WO2002005197A1 - Shared freight rate system and invoicing method - Google Patents
Shared freight rate system and invoicing method Download PDFInfo
- Publication number
- WO2002005197A1 WO2002005197A1 PCT/US2001/041302 US0141302W WO0205197A1 WO 2002005197 A1 WO2002005197 A1 WO 2002005197A1 US 0141302 W US0141302 W US 0141302W WO 0205197 A1 WO0205197 A1 WO 0205197A1
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- WO
- WIPO (PCT)
- Prior art keywords
- customer
- shipment
- weight
- shipping
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Classifications
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- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q10/00—Administration; Management
- G06Q10/08—Logistics, e.g. warehousing, loading or distribution; Inventory or stock management
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q30/00—Commerce
- G06Q30/04—Billing or invoicing
Definitions
- the present invention relates to a system and technique for establishing freight rates or shipping charges associated with shipping goods in the trucking industry, particularly partial loads.
- the trucking industry accommodates the shipment of a variety of goods to a variety of locations.
- a single truckload shipment often comprises the goods of numerous customers. Therefore, it is necessary to establish an appropriate charge for each customer for a particular shipment.
- the prior art for determining a less-than-truckload (LTL) shipping charge is a tariff-based system, based on the commodity classification and following a complex pattern.
- the tariff-based system requires referring to a significant number of individual schedule books, often by several different clerks simply to perform the steps needed to determine the shipping charge.
- the shipping charge is decided by a series of basic determinations and calculations for a particular cargo.
- NMFC National Motor Freight Classification
- the origin basing point and the destination basing point of the shipment are identified to determine the overall shipment distance.
- the overall shipping distance is an additional factor used to generate the shipping rate for each shipment.
- the customer chooses a carrier.
- the carrier applies the tariff, or rate, based on the NMFC classification and the carrier's specific rating system.
- the ability of each carrier to develop their own rating system is another consideration for the customer when choosing a carrier.
- a weight class is identified based on the commodity weight of the shipment.
- the weight class provides a span of weights that correspond to a specific rate or tariff.
- the carrier matches the identified weight class number and the NMFC classification number for the commodity to determine the class rate tariff.
- the weight of the commodity is multiplied by the class rate tariff/100 to determine the base charge or non-deficit subtotal shipping charge for the goods.
- the carrier typically applies an additional weight deficit charge for the amount the weight of the shipment is below a standard weight.
- the weight deficit charge is added to the base charge to obtain a gross shipping charge.
- any discounts negotiated between the carrier and the customer are applied to determine the total shipping charge.
- the prior art technique requires referring to a number of different data sources, generally found in a variety of different books, catalogs, and tables, along with tracking deficit weights and shipping discounts.
- the system is a cumbersome and inefficient method of establishing shipping charges.
- Inherent in the existing methodology is the significant possibility of human error in making rate calculations.
- the multiplicity of tasks that must be performed and data sources that must be referenced combine to increase the likelihood of producing an incorrect shipping charge determination. Indeed, entire businesses have been formed for the sole purpose of reviewing shipping tariffs and recovering erroneous charges.
- the prior art technique for determining such charges is time-consuming, expensive, and difficult to learn.
- the cost of transporting a partial load of freight is based only on that portion of the load, i.e., the cost is determined independently of any other freight carried in the same shipment.
- the amount the customer pays is predetermined regardless of how much other freight from other customers is carried on the shipment.
- the tariffs collected from a combination of customers may exceed that which is actually necessary to cover municipal, administration and other costs that the tariff was designed and intended to fund. Consequently, customers in many cases may be paying excessive or disproportionate tariffs that do not reflect otherwise economically justifiable shipping costs for certain combined load shipments.
- the present invention provides a greatly simplified method of establishing shipping charges for combined LTL shipments.
- the method of the present invention avoids the need to use tariffs and the National Motor Freight Classification (NMFC) cargo classifications, reducing the complexity of determining freight charges, and thereby reducing the margin for human error.
- the method of the present invention also reduces the cost to the customer as compared with the costs under the prior art tariff-based system.
- the present invention establishes a fixed flat rate that is based on each customer's bill-of-lading weight as a portion of the total shipment weight. Under the system of the present invention, each paying customer bears a fair and proportionate shipping cost for the goods transported through a shared cost/split invoicing system.
- the invention provides a method of establishing a shipping charge for combined less-then-truckload (LTL) shipments, based on a customer's freight weight portion of the total shipment freight weight, comprising: calculating the total shipping rate for the shipment based on total route mileage and flat shipping rate; calculating the hundred weight cost for the shipment based upon hundred weight of the shipment (total weight of the shipment in pounds, divided by 100); determining the hundred weight of the customer's goods on the shipment; and calculating the shipping cost to the customer.
- the total mileage is calculated by summing together all of the mileage between each stop on the route utilizing zip codes of each location.
- the flat shipping rate for the shipment is determined by multiplying the total miles of the route by a customer-negotiated rate per mile.
- the total shipping rate for the shipment comprises the flat shipping rate for the shipment, plus any additional fees and charges.
- the hundred weight of the customer's goods is the weight, in pounds, of the customer's shipment divided by one hundred.
- the shipping cost to the customer is the customer's hundred weight multiplied by the hundred weight cost of the shipment.
- the shipping charge per customer is thus only that customer's LTL freight weight portion of the combined truckload shipment.
- the invention further provides a method of invoicing a customer of an LTL shipment based on the customer's portion of the total shipment weight of the combined load, comprising: populating a database; entering data from each bill-of-lading into a computer system linked to the database; processing the data for a selected route; and creating an invoice for each customer' portion of the combined load on the route.
- the populated database comprises shipping route and flat rate data. Processing of the data further comprises creating a total rate for the shipment, computing the customer's hundred weight and its cost.
- the invention also provides the invoice produced in accordance with the present methods for a customer's shipping charge for the customer's less-then-truckload (LTL) freight weight portion of a combined truckload shipment.
- the resulting invoicing for each customer comprises the following data for each customer on a combined load: bill-of- lading, the weight of each bill-of-lading, and the sum of all bills-of lading for the combined load, wherein the invoice is apportioned by customer.
- Invoicing for each customer comprises charges and an amount due for each bill-of-lading, the hundred weight cost for the customer, and the total amount due for that customer's portion of the combined load.
- the invoice produced for each customer in accordance with the present methods is specific to that customer's LTL freight weight portion of the combined truckload shipment.
- Figs. 1 and 2 are exemplary invoices which illustrate a shipping charge using the shared freight system according to the present invention for an 841 pound shipment of metal material from Lake Bluff, IL to Fayette, AL.
- Fig. 1 shows a sample invoice for the customer, Arvin Exhaust, for the first leg of the shipment.
- Fig. 2 shows a sample invoice for the same customer, Arvin Exhaust, for the second leg of the shipment.
- Fig. 3 shows an invoice for the same shipment as invoiced in Fig. 1, onto which an additional customer's goods have been added.
- the invention provides a method for determining a shipping charge and a method for invoicing less-than-truckload (LTL) shipments based on the customer's portion of the total weight of the shipment.
- the shared freight system for establishing a shipping charge and invoicing each customer provides a rating system based on the freight weight of the customer's goods as a portion of the total freight weight of the shipment.
- a truck picked up the shipment from its local customer in Lake Bluff and delivered it to a "hub facility" in Chicago, IL.
- a "hub facility” is a facility used to combine and distribute goods with common destinations. While at the Chicago hub facility, the goods were NMFC classified. The commodity was classified according to an appropriate commodity classification set forth in the NMFC book. NMFC classifications are based, on the weight, density, fragility of the commodity and whether or not it is a hazardous material. In this case, the commodity of metal material was classified as NMFC Class 70. Following this, the origin and destination basing points, i.e., the zip codes for Lake
- the second hub was located in Nashville, TN, where the load is broken down for transport to lesser hub facilities.
- the lesser hub facility would typically be Birmingham, AL.
- the load was broken down for delivery to the designated final destinations, e.g., Fayette, AL.
- the commodity weight of 841 pounds lies between the weight class of M5C with a standard weight of 500 pounds, and MIM, with a standard weight of 1000 pounds.
- the rate used in the prior art is the smaller of either: the commodity weight multiplied by the higher rate, or the commodity weight multiplied by the lower rate plus the weight deficit multiplied by the lower rate.
- the chart shown in Table 1 has predetermined the weight break for this calculation, and shows the maximum commodity weight for each weight class rate.
- the commodity weight of 841 pounds in accordance with prior art methods would use the rate of the MIM class with an additional weight deficit charge.
- the weight deficit charge is based on the difference of the weight of the commodity from the standard weight of the weight class.
- a commodity weight of 841 has a weight deficit of 1000 - 841 or 159.
- the carrier's class rate tariff for the origin and destination of the present example a NMFC classification of 70, and a weight class MIM was 27.23.
- This class rate tariff is also depicted in the tables of NMFC Class versus weight classes shown in Table 4).
- the weight deficit charge was calculated by multiplying the weight deficit, in pounds, by the class rate tariff.
- Figs. 1 and 2 and Table 4 reflect the simplified and less costly mechanics of shipping the same 841 pounds of metal material from Lake Bluff, IL to Fayette, AL using the shared freight invoicing system of the present invention.
- the system of the present invention avoids all use of tariffs, and thus eliminates the inherent complexities and potential for human error that are associated with such tariffs.
- the present system charges a user in proportion to the weight contribution of his/her goods to the total weight of a shipment. Accordingly, shipping charges are fairly and logically distributed among the several paying customers that ship on a typical LTL shipment. As a result, in most cases the shipping charges paid to ship certain goods using the shared freight invoicing system of the present invention may be substantially less than those paid to ship the same weight of goods using a conventional tariff-based system.
- the shipment of goods from Lake Bluff, IL to Fayette, AL involves a multiple leg journey.
- freight was shipped from Lake Bluff, IL to a hub facility in Alexandria, IN.
- a "flat shipping rate" for the entire truck is determined based on the total mileage and not based on the commodities being shipped as in the tariff-based system. Specifically, the "flat shipping rate” equals the total mileage multiplied by a rate per mile negotiated with the customer.
- the customer- negotiated rate per mile for the customer, Arvin Exhaust was $1.142323 per mile.
- the trucking industry uses the "hundred weight” or "Cwt” for calculating shipping charges using the shipment weights.
- the “Cwt” is the total weight divided by 100.
- the “Cwt cost” is the cost of each 100 pounds of freight.
- the use of Cwt and the Cwt cost provides a means to understand ongoing costs irrespective of volume. Therefore, the total freight weight carried by the truck for the round trip is first divided by 100. In the present example, the total freight weight, 7,795 pounds, divided by 100 is 77.95 pounds. Then, to calculate the Cwt cost, the total shipping charge is divided by the total freight weight (Cwt).
- Fig. 2 shows the cost of the second leg of the journey from the Alexandria, IN hub facility to the Fayette, AL final designation.
- the total mileage, round trip, from Alexandria, IN to Fayette, AL for the shipment used in this example, conducted on April 10, 2000 was 1102.0 miles.
- the flat shipping rate for the entire truck is determined based on the total mileage and not the commodities being shipped. As stated above, the flat rate equals the total mileage multiplied by a customer negotiated rate per mile charge.
- the rate per mile charge for the customer, Arvin Exhaust is $1.142323 per mile.
- the total shipping rate for the round trip shipment was $1,258.84.
- the hundred weight or "Cwt" cost for that shipment is then determined.
- the total freight weight canied by the truck for the second leg was 59,815 pounds, round trip.
- the total shipping rate is then divided by the total weight to get the Cwt cost.
- the shared freight system overcomes the problem in the prior art, wherein the customer is charged a rate independent of the contribution of the weight of the customer's goods to the weight of the total shipment.
- the shared freight system not only is the customer's cost always based on his/her portion of the weight of the total shipment, but as the total weight of the shipment is increased, the Cwt cost for each individual customer decreases.
- the addition of another customer's (Tenneco) goods on the first leg of the shipment significantly decreases the cost of the shipment for the customer of the present example, Arvin Exhaust.
- the Cwt cost to Arvin Exhaust was 7.3462 per Cwt.
- the shipment total freight weight of Fig. 3 is 37,993 pounds or a Cwt of 379.93 pounds.
- the cost to ship the 841 (or 8.41 Cwt) of cargo is $12.68 (8.41 Cwt X 1.5073 per Cwt).
- the shared freight system also provides a unique system for invoicing customers.
- the standard customer information such as billing method, minimum charges, credits and fixed costs are continuously maintained in a computer system.
- the route information such as identification of all stops, total miles, tolls and bridge charges are loaded (populated) into the computer system.
- the individual customer rate per mile charges are also entered.
- the pre-loading of the computer system enables the carrier to request any or all routes for a particular day. Once the information has been loaded into the computer system, the information is then also available for tracking shipping routes and invoicing.
- the specific customer information for each route is entered as the truck proceeds through the route. For example, the inforaiation on each bill-of-lading is transmitted to the computer for entry. As a result, both the information for each customer, as well as for the total shipment is then available in the computer. Loading the proper weight for each customer's goods permits the generation of the invoice based on the weight of the customer's goods as a portion of the total weight of the shipment.
- Figs. 1 and 2 show exemplary "split" invoices for a specific customer for a selected route.
- the "split" invoice is an invoice provided to a customer, which shows unique customer information along with specific information for that customer and the same specific information for each customer of a particular shipment. The percentage contribution by the customer is thereby apparent.
- a similar invoice is generated for each customer participating in a particular shipment.
- the specific information shown for each customer is its freight weight.
- the invoice lists of all the customers participating in the combined load for a selected route, with the specific weight contributions of each bill-of-lading identified for each customer. Accordingly, since the invoice is based on the freight weight of the customer's goods as a portion of the combined weight of the entire shipment, the invoice is apportioned by customer.
- the invoice shows: the bill-of-lading number; the inbound, outbound, and total weight of each bill-of-lading. It also shows the sum of the freight weight for that customer. The total weights for each customer are summed and the total freight weight for the shipment is shown. This allows each customer to view his/her freight weight as a portion of the total shipment freight weight.
- the unique charges for a particular customer are only provided on that customer's invoice.
- the rate per mile negotiated by each customer may vary; thus, the flat rate and total rate shown on a particular customer's invoice applies only to that customer on that selected route.
- charges, such as minimum charges, for each customer appear only on that customer's invoice.
- the shipment route and date are first identified as Lake Bluff, route # 2008d, run date 04/07/2000.
- the flat rate, any additional charges, and the total shipment rate are also shown.
- the flat rate of $572.64, with no additional charges or credits results in a total shipment cost of $572.64, which is a cost that is unique to that particular customer.
- similar information, unique to each customer will appear on each customer's invoice for the particular route.
- the invoice then lists, segmented by customer, the customer identification, bill-of- lading number, associated weight for each bill-of-lading, and specific charges segmented by customer.
- each invoice lists: every customer, his/her bill(s)-of- lading, the inbound, outbound and total weight for each bill-of-lading, and the total weight contribution for each customer participating in the combined load for the selected route.
- the total weight for customer Arvin Exhaust is 6,950 pounds.
- the total weight of the shipment of 7,795 pounds. Therefore, along with the listing of each bill-of-lading, the invoice provides to the customer, in this case Arvin Exhaust, its freight weight as a portion of the total freight weight of the combined shipment.
- each bill-of-lading is shown only on that customer's invoice.
- the shipment of customer, Arvin Exhaust, for 841 pounds generates a shipping rate of $61.78.
- each bill-of-lading for the customer is itemized, and the total charge for the customer is shown on the invoice as $1167.36.
- the present method of invoicing provides the customer with detailed information of the charges. Moreover, the invoice provides each customer with the information used to generate the charges based on the customer's portion of the total freight weight of the combined load for the selected route. Thus, the present method of invoicing not only advantageously shows the customer the charges for its portion of the combined load, but how they were determined, while at the same time providing the customer with a significant savings over prior art invoicing methods for shipping the same partial load.
Abstract
Description
Claims
Priority Applications (4)
Application Number | Priority Date | Filing Date | Title |
---|---|---|---|
MXPA03000331A MXPA03000331A (en) | 2000-07-10 | 2001-07-09 | Shared freight rate system and invoicing method. |
AU2001281297A AU2001281297A1 (en) | 2000-07-10 | 2001-07-09 | Shared freight rate system and invoicing method |
CA002415566A CA2415566A1 (en) | 2000-07-10 | 2001-07-09 | Shared freight rate system and invoicing method |
US10/332,641 US20040015392A1 (en) | 2001-07-09 | 2001-07-09 | Shared freight rate system and invoicing method |
Applications Claiming Priority (2)
Application Number | Priority Date | Filing Date | Title |
---|---|---|---|
US21719700P | 2000-07-10 | 2000-07-10 | |
US60/217,197 | 2000-07-10 |
Publications (1)
Publication Number | Publication Date |
---|---|
WO2002005197A1 true WO2002005197A1 (en) | 2002-01-17 |
Family
ID=22810048
Family Applications (1)
Application Number | Title | Priority Date | Filing Date |
---|---|---|---|
PCT/US2001/041302 WO2002005197A1 (en) | 2000-07-10 | 2001-07-09 | Shared freight rate system and invoicing method |
Country Status (4)
Country | Link |
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AU (1) | AU2001281297A1 (en) |
CA (1) | CA2415566A1 (en) |
MX (1) | MXPA03000331A (en) |
WO (1) | WO2002005197A1 (en) |
Cited By (1)
Publication number | Priority date | Publication date | Assignee | Title |
---|---|---|---|---|
GB2385163A (en) * | 2002-02-12 | 2003-08-13 | Inventec Corp | Method of sharing expenditure of distribution system |
Families Citing this family (1)
Publication number | Priority date | Publication date | Assignee | Title |
---|---|---|---|---|
US20060111924A1 (en) * | 2004-11-24 | 2006-05-25 | Franz Hollich | Method and system for warranty claim processing |
Citations (3)
Publication number | Priority date | Publication date | Assignee | Title |
---|---|---|---|---|
US5450317A (en) * | 1993-11-24 | 1995-09-12 | U S West Advanced Technologies, Inc. | Method and system for optimized logistics planning |
US5910896A (en) * | 1996-11-12 | 1999-06-08 | Hahn-Carlson; Dean W. | Shipment transaction system and an arrangement thereof |
US6061667A (en) * | 1997-08-04 | 2000-05-09 | Schneider National, Inc. | Modular rating engine, rating system and method for processing rating requests in a computerized rating system |
-
2001
- 2001-07-09 CA CA002415566A patent/CA2415566A1/en not_active Abandoned
- 2001-07-09 MX MXPA03000331A patent/MXPA03000331A/en unknown
- 2001-07-09 WO PCT/US2001/041302 patent/WO2002005197A1/en active Application Filing
- 2001-07-09 AU AU2001281297A patent/AU2001281297A1/en not_active Abandoned
Patent Citations (3)
Publication number | Priority date | Publication date | Assignee | Title |
---|---|---|---|---|
US5450317A (en) * | 1993-11-24 | 1995-09-12 | U S West Advanced Technologies, Inc. | Method and system for optimized logistics planning |
US5910896A (en) * | 1996-11-12 | 1999-06-08 | Hahn-Carlson; Dean W. | Shipment transaction system and an arrangement thereof |
US6061667A (en) * | 1997-08-04 | 2000-05-09 | Schneider National, Inc. | Modular rating engine, rating system and method for processing rating requests in a computerized rating system |
Cited By (1)
Publication number | Priority date | Publication date | Assignee | Title |
---|---|---|---|---|
GB2385163A (en) * | 2002-02-12 | 2003-08-13 | Inventec Corp | Method of sharing expenditure of distribution system |
Also Published As
Publication number | Publication date |
---|---|
MXPA03000331A (en) | 2005-09-08 |
CA2415566A1 (en) | 2002-01-17 |
AU2001281297A1 (en) | 2002-01-21 |
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