Economics and management in the sphere of ict department: management and marketing

10-graph Container storage yard.
Freight rail transportation rarely tolerates more than a 1% gradient during transit. Gradients during transit have fuel consumption and time implications. Additionally, rail transportation has struggled to adopt a universal standard for the gauge of rail used during construction. This may seem a small detail but in actuality it is very detrimental to the integration of transcontinental rail lines that cross multiple borders. While these constraints may seem like major flaws in rail transportation there remain a number of advantages to this mode of transportation. The first advantage is that freight shipment by rail is more efficient than road transport. Table 1.5 provides a general comparison of all modes of transportation and their unique characteristics and ideal operating scenarios. Rail transport can also easily be combined with other modes of transportation for freight shipments. Methods such as “piggy backing” are used to efficiently combine road and rail freight shipments for inland shipment. This is just one of the ways rail transportation can be modified for each shipment.
Practical implications To be competitive in the marketplace, businesses must focus on the speed of deliveries and price. Assuming same manufacturing cost (cost of production) for a product, logistics companies has the option differentiate the value propositions for their customers. Most customers will go to a company that can deliver fast for a competitive price. For example, a customer will buy the same product from a shipper who charges lower shipping costs. Similar to shipping cost analogy, a customer will buy the same product from a shipper who delivers quickly at the same price level. In 2016, customers were excited to have same-day delivery, but today they are not satisfied with same-day deliveries. Among others, Amazon came up with a 2-hour delivery window to accommodate these customers. In all these contexts, setting the shipping and handling cost too high or too low can hurt the bottom line. If businesses charge too much, customers will see phantom costs and business’ cart abandonment rate can skyrocket. If businesses charge too little, they have to absorb a part of the shipping costs and hence their bottom lines can quickly disappear. Phantom cost is a shipping charge imposed upon a customer in excess of the true shipping cost incurred by the seller. This is also known as phantom freight. For example, in the single zone pricing approach, a customer close to the distribution center will be charged a phantom shipping when the shipping charge is calculated based on an average price for the entire region, possibly distant, central point. Local customers consider this unfair treatment. Absorption cost is a geographic pricing strategy in which a seller absorbs a part of the shipping cost in delivering the goods in order to capture the business. This is also known as freight absorption. For example, in the single zone pricing approach, a distant remote customer will be charged the same as other customers while the actual shipping cost is higher than the charged cost. In this scenario, the seller bears some of the shipping costs involved in transporting goods to customers. Single zone pricing refers to charging the same price to all customers regardless of their geographical locations. Those customers whose actual shipping costs are higher than the single price will gain positive perception about the seller. Those customers, whose actual shipping costs are lower than the single price may gain negative perception about the seller as they realize an overcharged situation. Single zone pricing is practiced when sellers do not have enough pricing power to charge a different price to each buyer.