BMATWT 352 - Building Materials and Forest Products Marketing

Assignment 6- Transporation and Freight Rates

Based on Ch. 4, The Transportation Function, From Dave Leckey's book Buying and Selling Softwood Lumber answer the following questions.

1) Describe the differences between "f.o.b. mill" and "delivered" pricing?

 

2) What information is contained in a "bill of lading"?

 

3) You have been given a per-car rate of $7,956 to move an A-frame of lumber from point A to point B. You intend to load 102 mbf on the car. What is your rate/mbf?

 

4) What will your estimated freight cost/mbf be if you are shipping a truck of lumber 1,280 miles @ $1.25/mile, with lumber weighing 2,100 lbs / mbf (Assume the truck can hold 48,000 lbs of lumber)?

 

5) Below you will find two sets of lumber prices from a recent Random Lengths lumber price guide. You have a customer in Atlanta who is interested in train car loads you will compare each size and grade of Kiln Dried Dimension Random Length lumber, that is 2x4 through 2x12 for both Std. &Btr (#2 & Btr) and Utility (#3) grades. You have the choice of buying FOB West Coast or Delivered to Atlanta.

You are to create a spreadsheet where you can easily change the Train Car capacity, the density of the lumber, and the train freight rate ($ / CWT) Use the Coast Hem-Fir column for FOB pricing and compare with the delivered price listed for Atlanta (Spruce-Pine-Fir).

a) Given the following data, For which grades and sizes does it make sense to use the rail option?

Train capacity = 100,000 lbs

Lumber Specific Gravity = 2,200 lbs/MBF

Freight Rate: $3.25/CWT

Here is the spreadsheet template you can use.

Freight_06.xls

Prices in $ / mbf

	Coast Hem-Fir - FOB Mill (West Coast) ($/MBF)	S-P-F: Delivered to Atlanta ($/MBF)
2 x 4 Std. & Btr.	250	320
2 x 4 #2&btr	255	327
2 x 6 #2&btr	260	357
2 x 8 #2&btr	250	370
2 x 10 #2&btr	280	421
2 x 12 #2 &btr	275	606
2 x 4 Utility	170	240
2 x 6 #3	140	209
2 x 8 #3	160	251
2 x 10 #3	160	265

b) Do any of your answers change if the Freight Rate jumps to $4.00 / CWT?

 

Produced and maintained by David T. Damery
Building Materials and Wood Technology
Department of Natural Resources Conservation
College of Natural Resources and the Environment
University of Massachusetts, Amherst.