Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

All transport modes are designed to move products from one market
to another. However, each moves the products in a slightly different
manner resulting in different service characteristics. We usually say
they offer differing "qualities of service." These service attributes
are of concern to the shipper. He must consider all the implications
of shipping by the various available modes before it is possible for
him to make an intelligent choice of mode decision.
Some of the more commonly listed quality attributes are: the
time required for transport; schedules and the convenience of. shipping
times; the reliability of schedules; breakage, spoilage and deterior-
ation of the product enroute; packaging requirements; and interface
costs on joint hauls. The main assumption of this paper is that con-
ceptually each of these quality attributes can, and should, be expressed
as costs associated with shipment by an individual mode. Each shipper
must then take all costs into account in making his choice of mode
decision, that is he must place quality costs on an equal basis with
transport rates. With this assumption we shall be able to develop an
analytical model of the transportation market and, subject to the form.
of the individual equations and the specification of parameters, derive
(1) the total quantity shipped and unit costs borne , by•the shippers,
(2) the modal split, should one occur, and the conditions under which
it will occur, (3) the conditions under which a resulting modalsplit -
is an efficient, cost minimizing, allocation of traffic, and (4) the .
resulting transport rates and associated costs for each participating
mode of transport. 3
3. A similar approach has recently been advocated for passenger
transport as well. See R. E. Quandt, and W. J. Baumol, "The Demand
4