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