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Question 484 - CSCP discussion

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Total line-haul costs vary directly with:

A.
weight shipped.
Answers
A.
weight shipped.
B.
distance shipped.
Answers
B.
distance shipped.
C.
shipping time.
Answers
C.
shipping time.
D.
the number of times a shipment is handled.
Answers
D.
the number of times a shipment is handled.
Suggested answer: B

Explanation:

Total line-haul costs are the expenses associated with the transportation of goods over long distances and vary directly with the distance shipped. Here's how:

Distance Dependency: As the distance between the origin and the destination increases, the cost of transportation proportionally increases due to fuel consumption, driver wages, and vehicle maintenance.

Fixed and Variable Costs: While there are fixed costs involved in line-haul transportation, such as loading and unloading, the variable costs increase directly with the distance traveled.

Economies of Scale: Though longer distances can benefit from economies of scale, the overall cost will still rise with increased distance.

Freight Rates: Transportation companies typically set their freight rates based on distance brackets, making the cost calculation straightforward for longer hauls. Understanding that total line-haul costs are distance-dependent helps in planning and optimizing transportation routes effectively.

Reference:

'Transportation Cost Analysis' - Transport Economics Journal

'Logistics and Supply Chain Transportation Costs' - Journal of Business Logistics

asked 16/09/2024
michael hunter
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