Homework

Transportation and Warehousing

Homework #3

One of the big issues for many shippers these days is whether they should operate their own private carrier fleet, use a dedicated contract carrier, or rely upon the general market. For the following two situations, discuss the advantages and disadvantages of each of the three transportation alternatives. Post a discussion about your findings. Submit your report through the homework submission section.

1. Your company regularly ships truckload volumes of frozen foods from a factory and distribution center to a series of grocery-owned distribution facilities across the Midwest. You can operate using a private motor carrier that you own, a dedicated contract motor carrier, or use a selection of motor carriers available on the open market.

The general impression of many logistics managers is that for-hire carriers could provide the same levels of service at a lower cost and this led to many companies getting rid of the idea of owning a private fleets. However to effectively make a “make or buy” decision, many factors are to be considered.

The first crucial consideration for anyone planning a transportation logistics strategy is to consider the Strategic planning in procurement, transportation, receiving, materials management, sales, and import and export logistics.

The primary reasons for operating a private fleet should be improved service and lower costs.

The motivation of maintaining a private fleet resides in providing better service to customers since product distribution frequently is as important as the product itself. The on time delivery has become a key part of the requested value expected by the customer.

The private operation will help the company have greater control to respond to the customer need and have less stress than dealing with for-hire carriers, therefore reducing logistics costs. This will help project the company image in the marketplace.

A decision will be...