Abstract
The purpose of this paper is to develop a novel calculation scheme for the costs of distribution per shipment according to a cost-by-cause principle. We propose to estimate the full costs of distribution routes excluding and including a new consignor. Then, we estimate the marginal costs per shipment and per consignor. The contributions of this paper are (1) a comprehensive list of drivers of Economies of Integration and (2) a calculation scheme, how to estimate true marginal cost of new consignors. Practitioners may deploy the method and insights of this paper for tariff design, negotiations, consignor acquisition, and also demarketing.
Highlights
Introduction to pricing in groupage freightAll freight forwarders face the recurring same problem of integrating new consignors into their distribution
A prospective new consignor who plans to outsource distribution of shipments always negotiates about discounts off the standard tariff (Baker 1991; Özkaya et al 2010)
We investigate the problem of a groupage freight forwarder (GFF) who wants to evaluate a new consignor
Summary
All freight forwarders face the recurring same problem of integrating new consignors into their distribution. We investigate the problem of a groupage freight forwarder (GFF) who wants to evaluate a new consignor. This paper addresses the NCIP and investigates the following research question: How should a freight forwarder calculate the impact of a new consignor’s shipments on the costs per shipment?. The acquiring forwarder grants a discount on the basis of fixed transfer prices (The receiving forwarder invoices the transfer price of a shipment to the acquiring forwarder) This might be a bad idea, as the transfer pricing may be outdated, ignore major drivers of distribution costs (Lohre and Monning 2007), or assume symmetrical and homogeneous shipment structure and volume. The final section concludes this paper by discussing both theoretical and practical implications and outlining further research
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
