Re: Freight Tariffs
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CBarkan@...
Phil,
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The subject of rail freight tariffs is ENORMOUSLY complex. There are numerous books with substantial content on the subject dating back over 100 years. It was so complex that at one time one could take college courses that were largely devoted to the topic. Both RRs and shippers needed people who understood this stuff. The subject does not lend itself to any simple, logical rules of transportation or economic efficiency. As Tim says, the basis for rates started with commodity type and weight (higher value commodities generally commanded higher rates per hundredweight), but beyond that the arcana began. And don't make the mistake of thinking it was internally consistent within a particular RR. RR sales agents were often rewarded for getting the traffic, not how much (or even if!) the company actually profited from it. One principal that affected a lot of this was the belief (probably mistaken) that RR cost structure was dominated by very large fixed expenses, so any carload that at least covered what was thought to be the small incremental cost of its actual transportation was contributing to the bottom line. This could lead to the routings like the one Tim cites below and Schuyler's example of the Texas to NJ routing via Chicago. In fact, neither of these strike me as the most outlandish that occurred. There are others on this list (Greg Mahlkov, etc.?) who were employed by railroads and have more direct knowledge of the process. They could probably cite some interesting examples of the ways and means by which RRs and their employees obtained business by playing games with the rate and routing structure. Chris
In a message dated 1/22/05 1:54:05 PM, timboconnor@... writes:
<< Phil, I think tariffs were based on commodity and weight per carload, and of course, source and destination. Changing the rules to be more flexible as cars got larger, and railroads wanted to offer multi-car discounts, was the subject of the huge "Big John" hopper case in the 1960's. Tariffs were published and anyone could offer them. For example, a railroad from A-B might have the best route, but any other competitor serving A and B also could offer the same rate, even if that meant going A-C-D-B. So routings were often seemingly bizarre, involving hundreds of extra miles (if not thousands). The SP brought Oregon lumber down through Texas and up via the Cotton Belt to St Louis, rather than short-haul itself via Ogden and the UP. The all-SP route was hundreds of miles further, but UP could offer no advantage on rates -- only service. Tim In general terms, how were shippers charged for the railroad's
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