Consort Case Study

Question 1

If we use the ship direct model, using the data from Figure 1, what are our total costs over a 52 week period?

Question 2

If we use the vehicular consolidation model, using the data from figure 1 what are our total costs over a 52 Week period?

Question 3

Do you recommend using the ship direct or the vehicle consolidation model? Explain why?

Question 4

If we use the ship model using the data from figure 2 and 3, what are the total cost over a 30 day period?

Question 5

If we use the three day temporal consolidation model using the data from figure 2 and 3 what are our total costs over a 30 day period?

Question 6

Do you recommend using the ship direct model OR the three day temporal consolidation model? Explain Why.

Question 7

Compare and contrast the similarities and differences between a freight broker and a freight forwarder. When is it appropriate to use one but not the other?

Freight Broker Freight Forwarder

Definition

Differences

Similarities

Best Used

Question 8

Propose a flat rate for each of the five zones using a cost/CWT.

Zone A Zone B Zone C Zone D Zone E

Q8. Zone A example Step 1. Identify the margins for MT Freight Forwarding (you will use these margins for the remaining zones. MT Freight Forwarding falls in the $5M-$50M range. The amount of transportation purchased is 65.4%. That means that 65.4% of their revenues charged to clients goes towards procuring transportation. EBITDA margins are 6.3%. This means that 6.3% of their revenues are profits before interest, taxes and depreciation. Remaining margins 28.3%. This means that 28.3% of their revenues goes to cover all other aspects of the business including operating expenses, general administrative expenses, etc. Step 2. Identify correct rates Zone A shipments for the prior year: 56,250,000 falling into the 30,000+ lbs. category Rate for Zone A at 30,000+ lbs. is $1.48 Step 3. Identify should be rates to negotiate for Consort wants to ensure that MT Freight Forwarding will be able to maintain their margins and they believe that they face similar cost structures. As such, they feel that the $1.48 for Zone A should be 65.4% of rates that they are paying MT Freight Forwarding (MT Freight Forwarding Rate * 65.4% = $1.48) Backing it out. We find that the rates Consort should be negotiating for is $2.26, and the proposed flat rate for Zone A.