PART II
ANSWERS TO END-OF-CHAPTER QUESTIONS
CHAPTER 13: TRANSPORTATION MANAGEMENT
13-1. How has globalization impacted the transportation manager’s job?
The text cites the People’s Republic of China as an example of globalization’s impact on the
transportation manager’s job. In particular, in the late 1970s China had begun to emerge from the
13-2. How have advances in technology changed the rate determination process?
Approximately 30 years ago, all rates were published in tariffs (a phonebook-like manual that
contained rate information), and it wasn’t uncommon for a transportation manager to refer to multiple
13-3. Discuss how transportation managers could be involved with other operations of the firm.
Transportation managers assist marketing by quoting freight rates for salespeople, suggesting quantity
discounts that can be based on transportation savings, and selecting carriers and routes for reliable
delivery of products. They can help manufacturing by advising on packaging and materials handling,
13-4. What are the three primary factors that determine transportation rates?
Transportation rates are based on three primary factors; one involves relationships between different
products in terms of their handling characteristics, such as the difference between carrying 2,000
pounds of ballpoint pens and 2,000 pounds of live chickens. A second factor involves relationships
13-5. Distinguish between a commodity rate and a class rate.
A commodity rate refers to determining one specific rate for every possible combination of product,
weight, and distance. Although commodity rates are good for dealing with demand-specific situations,
13-6. Discuss the four factors used in determining a product’s freight classification.
Density, which refers to how heavy a product is in relation to its size, is viewed as the primary factor
for setting a product’s classification. Low-density products (low weight per cubic feet) are assigned a
13-7. Describe the potential tension that might exist between shippers and carriers with respect to a
product’s freight classification.
With respect to a product’s freight classification, the higher the classification rating, the greater the
relative charge for transporting the commodity. As such, shippers tend to prefer a lower classification
13-8. Discuss how a transportation manager might take advantage of the trade-offs between price and
service.
The text provides two examples where monetary premiums were paid for meeting predetermined
service standards, and there can be monetary penalties for failure to achieve predetermined service
13-9. List and describe the payment options (terms of sale) that can be applied to domestic U.S.
shipments.
FOB origin, freight collect: The buyer pays freight charges and owns the goods in transit.
FOB origin, freight prepaid: The seller pays the freight charges, but the buyer owns the goods in
transit.
13-10. Why is the carrier selection process less straightforward than the modal selection process?
There are several reasons why the carrier selection process is less straightforward than the modal
selection process. First, while there are only five modes, there can be tens, hundreds, or even thousands
13-11. Define what is meant by an amodal shipper, and discuss the factors that have contributed to its
growth.
An amodal shipper refers to a transportation manager who purchases a prespecified level of
transportation service (e.g., two-day delivery for a particular price) and is indifferent to the mode(s)
and/or carriers used to provide the actual transportation service. One reason for its growth is that non-
13-12. Discuss some of the basic functions performed by the bill of lading.
The bill of lading is the basic operating document in the transportation industry, and it functions as a
delivery receipt when products are tendered to carriers. The signed original bill of lading is the
13-13. Distinguish between the straight bill of lading and the order bill of lading.
A straight bill of lading is printed on white paper. It states the name of the consignee in the appropriate
place, and the carrier is under a strict legal obligation to deliver the freight to the named consignee and
13-14. What is a freight bill? Why should each freight bill be audited?
A freight bill is an invoice that is submitted by the carrier requesting to be paid. Each freight bill should
services.
13-15. Discuss the basic issues, conflicts, and problems involved in concealed loss and damage claims.
Concealed loss and damage refers to a situation where loss or damage is not apparent until after a
shipment has been unpacked and inspected. Carriers are reluctant to pay concealed loss and damage
13-17. Discuss the basic idea of demurrage and detention and how averaging agreements can be helpful
in this area.
Demurrage is a penalty payment made by the shipper or consignee to a railroad, inland water carrier, or
pipeline for keeping particular equipment beyond the time when it should be released back to the
13-18. Explain how a routing guide might be used by a transportation manager.
Routing can be defined as the process of determining how a shipment will be moved between origin
and destination. A routing guide is a document that can provide a variety of shipment-related
13-19. Distinguish between tracking and expediting.
Tracking refers to determining a shipment’s location during the course of its move and the capability to
final destination.
13-20. What is a carrier performance scorecard? How might it be used by transportation managers?
Carrier performance scorecards contain a list of relevant attributes (perhaps the same attributes used to
select carriers) and an evaluation of each carrier on every attribute. The performance scorecard could
PART III
CASE SOLUTIONS
CASE 13-1: CHIPPY POTATO CHIP COMPANY
Note: Because motor freight classifications are not static, but change over time, it is suggested that
Freight Classification (NMFC).
Question 1: If you worked for Chippy, what new classification would you ask for? Give your reasons.
As of 2016, the NMFC indicated that absent any unusual or significant stowability, handling, or
liability characteristics, density is of prime importance in the assignment of classes. The old-style chips
Moreover, the relatively low value per pound of the product (less than $2.00) qualifies for a
classification of 55. However, this value per pound classification doesn’t consider potential liability
Thus, there is ample evidence that Chippy can argue for, and support, a lower classification for its
Question 2: Classifications are based on both cost and value of service. From the carriers’ standpoint,
how has cost of service changed?
At a minimum, the cost of service is changed in the sense that the increased density per cubic foot
service might also change because the tubular containers may result in less product damage.
Question 3: Given the existing LTL classification of 200, how has value of service to the customer
changed?
Because the tubular containers may result in less product damage, the value of service to the customer
may change. On the other hand, the value of service appears to be negatively impacted in that
Question 4: The new tubular containers are much sturdier. If you worked for Chippy, how—if at all—
would you argue that this factor influences classification?
Question 5: You work for the motor carrier classification bureau and notice that the relationship
between the weight of potato chips and the weight of packaging has changed. How, if at all, should this
influence changes in the product’s classification?
It appears as if the ratio of total product weight to total carton weight with the old-style chips is
approximately 85.7%. (The carton weighs 14 pounds or 224 ounces; the product weight is 24 bags
The motor carrier classification bureau could argue the following with respect to classification: that
Question 6: One of Chippy’s own trucks, used for local deliveries, has two axles and an enclosed body
measuring (inside) 7 feet by 8 feet by 20 feet and is limited by law to carrying a load of no more than
8,000 pounds. Because the truck is not supposed to be overloaded, what combinations, expressed in
terms of cartons of both new- and old-style chips can it legally carry? (Hint: Use a piece of graph
paper.)
As a starting point, one might calculate the number of cartons that it would take to weigh out as well as
cube out. With respect to the old-style chips, 8,000 pounds of capacity divided by 14 pounds per carton