Directions: As learned in the lecture and in your reading (pages 113-120) the ca

Question

Directions: As learned in the lecture and in your reading (pages 113-120) the calculation of freight rates requires consideration of a number of factors. The example in the lecture also highlights some of the simplifying steps and processes used in calculating a freight rate. It is very important for you to understand these steps because, as you will see in the questions that follow, mistakes in your shipping process can be very costly.

For the questions below, use the following web-site which is hosted by R+L Carriers: http://www2.rlcarriers.com/rate-quote.aspx?AspxAutoDetectCookieSupport=1

Question 15: What would the Standard Service Net Charge be to ship 3,000 lbs. of Class 50 freight from Savannah, GA (31401) to Atlanta, GA (30315)?

Question 16: What would the Standard Service Net Charge be to ship 3,000 lbs. of Class 100 freight from Savannah, GA (31401) to Atlanta, GA (30315)?

Question 17: What would the Standard Service Net Charge be to ship 3,000 lbs. of Class 500 freight from Savannah, GA (31401) to Atlanta, GA (30315)?

Question 18: Why is there such a significant difference in costs between the classes of freight?

Question 19: Given this example, explain the importance of knowing the correct freight class.

Question 20: Calculate the Standard Service Net Charge to ship 5,000 lbs. of Class 50 freight from Savannah, GA (31401) to Atlanta, GA (30315). Notice that below the standard service charge, R+L offers additional service levels for those customers willing to pay the extra fees. Assume you work for R+L and a very large and valued customer asks you to explain the costs that justify you charging them these additional fees. How would you respond? What costs are incurred for these additional services?

Explanation / Answer

Q15 . Standard Service Net Charge = $ 539.55

Q16 . Standard Service Net Charge = $ 928.68

Q17 . Standard Service Net Charge = $ 5429.19

Q18 . there is a significant difference in costs between different classes of freight. This is for the reason that class depends on the volumetric weight or density of the consignment. Lower density means higher volume and higher class. As higher class consignment occupies more volume, it leaves less space for other consignments, (there is a limited square feet space in every container) so to compensate for the opportunity cost of the additional space occupied by the consignment, carriers charge a higher freight for higher class consignments.

Item Weight Rate Charge Class: 50 3000 $43.51 $1,305.30 Gross Charge 3000 $1,305.30 R+L Discount Saves This Much 65% $848.44 Discounted Freight Charge $456.86 Fuel Surcharge 18.1% $82.69 Standard Service Net Charge $539.55

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