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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…show more content…
During 1980, the TL motor carriers fared quite well. These companies include J.B. Hunt, MS Carriers and Werner. There was 30% to 40% annual increment in their revenues during 1980s. For instance, J.B Hunt’s revenues at the start of 1980 was around $25 million but increased to $732 million starting 1991. MS Carriers increased from $35 million in 1980 to $152 million in 1991. During 1980s, TL segment of the motor-carrier industry rapidly outgrew other segments such as LTL, rail boxcars, and long-haul private fleets. 3. Railroads have abandoned a significant number of miles of track (over 260,000 miles) since 1916. Why has this trend developed? Will it continue into the future? Why or why not? The major reason of railroads abandoning significant number of miles of track (over 260,000) has been the rapid inter-model transportation competition. Since the gradual deregulation of railroad industry, the two major industry segments in motor carrier transportation have been truck load (TL) and less-than truck load (LTL) industries. TL and LTL industry segments have rapidly developed after the US government reregulated the transportation industry. There has been an increasing competition of rail boxcars with trucking industry. The improvement of water ways carried out by the engineering corps of the U.S army has also led to increased competition between inter-modal transportation carriers. The trend is
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