Accession Number : ADA208630

Title :   Optimal Weight Break for Minimum Freight Charges

Descriptive Note : Final rept.

Corporate Author : DEFENSE LOGISTICS AGENCY ALEXANDRIA VA OPERATIONS RESEARCH AND ECONOMIC ANALYSIS OFFICE

Personal Author(s) : Kleinhenz, Mark

Report Date : APR 1989

Pagination or Media Count : 59

Abstract : The purpose of this study was to review the less-than- truckload (LTL) minimum freight category of the Guaranteed Traffic Program (GTP) to determine whether or not carriers' rates were skewed upwards; if this was found to be true, it was requested that an optimal weight break point be determined. Two approaches were used to investigate the LTL minimum freight charges. The first method was to do charge comparison. Two comparisons were performed: One using the discounted Military Traffic Management Command (MTMC) Class 100 Standard Baseline Rates and the second using carriers' government discounts on the commercial rates published by a nationwide carrier. The first comparison showed that the GTP charges were 33.04 percent lower than the discounted MTMC charges. The second comparison indicated that the GTP charges were 40.57 percent less than the discounted commercial charges. The second approach was an application of linear regression. The regression model, based on the average rate per hundredweight per mile of the other LTL weight categories, predicted a higher average rate per hundredweight per mile than was obtained from the actual shipment data. The conclusion of both approaches is that there is no evidence the rates for the LTL minimum freight category are skewed upwards. The determination of an optimal weight break point is not feasible because of the dynamic nature of the GTP agreements, in which carriers can adjust their rates in response to changes in the conditions of those agreements. Keywords: Cost benefits; Cost analysis; Trucking; Freight costs; Shipment costs.

Descriptors :   *CARGO, *COST ANALYSIS, COMMERCE, COST EFFECTIVENESS, TRAFFIC, LAND TRANSPORTATION, COMPARISON, RATES, REGRESSION ANALYSIS, COSTS, GUARANTEES, RESPONSE, WEIGHT, LINEAR REGRESSION ANALYSIS, MATHEMATICAL MODELS, OPTIMIZATION

Subject Categories : Economics and Cost Analysis
      Surface Transportation and Equipment
      Logistics, Military Facilities and Supplies

Distribution Statement : APPROVED FOR PUBLIC RELEASE