Transportation and Distribution Management
This domain tests mode selection, freight rate construction, vehicle and container utilisation, and distribution network design. Expect at least one chargeable-weight or utilisation calculation.
Modes and selection criteria
Road (flexible, dominant for last mile), rail (bulk, long haul, now boosted by Dedicated Freight Corridors), coastal shipping and inland waterways (heavy bulk), air (high value, urgent, low weight), pipeline (liquids and gases). Selection balances cost per tonne-km, transit time, reliability, accessibility and cargo characteristics.
Rates and utilisation
Freight may be quoted per tonne-km, per kg chargeable weight, per trip or per container, usually with a minimum charge. Chargeable weight is the higher of actual gross weight and volumetric weight. Air uses a divisor of 6,000 cm3 per kg, i.e. 1 CBM = 167 kg; sea LCL commonly uses 1 CBM = 1,000 kg. Containers: a 20-foot TEU holds about 33 CBM, a 40-foot FEU about 67 CBM. Network designs include hub-and-spoke, milk runs and cross-docking; last-mile delivery alone often accounts for 40-50% of total logistics cost.
Worked example
Six cartons, each 60 x 40 x 50 cm and 18 kg gross. Volume per carton = 0.6 x 0.4 x 0.5 = 0.12 CBM, total 0.72 CBM. Actual weight = 6 x 18 = 108 kg. Air volumetric weight = 0.72 x 167 = 120.24 kg. Chargeable weight is the higher figure, 120.24 kg, so freight is billed on roughly 120.5 kg. Reason: aircraft are volume-constrained, so light bulky cargo pays for the space it occupies.
Traps that cost marks
- Billing on actual weight when volumetric weight is higher.
- Using the air divisor for an LCL sea shipment.
- Confusing demurrage (container overstaying inside the port or terminal) with detention (container overstaying outside the port with the consignee).
- Ignoring axle-load and gross vehicle weight norms when claiming payload.