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

The sccond part of Hurter's cost study was an attempt to relate
firm size to "profitability." Three measures of profitability were
used: (1) the ratio of total freight revenue to total assets; (2) the
ratio of net revenue to assets; and, (3) the ratio of total waterline
costs to total freight revenue (the so-called "operating ratio"). No
significant relationships were found.
For the third part of the cost study, Hurter separated out annual
line-haul costs from total waterline expense. Linear and log-linear
estimates were made of line-haul expense on annual tonnage. Signifi-
cantly higher scale economies were indicated by the results for the
line-haul operation relative to the terminal and administrative oper-
ations. Once again, scheduling economies are a possible source of
these scale economies.
Hurter also related line-haul costs to inputs used in the line-
haul operations (average horsepower per towboat, annual fuel consumption,
and total labor hours). These variables represent the input flow vari-
ables of Hurter's production functions. A log linear relationship was
estimated. It was found that a 10 percent increase in all
accompanied by a 13 percent increase in all line-haul costs in 1957 and
1962. At the same time, a 10 percent increase in all inputs was found
to be associated with a 28 percent increase in total output for 1957;
a 10 percent increase in total output in 1962. This indicates strong
economies of scale in 1957, but does not support scale economies for
1962. Additional support for positive scale economies was obtained
by relating the stock input variables to line-haul costs.
inputs was
One of the difficulties that have beset investigators of the
barge industry has been the unavailability of important (and relevant)
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