CPIM Practice Exam

What is the key to reducing the organization's overall terminal handling costs for a time period?

1. Maximize the weight of individual shipments.

2. Use the air transportation mode more often.

3. Use a customs broker.

4. Maximize the number of shipments handled by the same carrier.

The correct answer is: Maximize the weight of individual shipments.

To effectively reduce an organization's overall terminal handling costs during a specific time period, a strong focus should be placed on maximizing the weight of individual shipments. When shipments are heavier, the organization can potentially decrease the total number of shipments, as fewer, larger shipments can often be more efficient. This reduction in the number of shipments can lead to lower handling costs, as terminal operations often incur fixed costs per shipment, regardless of weight. Therefore, consolidating loads and maximizing shipment weight can streamline the handling process and optimize resource usage, resulting in cost savings. In this context, while increasing the use of air transportation might speed up shipping times, it typically incurs higher costs due to more expensive freight fees. Additionally, using a customs broker, while beneficial for navigating regulations, does not directly address terminal handling costs. Similarly, maximizing the number of shipments with the same carrier might improve carrier relationships or service levels, but it does not inherently reduce per-unit handling costs without addressing the overall scale and weight of shipments. Hence, focusing on maximizing shipment weight is key to achieving the desired reduction in terminal handling expenses.