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

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

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

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The tons figure is the total tonnage of the commodity carried from<br />

the state of origin to the state of destination during 1963. This<br />

should not be confused with the tons included in an individual ship-<br />

ment. It is an annual total. In<strong>for</strong>mation on the size of individual<br />

shipments would be valuable in that quantity rates and discounts are<br />

usually figured in these terms. Such in<strong>for</strong>mation is not available how-<br />

ever. The annual tonnage data were selected because we believed it<br />

would prove even more important in determining the level of rail rates.<br />

This annual tonnage reveals how important the product is to both the<br />

shipper and the railroads. We believed that as more of a product is<br />

shipped annually the rate charged per ton would tend to decrease.<br />

The average short-line haul per ton became our distance variable.<br />

Clearly, in constructing the freight rate <strong>for</strong> a ton of any commodity,<br />

the distance it is to be carried is the primary determinant. This<br />

belief was verified time and time again.<br />

Average tons per car was used as a surrogate <strong>for</strong> the density of the<br />

product. The rate charged <strong>for</strong> transporting commodities of different<br />

densities should vary, since undoubtedly the cost of transporting them<br />

varies. This variable was only utilized when more than one commodity<br />

was being . examined at the same time. That is, we selected the average<br />

tons per car figure <strong>for</strong> all shipments of a commodity. Our explanatory<br />

variable density then changed in value only when a new commodity was<br />

considered. This was also true of the price variable.<br />

So much is heard of value of service pricing in transportation that<br />

we felt it necessary to include a variable to attempt to capture this<br />

influence, if it was in fact present. For the vast majority of the<br />

commodities we were going to investigate, no demand studies have ever<br />

84

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