Understanding Applicable Rates and Charges for Shipments for Budgeting - Case Study Example

Introduction For the sake of effective and efficient shipment, shippers must always keep being up to with themost current applicable rates and charges. This is also vital, since it would aid helping the respective company plan and budget for the applicable mode to use in carrying and selecting the best carrier (Pohlen). The rates selected are exact and valid and are expected to be up to date and stand the test of time. It is acknowledged that many carriers have automated the systems of rates and charges determination using the most modern forms of technology but the manual system is still much applicable. This is so in cases when there is a breakdown in technological forms available (Judge). For ease in determination of shipment rates and charges for the sake of effectiveness in the determined rates, it is important that the products be in the first instance classified. Classification is vital to help in the determination of optimum total charges. Optimal total shipment charges helps the shippers minimize the charges as much as possible, it also facilitates reclassification by carriers of the shipment hence submission of very different freight bills that indicates higher amounts. 1. Classification of items (a) Chest warders other than hanging with density of 12 pounds or greater is appropriately classified as 85. (b) Drill bits, rotary, with other than carbide tips can be appropriately classified as item number 142790-A under classes 85, 77.5 and 65 respectively. (c) Hose, flexible, with fittings, and having a density of 11 lbs/cf is well classified as item number 51140-A in the group CONDUITS, OTHER THAN EARTHEN, class 92.7 sub group 7. (d) Cloth diapers, in boxes, with a density of 2 lbs/cf is classified under article number 49390-A in sub group 3 class 250. (e) Hot water tank, with glass lining, not crated, with a density of 5 lbs /cf is classified as 181700-sub group 2 class number 250. The classifications above are done based on the data as presented by the National Motor Freight Classification standards which are mainly used by many less than truckload(LTL) to help them in determining freight rates and total charges. 2. The charges by Eagle Tracking for various items from a warehouse in Atlanta, GA to a distribution center in Dallas, TX. (a) Garbage cans, 4,000 lbs with a density of 5 lbs/cf will be charged under class 150 by 4000, which costs 28.81 (b) Pulp board—not corrugated, fluted or indented, 9,000 lbs will be charged under class 55 weight 9000 which will then be charged as 12.53 (c) Ink pens, 7 lbs/cf, 1,200 lbs will be charged under class 125 weight 1200 lbs which will cost the shipper 33.03 (d) Stationery sets, 9 lbs/cf, 200 lbs will be charged under class 100 weight 200 which will cost 52.62 (e) Fiberboard ceiling tiles, 37 lbs/cf, 22,000 lbs with a 4 percent fuel surcharge will be charged under class 55 weight 22000 lbs which will cost 7.85 3. The appropriate less-than-trucked (LTL) or truckloads (TL) product classification for the following shipments produced by shatter glass are as follows. (a) Microscope slides, 39,000 lbs will be classified as 70 under LTL and 55 under TL. (b) Skylights for roofing, 19,000 lbs are classified as 65 and 50 in LTL and TL respectively. (c) Glass, silvered for mirrors, shock, in boxes, 8,750 lbs has classifications 85 and 40 for LTL and TL respectively. (d) Glass, window, other than plate, 28,000 lbs are under classifications 77 for LTL and 55 under TL. (e) Skylight, 200 lbs will be classified as 65 and 50 for LTL and TL respectively. 4. What is the weight break for a class 175 shipment weighing between 5,000 and 10,000 pounds? Weight break= (24.81*175)/31.90 = 136.105CWT 5. Referring to the NT Trucking rate table the costs of shipping individually products versus consolidation will be as follows:- Individual Costs= (35.50+35.50+35.50) = 106.5 Consolidation cost= 32.55 Eagle electronics just like any other company operating in the highly competitive market would always wish to minimize costs as much as possible to maximize revenue. Eagle electronic would automatically go for the cheaper cost, which is that of consolidated cost at 32.55 as opposed to the individual cost 106.5. This is, therefore, the choice assuming there is no extra cost to be incurred by NT Trucking. Conclusion In scenarios of transportation through shipments, there are fixed charges and flexible charges. These charges are at the same time affected by other variable charges among which we have the minimum charge. Minimum charge is derived from the minimum weight calculations to qualify for truckload classification. This weight appears as its own column in the NMFC so that the cost increases with the enlargement of the minimum weight hence qualification for the TL just after TLT qualifications. This is from the principle that lower classifications fetches lower freight charges hence minimum costs (Judge). Works Cited Judge, George G. Studies in Economic Planning Over Space and Time. Amsterdam: North-Holland Publishing Co.: 2003. Print. Pohlen,Terrance L. Transportation Pricing. Chapter 4. Mason: South-Western Cengage Publishing: 2011, pp. 113-120. Print. Read More