MODE SELECTION ( SELECTION OF TRANSPORTATION )

The choice of the three arrangement that is private, contract, common carrier depends on a variety factors, but the most important is the level of commitment and risk the shipper is willing to accept. In a stable environment, where the cargo volume, origin, destination and timing of shipments are stable, it is more likely that private or contract carriage more cost effective. There are three carriage that is :


1) PRIVATE CARRIER

Private carrier in general and simple meaning is the company who own the carrier. A private carrier is essentially a firm's own transportation as said just now. The basic reason for a firm to enter into private transportation is cost and services. Normally, most of company use this type of carrier because of the cost is cheaper during production even high investment at first. There are many advantages of using this carrier that is increase control and flexibility result in lower inventory level, greater customer satisfaction and greater efficiency at loading and unloading docks.

2)COMMON CARRIER

The common carrier must transport all the commodities offered to them no matter where the goods came from. They also liable for the damages while in transit . Then, the government may intervene to safeguard public interest, the government control the tax rate for the carrier. This common carrier is a carrier that operates on a regular route, publishes and its rate for example for this carrier are Mas Kargo .

3)Contract Carrier 

Contract carrier is a hire-for carrier that do not serve general public but rather than serves one or limited number of shippers with whom it is under specific, this carrier will only work for those who have a contract with them. The contract contains terms pertaining to the carrier's rates, liability, type of service and equipment. The carrier must to complete the information that needed by customer. Then , this carrier's rate are lower than common carrier so customer can save the cost there. The contract carrier is available only to shipper with whom the carrier has signed the contract so if there is no contract customer does not have the right for using contract carrier.