TRANSPORTATION 2.

Fixed costs- costs not

OPERATIONS directly influenced by
-the single largest element of
shipment volume ( vehicles,
logistics cost
terminals, right-of-way,
TRANSPORTATION ECONOMICS & PRICING information systems &
support equipment)
3. Joint costs- expenses
FACTORS & created by the decision to
CHARACTERISTICS provide a particular service.
I. ECONOMIC DRIVERS
7Factors: 4. Common costs- expense a
1. Distance- a major influence firm incurs as a whole, and
on transportation cost since it which cannot be assigned
directly contributes to directly to any particular
variable expense, such as department, product, or
labor, fuel & maintenance. segment of the business.
2. Weight- III. CARRIER PRICING CATEGORY
3. Density- the combination of
weight & volume
1.Cost-of-Service Strategy- a
build up approach where the
4. Stowability- refers to how carrier establishes a rate
product dimensions fit into based on cost of providing the
transportation equipment. service plus a profit margin.
5. Handling- Special handling
equipment may be required to
2.Value-of-Service Strategy-
An alternative strategy that
load & unload trucks, railcars charges a price based on a
or ships. value as perceived by the
6. Liability- includes product shipper rather than the carrier
characteristics that can result cost of actually providing the
in damage. service.
7. Market-
Transport lane- refers to
3.Combination Pricing
Strategy- establishes the
movement between origin & transport price at an
destination points. intermediate level between the
cost-of-service minimum & the
II. COSTING value of service maximum.
4 Categories:
1. Variable costs- costs that 4.Net Rate Pricing -
change in predictable direct establishes discounts &
accessorial changes or an all
manner in relation to some
inclusive price.
level of activity.
 IV.RATES & RATING *KEY ELEMENTS

1.Class Rates-evolved from the a. Equipment Scheduling & Yard

Management
fact that all products
b. Load Planning
transported by common
carriers are classified for c. Routing & Advanced Shipment
pricing purposes. Notification (ASN)

2.Classification- d. Movement Administration

3. Rate Determination II. CONSOLIDATION- or

4.Commodity Rates-Special or amalgamation is the act of
specific rates published w/out merging many things into one. In
regard to classification. business, it often refers to the

5.Exception Rates- Special mergers or acquisitions of many

smaller companies into much larger
rates published to provide
ones.
prices lower than the
prevailing class rates. *TYPE OF CONSOLIDATION
6. Special Rates& Service- a. Reactive Consolidation
*freight-all-kind (FAK) b. Proactive Consolidation
*proportional rates
*Transit Services III.NEGOTIATION- a dialogue
*split delivery intended to resolve disputes, to
*environmental service
produce an agreement upon courses
of action, to bargain for individual or
TRANSPORT ADMINISTRATION
collective advantage, or to craft
outcomes to satisfy various
6 ACTIVITIES
interests. It is the primary method of
I.OPERATIONAL MANAGEMENT- an
alternative dispute resolution.
area of business concerned with the
IV. CONTROL-
production of goods and services,
V. AUDITING & CLAIM
and involves the responsibility of
ADMINISTRATION
ensuring that business operations
VI. LOGISTICAL INTEGRATION
are efficient in terms of using as
little resource as needed, and
effective in terms of meeting TRANSPORT DOCUMENTATION
customer requirements. It is
concerned with managing the
process that converts inputs (in the
I.BILL OF LADING- basic document
forms of materials, labor and
utilized in purchasing transport
energy) into outputs (in the form of
services. It serves as a receipt &
goods and services).
 documents product & quantities
shipped.
II. FREIGHT BILL- represents a
carrier’s method of charging for

transportation services performed.

III.SHIPMENT MANIFEST- list
individual. Stops or consignees when
multiple shipments are placed in a
single vehicle.

GROUP 3

Cruz, Dagami, De Guzman, Delo Santos & Dy