Page 390 - Introduction to Business

364 PART 3 Marketing

A railroad freight center.

common carriers Trucks not owned by A major decision that companies must make is whether to use common carriers,
shippers on which they can ship their trucks not owned by shippers on which they can ship their products for a fee, or
products for a fee
private carriers, their own fleet of trucks. Usually, the most significant factor in this
private carriers Trucks owned and decision is not the cost, but the extent to which the companies are satisfied with the
operated by shippers
level of customer service provided by the available common carriers. If shipments
consistently arrive late and in poor condition, firms may be forced to invest in their
own fleets. When the company owns its own fleet, it retains control over the trans-
portation function. Thus, it can give the type and level of customer service it wants.
It also has more flexibility in its operations. For example, it can ship when it wants
and where it wants.
Air transportation is the fastest mode of transportation available. It is also the
most expensive. As a result, high-value items like industrial machinery and auto-
mobile parts are frequently shipped by air. Because of the speed factor, perishable
items like cut flowers, strawberries, and asparagus are shipped via airfreight. Many
companies use air transportation to make emergency shipments to important
customers. The extra cost is justified because of the good will that results. Because
of the speed of service, companies shipping by air usually obtain a competitive
advantage because they can provide better customer service. Samsonite Corpora-
tion used airfreight to ship luggage from its Denver plant to dealers in Chicago,
Los Angeles, and San Francisco. Merchandise got to dealers quicker, dealers
did not have to carry as much inventory, and out-of-stock situations could be
minimized.
reality Go to your college or university’s library and skim through the most
CH ECK recent issues of five business periodicals. How many advertisements
involved the five modes of transportation?

Once the transportation mode has been selected, the shipper must determine
the routes that the transportation mode should take. For example, truck routing
involves decisions on when customers should receive deliveries, in what order the
customer should receive the deliveries, and which roads should be used. Routing
may have a number of objectives. Routes should be developed that minimize the
times required to get shipments to customers. Total distance traveled should be

Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.