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

or services in his analysis and concentrates only on rates.
Sealy and Herdon [102] break down the productive
processes of machinery and textile firms into four components:
(1) transport, (2) inventory, (3) warehousing, and (4) packing.
The authors then calculated total distribution costs by
air and sea. They found that only two percent of the
consignments studied were cheaper by air when assessed on
freight charges alone; but that eighteen percent were
cheaper when assessed on. total distribution costs. 14 Total
cost by surface transport was, on the average, the surface
freight charge plus 254% (of the surface freight charge).
On the same basis, the total cost by air is the air
rate charge plus 457. (of the air freight charge). 15
From the above a demand curve for air freight was
derived. Given the current levels of traffic for good A
and rates of a (for air) and s (for sea), the percentage
drop in the air rate could be calculated which would make
1.45a 4: 3.54s. At that, and all lower rates, all of
commodity A would go by air. This was done for all commodi-
ties and yielded the graph AA. (Currently 18.67. of the
consignments are going by air).
14 Kenneth Sealy and Peter Herdon, Air Freight and Anglo-
European Trade, (London, ATS Ltd., 1961), p. 8..
15 Ibid, p. 39.
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