Comparing The Pon Just Requested For The Via Chicago

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1. Assume you are Vanderpool. Draft the comparison Pon just requested. I will compute conveyance. For the via Chicago, I will choose to use rail. Here’s the comparison:
Via Chicago Costs ($)
Container charter 72,000
Load and block ($20/trk) 2,000
Rail rate at $90/trk 9,000
Wharf age 1,070
Loading and stowing ($80/trk) 8,000
Seaway tolls ($27/trk) 2,700
Unloading 4,200
Insurance ($105/trk) 10,500 Total 109,470
Via Baltimore Costs ($)
Load and block ($30/trk) 3,000
Rail rate at $448/trk 44,800
Handling @ Baltimore ($100/trk) 10,000
Ocean freight ($720/trk) 72,000
Insurance ($75/trk) 7,500 Total 137,300

1. Which of the two routing alternatives would you recommend? Why?
In terms of transportation costs only, the chartered vessel is cheaper. However, when we take into account cash flows and the value of money, the Baltimore route becomes advantageous. Assume we use the charter vessel. It should arrive on May 30th and HDT will be paid. However, if trucks are sent two at a time via Baltimore, the middle pair (#25 and #26) should be finished on about April 16th and arrive at Doha about May 8th, when they will be paid—in other words, 22 days earlier than if they arrived on May 30th on the chartered vessel. HDT pays 8% per year for its money so here is how to calculate the savings for truck #25 or #26:
($172,000 times .08 times 22) divided by 365 = $829.37
Multiplying $829.37 times 50 yields $41,468.50. When added to the costs of using Chicago ($109,470), the total cost now

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