Unit 2: Cost Considerations in Transportation

Cost Considerations in Transportation

Transportation personnel must evaluate multiple cost factors when determining carrier quotes and shipment pricing.

Special Services

Extra-cost services requiring specific equipment or handling, such as temperature-controlled or climate-sensitive shipping.

Reefer Truck

A refrigerated truck used to transport chilled or frozen goods, commonly used for perishable or temperature-sensitive shipments.

Hazardous Materials

Substances posing risk to health, safety, or property; includes items like acids, fireworks, and dynamite; requires special handling and training.

Hazmat Classes

The 10 categories of hazardous materials: explosives, gases, flammable liquids, flammable solids, oxidizers, poisons, radioactive materials, corrosives, miscellaneous, and other regulated items.

Hazmat Shipping Cost

Shipping hazardous materials costs more due to limited carrier availability and the need for trained personnel and safety measures.

High-Value Goods

Expensive or rare products requiring higher security, care, and insurance, leading to increased transportation costs.

Security Risk in Transport

High-value goods are targeted more by thieves, requiring enhanced security during shipping, increasing overall costs.

Insurance Cost

High-value shipments typically need more expensive insurance, which contributes to the higher cost of transporting these goods.

Risk in Shipping

Frail or easily breakable items, like eggs or glass, have higher shipping costs due to their greater likelihood of damage in transit.

Frail Goods

Items prone to breakage during transport; not necessarily hazardous or high-value, but still incur higher shipping charges due to risk.

Balance of Freight

The principle that the amount of freight going to a location should match the amount returning, ensuring carrier efficiency.

Headhaul

The primary route of a freight shipment, often priced higher when the return (backhaul) lacks a compensating load.

Backhaul

The return trip of a freight carrier; if empty (a deadhead), it increases costs on the headhaul to compensate for the imbalance.

Deadhead

An empty return trip in freight transport; results in higher costs on the outbound shipment to cover unproductive return.

Seasonality

Price fluctuations in transportation due to seasonal demand, such as higher rates during holidays or peak shipping months.

Holiday Shipping Rates

Transportation costs increase in busy seasons (e.g., November and December) due to high demand and limited carrier capacity.

Freight Seasonality

Rates for freight, such as heating oil shipments, increase during colder months due to seasonal demand surges.