Transportation and Distribution Management
Transportation and distribution management tests mode selection, freight costing, load planning, consolidation, carrier management, and delivery network design. Expect questions on truckload versus LTL, weight breaks, Incoterms, accessorial charges, and last-mile economics.
Core rules
- Modes differ in cost, speed, capacity, and accessibility: parcel, LTL, truckload, rail, intermodal, air, and ocean. Cost per unit falls with shipment size until cube or weight limits bind.
- LTL rates are often quoted per hundredweight (cwt) with minimum charges and accessorials. Truckload is a flat rate for the trailer. Compare at the shipment level, not by rate per mile.
- A weight break is the shipment weight at which LTL cost exceeds the truckload rate; above it, buying truckload can be cheaper even if the trailer is not full.
- Consolidation combines shipments to improve utilization; milk runs sequence multiple stops; cross-docking reduces storage but requires schedule discipline.
- Incoterms define cost, risk, and responsibility transfer. They do not define title or payment terms.
- Carrier selection should use service, cost, capacity, claims, and compliance, not rate alone. TMS and freight audit close the loop on accessorials and billing errors.
Worked example
A shipment weighs 8,000 lb. The LTL rate is $25 per cwt, so LTL cost = 80 x $25 = $2,000. A truckload carrier quotes a flat $1,900. The weight break where LTL equals truckload is $1,900 / $25 x 100 = 7,600 lb. At 8,000 lb, truckload is cheaper by $100 even though the trailer is not full. If the shipment cubes out before it weighs out, the calculation changes because LTL may reclassify or require multiple trailers.
Traps that cost marks
- Comparing modes by cost per mile instead of total shipment cost.
- Ignoring accessorials such as detention, liftgate, residential delivery, and reweigh fees.
- Assuming Incoterms transfer title; they transfer risk and cost according to the named rule.
- Ignoring cubic capacity and density; a light shipment can be cheaper in LTL than a full trailer.
- Choosing a carrier on rate alone while missing service failures and claims.