Questions and Answers on the Carrier Industry Essay

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1. What are the various factors used in classifying commodities for tariff purposes?
The National Motor Freight Classification (NMFC), as determined by the Surface Transportation Board (STB), is the tariff system that has classification and description of commodities based on four main characteristics. These are density of the commodity, liability, handling and storability of the commodity. Carrier companies negotiate the rate and terms of transporting the commodities on the basis of these four characteristics. It is important to mention that product density is the dominant factor that determines use of carrier’s vehicle and cost per hundredweight. Higher product density results in lower cost per hundredweight but higher capability of hauling product weight. A lower density of commodity results in high cost per hundredweight and lower capability of weight haulage.

2. What is the nature of intra-modal and intermodal competition in the motor carrier industry? How have the motor carriers fared in terms of intermodal competition since 1980?
The nature of inter-modal and intra-modal competition in the motor carrier industry has transformed over a period of last five decades. The motor carrier industry is composed of truckload (TL) and less than truckload (LTL) motor carriers. There has been an increment in the concentration among LTL carriers (ton miles as concentration measure) but decrease in number of firms. This means intra-modal competition in LTL motor carrier segment…

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