Transportation Management Unit - 1102

The Transportation Management Unit (TMU) was established in accordance with the provisions of Government Code, Section 14920 et seq. Departments shall contact TMU (916) 376-1888 to determine the cost and routing of freight whenever the weight of the purchase is 100-lbs or more and Free on Board (F.O.B.) Destination, Freight Prepaid is not used. The TMU also reviews and approves freight invoices in accordance with SAM, Section 3851, 3852, and 8422.1.

Freight and Shipping Terms

The shipping term Free on Board (F.O.B.) identifies the location where the title to the goods changes from the seller (supplier) to the person receiving the goods (state).

There are several different types of F.O.B. Refer to the table below:

Type	Definition
F.O.B. Origin	Unless otherwise qualified in the F.O.B. clause, the buyer is responsible for freight charges.
F.O.B. Destination	Unless otherwise qualified in the F.O.B. clause, the seller is responsible for freight charges.
Origin/Destination Freight Collect	Buyer pays and bears the freight charges.
Origin/Destination Freight Prepaid	Seller pays and bears the freight charges.
Origin Freight Prepaid & Add	Seller pays and invoices buyer for freight charges.
Destination Freight Prepaid & Add	Seller pays the freight and add the freight charges to its invoice to the buyer
Destination Freight Collect & Allowed	Buyer pays freight charges and deducts the amount from seller’s invoice.

When any good is purchased F.O.B. Destination, Freight Prepaid or F.O.B. Destination, Freight Prepaid/Add, the title to the good remains with the supplier until it is delivered by the carrier, in original or acceptable condition, to the person receiving the good (state). If loss or damage occurs in transit, the seller is obligated to replace the good or otherwise compensate the state.

Shipping terms for International shipments should be Delivered Duty Paid (DDP). Import Costs, duties, taxes, value added tax, or any other transportation or customs costs will not be paid by the state unless expressly included and itemized in the Contract.

Most state purchases will be acquired using the term F.O.B. Destination, Freight Prepaid. Leveraged Procurement Agreement (LPA) purchase documents, unless otherwise specified within the individual LPA user instructions will also identify F.O.B. Destination, Freight Prepaid, as the shipping term.

Shipping Methods that Require TMU Pre-Approval

Prior to executing a requisition, contract, or P.O., Buyers shall complete a Freight Rate Analysis Request, and submit via email, to TMU for approval before using the following shipping methods:

• F.O.B. Destination, Freight Prepaid/Add – Shipping charge is assessed from the originating shipping point to the point of delivery. Upon verification with the TMU, the purchase document must reflect “freight not to exceed cost per supplier quote stated on PO.”

• F.O.B. Origin, Freight Collect – The TMU will determine the cost and routing of freight. The following information must be provided to TMU:
  
  • City, State and Zip Code of origin and destination
  • Description of goods being shipped
  • Estimated shipping weight
  • Special handling requirements
  • National Motor Freight Classification (NMFC) – up to 7 digits

Example:

A department located in Sacramento identifies “FOB Origin: Los Angeles” for the shipment of PCs. This means the state will be charged the cost of shipping from Los Angeles to Sacramento.

Transactions Exempt from TMU approval:

TMU approval is not required for any statewide contract or leveraged Procurement Agreement negotiated by DGS.