52 Railroad Transportation

rates, rate, freight, traffic, distance, york, railroads, mileage, lines and determined

Page: 1 2 3 4 5 6 7

Railroad Freight making freight rates in the United States the railroads have not been guided by rigid rules or theories. The most general practice has been to make rates at the traffic will i.e., at a point be lieved by them to yield the largest revenues in the long run rather than at the present moment and to encourage the development of traffic in the future. This practice has, however, been subject to a minimum determined in the case of the general level of their rates as a whole by the aggregate cost of service, and in the case of an individual rate, by the special or out-of-pock et costs incurred in connection with a particu lar item of traffic. It is also subject to a maxi mum determined by the value of the service per formed. As the extent of public regulation of rates increased, many rates made originally by the railroads were changed by the Interstate Commerce Commission or by State commis sions, the judgment of whom regarding the rea sonableness of rates sometimes differed from that of the carriers. During Federal control rate changes were initiated by the Director-Gen eral of Railroads, the Control Act of March 1918 requiring the Interstate Commerce Com mission when reviewing them to give due con sideration to revenue needs and expenses as certified by the President.

Freight rates may be variously grouped according to their form or application. They may he either class or commodity rates. In the former case thousands of items of freight traffic have been grouped into a limited num ber of classes, all those in the same class re ceiving the same rates. Three major freight classifications: — the official or eastern, the southern and the western-- govern most classi fied freight in the United States. In addition there is a Canadian and a Mexican classifica tion, applicable to some American shipments; a number of State classifications established by State laws or commissions, and certain excep tions to the major classifications due to the re fusal of some lines to accept them in full. Va rious efforts have been made by the railroads to unify freight classification throughout the United States, but only a limited degree of suc cess was attained. In 1918 when the lines were under government control a tentative consoli dated classification was prepared under the di rection of the Director-General, its adoption de pending upon the completion of an investiga tion undertaken by the Interstate Commerce Commission. In September 1919 the commis sion recommended the adoption with modifica tions of certain parts of the proQosed consoli dated classification. Much freight is not shipped under class rates, but under commodity rates which are quoted for specified articles without reference to classification. Commodity rates usually are lower than class Yates; they are granted to most freight moving in large volume and particularly to heavy, bulky commodities re quiring low rates in order that the traffic will readily move. A distinction is also drawn be tween local and through or joint rates; the for mer applying between points located on the same line and the latter between points located on different lines. Joint rates involve agreement

among the different carriers transporting a through shipment and make necessary the ar rangement of rate divisions among them. By no means all through traffic is covered by joint rates. Much traffic moves between points lo cated on different lines on a combination of local rates, and so-called proportional rates have also been established at various points. Under this latter plan instead of applying a joint rate or a combination of locals, a proportional rate to some defined gateway or rate point is added to the rates lawfully in effect beyond, the pro portional rate being lower than the local rates to the gateway, but applicable only in case of through shipments.

Many complicated rate structures have de veloped in the different traffic sections of the United States. Differences in the amount of water, rail and industrial or commercial com petition is largely responsible for the existence of sharply defined freight rate structures. Local rates covering short distances are frequently based upon mileage, but as the length of the haul increases distance tends to play a less im portant role in rate making. There are also many so-colled mileage scales applicable to long distance traffic, but they do not grade rates strictly on a mileage basis. The aggregate charges on a shipment moving under a mileage scale gradually advance as distance increases, but not in the same proportion; the rate per ton per mile declines as the length of the haul in creases, and beyond certain distances the scales usually provide flat rates for all distances. Dis tance also is an important factor in the percent age rate system applicable between points in the Central West and the Atlantic Seaboard. The rates between Chicago and New York are basic in this rate structure; those between New York and other Central Western points are determined largely although not entirely according to their relative distance from New York as compared with the distance from Chicago to New York; and those between Central Western points and North Atlantic ports, other than New York, are determined from the New York rates by apply ing fixed "port differentials." Throughout Southern territory distance considerations are less important. Because of water and commer cial competition there are belts of blanket or uniform rates along the South Atlantic Sea board,, in Virginia, and along the Ohio River; and there are many basing points throughout the South where the long and short haul princi ple is not applied. Distance is also disregarded in a large measure in the interstate rate struc tures of Texas and the Southwest, of the Cen tral Trans-Mississippi Valley and the North west, and of the transcontinental railroads which carry freight to and from the Pacific Coast terminals.

Page: 1 2 3 4 5 6 7