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Rail mergers and pricing

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  • Member since
    December 2001
  • From: Crozet, VA
  • 1,049 posts
Posted by bobwilcox on Monday, June 6, 2005 6:34 AM
QUOTE: Originally posted by MP173

The split of revenue, as mentioned by Greyhounds is based on "divisions" or what we called in the LTL industry "factors".

A book of factors was used based on common interline points. Points within a state were then assigned factors to these common points. Then the revenue would be divided accordingly.

For instance...and these are not accurate, but are probably close.

A shipment from Ft Wayne, Indiana to Los Angeles, Ca interlined at Chicago.

Factor from Ft. Wayne to Chicago = 68
Chicago to Los Angeles = 450

Originating carrier receives 68/518 of revenue or 13%
Terminating carrier receives balance or 87%

These LTL factors were based on rail rates from the early 1900's believe it or not. They did tend to give a higher percentage to the short haul carrier, rather than mileage factors (Ft Wayne to Chicago - 200 miles, Chicago to LA - 2200, resulting percentage = 8%).

I am sure, but not positive the rails did something very similar.

If it was a contracted move, such as a stack train or a coal unit train, the rate divisions were no doubt negotiated based on other factors such as costs for picking up and delivery and who's power is used.

ed



There were factors before Staggers but they have gone away in the post Staggers enviroment. It's up to each carrier to negotiate what they think they can get via the junction the think they can get.
Bob
  • Member since
    June 2002
  • 20,096 posts
Posted by daveklepper on Monday, June 6, 2005 7:15 AM
Thanks for this discussion.

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