Shipping Industry Case Study

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Article Overview With deregulation of the shipping industry, companies began to calculate their own base rates for transportation of goods. Distance of transport is a major portion included as part of the transportation equation, but aspects such as weight, shape, fragility, and type, are also taken into consideration when determining a rate. With this in mind, we must note that the lowest cost may not always be the best deal when it comes to shipping, One specific that must be identified in determining rates charged is the classification. A generic system has been established by The National Motor Freight Classification (NMFC) system that categorizes goods into eighteen groupings made by weight. The classifications help determine pricing, …show more content…
What approach is used to "demystify" LTL pricing? Companies can use data related to the variables of product weights, handling difficulty, stowability, and overall liability to work with shippers in determining a mutually agreeable price. Additionally, having a better understanding of those factors, can lead to companies simplifying or aggregating their shipping needs to further reduce …show more content…
How can Transportation Managers use this information to their advantage? These factors can be used by utilizing the information to make change on the company’s end of the transaction. For example, if the packaging can be changed to allow for uniformity and safe handling, more product can be transported without additional investment on the carrier’s part. When the carriers cost is lowered the price savings are passed along. Classifications is also a big part of the variability in prices. The NMFC periodically updates their classification system and those updates can be an advantage if the transportation manager is cognizant of the changes. Also manipulating how different classes are grouped can create a cost saving difference (Robinson, 2013). Another area that could increase efficiency is to consolidate products into full shipments. Or the company could always seek to decrease cost by considering full truck load

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