LTL Classification System Assignment

The battery supplier in Tennessee has been arranging and paying for freight to Fat-Es location in Kanata. You have been asked by the CEO to investigate the possibility of arranging for your own freight and youve received a few quotes back from LTL carriers however they have all classified your product higher than the existing LTL carrier.

Youve noticed on your invoices that the carrier classifies the batteries today at 125 (using the National Motor Freight Carrier Association system) and your new quotes are being received at class 175. Specifically, you have been asked to:

These are the questions below: 1 and 2. answer needs classifications systems and reason's for them in #1. in #2 how would the companies policies and procedures (staffing)change if they had to arrange and pay for their own LTL shipments. Please factor in the density of the batteries (in General ) and that they are now being quoted at a higher classification than the last one.

1. Your CEO has requested that you update the senior management team by means of a brief report that will describe the reasons for freight classification and the primary factors that a carrier would need to consider in developing their own classification system.

2. Provide insight into what would change at Fat-E if they did decide to take on arranging and paying for the LTL freight themselves. Consider changes in roles and risks to complete this challenge.

Your response should be approximately 1,000 words and contain a brief introduction, your analysis and recommendation, and finally a conclusion.

Reference Material

Business Case Fat-E Bike You have been hired as the Director of Transportation for Fat-E. Fat-E is three-year-old firm, founded by three university friends based out of Ottawa, Ontario. The company makes electrically powered bicycles made for off-road trail riding. The Fat-E is unique in that it is based on the fat tire bike already on the market. Fat-Es model includes an electric motor and with a heavy-duty transmission that automatically changes gears while moving. There are other bikes in this market, but the Fat-E is unique in that the transmission is electronically controlled, saving precious battery life power when in use. The firm has begun to build a relatively loyal customer base, and markets itself to off road cycling enthusiasts, and off-road cycling clubs. Fat-E started originally by manufacturing their first models on their university campus in space provided by their entrepreneurial centre. The owners quickly outgrew this space and moved into a small industrial unit just outside Ottawa (Kanata). Since then, the company has grown to expand into the two adjacent units in the industrial complex. From this location they managed the entire business including 24 permanent full-time staff (mixed between administration, production, and warehousing). Business is strong and Fat-E has now outgrown the space they currently occupy and unfortunately there are no more adjacent units in the industrial complex for them to consider expanding into.

The Bike: The bicycle is comprised of a heavy duty steel frame, weighing 48 pounds, two oversized rims with oversized fat tires, a battery that is integrated into the frame, and the patented transmission that has been integrated into the frame at the rear wheel. When fully assembled, the finished bike weighs 84 lbs. It is packaged and shipped with front wheel off and occupies a corrugated box: dimensions: 48 inches long x 12 inches wide x 30 inches high. The Fat-E is not palletized, and ships individually via courier. The bike contains a lithium-ion battery and due to dangerous goods regulations cannot be shipped by air.

There are four primary components to the bicycle

The frame, battery, gears and wiring, and the wheels. Each is sourced from an individual supplier outside of Canada:

The steel frame is manufactured in China and shipped via LCL.

The battery is manufactured in Tennessee (USA) using LTL service paid for by the battery supplier.

The gears and wiring are purchased in from a supplier in France using LCL service that is arranged by the seller.

The final component, the wheels, are sourced from a supplier in Mexico City (Mexico). If Fat-E orders six or more pallets of wheels the supplier includes the cost of freight in the price of the wheels. If Fat-E orders less than six pallets the supplier arranges for LTL service but adds this expense on to the invoice to Fat-E.