carriers, domestic water transportation, and the rates and services of pipelines that are not regulated by the Federal Energy Regulatory Commission

Straight Bill of Lading

Printed on white paper, the name of the consignee is stated in the appropriate place, and the carrier is under a strict legal obligation to deliver the freight to the named consignee and no one else - Ownership of the goods is neither stated nor implied

Order Bill of Lading

Printed on yellow paper, the name of the consignee is not specified - Can be used when faced with slow- paying customers because the order bill guarantees that the customer must pay for products prior to receipt

Office Automation Systems

Provide effective ways to process personal and organizational business data, perform calculations, and create documents - (Ex. Word processing, spreadsheet, presentation, and database management applications)

Lock

Raises or lowers barges so they can meet the river's level as they move upstream or downstream

Consignees

Receivers of freight

Global Positioning Systems (GPS)

Refers to a network of satellites that transmits signals that pinpoint the exact location of an object

Concealed Loss or Damage

Refers to a situation where loss or damage is not apparent until after a shipment has been unpacked and inspected Balancing act between a carrier: 1.) Not wanting to pay claims caused by shipper or consignee errors 2.) Upsetting a shipper or consignee by seemingly implicating them in the loss or damage

Amodal Shipper

Refers to a transportation manager who purchases a prespecified level of transportation service (Ex. Two- day delivery for a particular price), and is indifferent to the mode(s) and/ or carrier(s) used to provide the actual transportation service

Stowability

Refers to how easy the commodity is to pack into a load and possible considerations involve the commodity's ability to be loaded with hazardous materials and ability to load freight on top of the commodity - Items with rectangular shapes are easier to stow

Ease of Handling

Refers to the challenges to handling that might be presented by a commodity's size, weight, and so on

Intermodal Transportation

Refers to transportation when using a container or other equipment that can be transferred from the vehicle of one mode to the vehicle of another mode without the contents being reloaded or disturbed

Office of Pipeline Safety (OPS)

Responsible for safety considerations for natural gas and liquid pipelines

Preprinted Bill of Lading

Shippers buy their bills of lading and then have them preprinted with a list of the products they regularly ship - Can be long, short, order, or straight - Can be prepared more rapidly and with less chance of error

"Free- time" Principal

Shippers or consignees are permitted a specified amount of time to load or unload freight before monetary penalties are levied

Rate

Signifies the price charged for freight transportation

Class Rate System

Simplified each of the primary rate factors (Product, weight, and distance)

Data

Simply facts - recorded measures of certain phenomena

Line- haul

Terminal- to- terminal movement of freight or passengers

Department of Transportation (DOT)

The U.S. federal government body with primary responsibility for transportation safety regulation

Transportation

The actual, physical movement of goods and people between two points

FOB Origin, Freight Collect

The buyer pays freight charges and owns the goods in transit

FOB Destination, Freight Collect

The buyer pays the freight charges when the goods arrive, and the seller owns the goods while they are in transit

Transportation Management

The buying and controlling of transportation services by either a shipper or consignee

Rail Gauge

The distance between the inner sides of two parallel rail tracks - (Standard = 1.435 meters)

Ton Miles

The number of tons multiplied by the number of miles transported

Routing

The process of determining how a shipment will be moved between consignor and consignee or between place of acceptance by the carrier and place of delivery to the consignee

FOB Destination, Freight Prepaid and Charged Back

The seller owns the goods in transit, pre-pays the freight charges, and bills the buyer for the freight charges

FOB Destination, Freight Prepaid

The seller pays the freight charges and also owns the goods in transit

FOB Origin, Freight Prepaid and Charged Back

The seller pays the freight charges in advance but bills the buyer for them. The buyer owns the goods in transit

FOB Origin, Freight Prepaid

The seller pays the freight charges, but the buyer owns the goods in transit

Free- on- Board (FOB) Destination

The seller retains title and control of a shipment until it is delivered

Weight Break Concept

The shipment size that equates transportation charges for different weights and rate groups - Can be applied whenever rates differ by volume and a minimum weight is specified for the higher volume classification

Full Service Shipper's Associations

Thought of as providing a large number of transportation- related services for their members

Piggyback Transportation

Transportation involving either truck trailer- on- flatcar or container- on- flatcar to take advantage of rail's low transportation costs on the line- haul along with truck's ability to provide door- to- door service

Accessorial Service

Transportation service that is supplemental to the line- haul (Ex. Transportation from the shipper to the origin airport and from the destination airport to the consignee)

Electronic Data Interchange (EDI)

Viewed by many experts as the measuring stick for logistics information technology in the 1990's - The computer- to- computer transmission of business data in a structure format

Rate Determination

Weight x Rate = Transportation Charge

External Audits

Work is performed by an independent third party

Internal Audits

Work is performed by employees of the company