Assignment #2 Motor Carriers
Ana G. Barrios
Lindenwood University
Assignment #2 Motor Carriers
Motor carriers play an important role in an economy. In fact, motor carriers in addition to offering transportation services, contribute to the generation of jobs and revenue in the motor carrier industry. Truckload (TL) and less-than-truckload (LTL) are two types of motor carriers. Shippers who need to transport small quantities of products at low cost may prefer the less-than-truckload service rather than truckload. The less-than-truckload carriers require a lower quantity of products to be shipped from a customer than the truckload. This is because the less-than-truckload consolidates shipments from multiple customers in order distribute …show more content…
In fact, motor carriers including TL and LTL can provide services in any location. They are not dependent of waterways, airport locations, and rail tracks. For this reason, accessibility is one of their main characteristics. In addition, motor carriers are faster than other methods of transportation. Even when an intermodal service is performed, motor carriers contribute to the speed of the delivery. Also, the carrier‘s small size allows them to offer a better customer service. Thus, they are market oriented. Customers prefer motor carriers because they have a lower risk of damage of products. This lower risk is attributable to the smoothness of the transportation, a characteristic of motor carriers that may reduce the packaging requirements and costs. Regarding the operating characteristics, TL and LTL carriers differ in the need of terminals. TL carriers do not require terminals. They usually handle freight in the shipper’s facilities. However, some TL terminals provide maintenance and fuel service. On the other hand, LTL carriers consolidate shipments in pickup and delivery (PUD), break-bulk or relay …show more content…
The high percentage of variable costs may be mainly attributed to the costs of labor and fuel. This high percentage of variable cost is usually similar between TL and LTL carriers. In contrast, TL and LTL’s fixed costs may not be similar. The low percentage of fixed costs may be attributed to the use of a highway system and the ability to increase or decrease the trucks used. Also, with the exception of the LTL carriers, motor carriers do not invest on large facilities. For this reason, fixed costs may be higher in LTL than TL. The cost structure of LTL may be one of the reasons of the existence of an entry barrier to the LTL industry. The large investment required to begin LTL operations has made the LTL market an oligopolistic market. On the other hand, The TL market is considered a monopolistic competition because large investments are not required. Therefore, individuals can easily begin operations. Motor carriers represent a great contribution to the development of an economy. They have simplified the transportation of goods. In fact, motor carriers have competitive advantages such as speed, customer service, safety, and capacity in comparison to other transportation
Ana G. Barrios
Lindenwood University
Assignment #2 Motor Carriers
Motor carriers play an important role in an economy. In fact, motor carriers in addition to offering transportation services, contribute to the generation of jobs and revenue in the motor carrier industry. Truckload (TL) and less-than-truckload (LTL) are two types of motor carriers. Shippers who need to transport small quantities of products at low cost may prefer the less-than-truckload service rather than truckload. The less-than-truckload carriers require a lower quantity of products to be shipped from a customer than the truckload. This is because the less-than-truckload consolidates shipments from multiple customers in order distribute …show more content…
In fact, motor carriers including TL and LTL can provide services in any location. They are not dependent of waterways, airport locations, and rail tracks. For this reason, accessibility is one of their main characteristics. In addition, motor carriers are faster than other methods of transportation. Even when an intermodal service is performed, motor carriers contribute to the speed of the delivery. Also, the carrier‘s small size allows them to offer a better customer service. Thus, they are market oriented. Customers prefer motor carriers because they have a lower risk of damage of products. This lower risk is attributable to the smoothness of the transportation, a characteristic of motor carriers that may reduce the packaging requirements and costs. Regarding the operating characteristics, TL and LTL carriers differ in the need of terminals. TL carriers do not require terminals. They usually handle freight in the shipper’s facilities. However, some TL terminals provide maintenance and fuel service. On the other hand, LTL carriers consolidate shipments in pickup and delivery (PUD), break-bulk or relay …show more content…
The high percentage of variable costs may be mainly attributed to the costs of labor and fuel. This high percentage of variable cost is usually similar between TL and LTL carriers. In contrast, TL and LTL’s fixed costs may not be similar. The low percentage of fixed costs may be attributed to the use of a highway system and the ability to increase or decrease the trucks used. Also, with the exception of the LTL carriers, motor carriers do not invest on large facilities. For this reason, fixed costs may be higher in LTL than TL. The cost structure of LTL may be one of the reasons of the existence of an entry barrier to the LTL industry. The large investment required to begin LTL operations has made the LTL market an oligopolistic market. On the other hand, The TL market is considered a monopolistic competition because large investments are not required. Therefore, individuals can easily begin operations. Motor carriers represent a great contribution to the development of an economy. They have simplified the transportation of goods. In fact, motor carriers have competitive advantages such as speed, customer service, safety, and capacity in comparison to other transportation