Transportation Test 2 Review

Describe a Covered Hopper

A hopper car with a roof designed to transport bulk commodities that need protection from the elements

What are the major issues facing motor carrier

Safety Technology Driver Turnover Financial Stability issues

Define Dry van vehicles (Special vehicles)

Standard trailer or straight truck with all sides enclosed

Describe Trailer in motor carrier equipment:

Trailer: length and type (dry, refrigerated, ragtop, container, flatbed)

Water carriers, railroads, and pipelines compete for

long-distance movements of bulk commodities

summary ease of entry in the motor carrier industry

low

Water carriers have relativity________________ because they use publicly provided right-of-way like motor carriers and airlines.

low fixed cost

Water carriers offer ____________________, but their transit time is slow and can be interrupted by weather conditions.

low-cost services

summary: types of commodities hauled in the railroad industry

low-value, high-volume bulk commodities

Motor carriers can be

for-hire or private carriers.

What are the fixed cost of private trucking

*Depreciation (lease)*: Trucks, Trailers, Garage, Office *Interest on Investment*: Vehicles, Garage, office, Maintenance, Equipment *Management Costs*: Salaries, Fringe Benefits, Travel and Entertainment, FICA (workers comp) *Office and Garage Cost*: Salaries, Utilities, Rent, or property cost, supplies, communication

What are the disadvantages of Private Trucking

*Higher Cost* Transportation Cost Higher Than For-Hire Empty Backhaul Lack of Managerial Talent Added Overhead and Managerial Burden Capital Requirements Cargo Damage and Theft Responsibility Liability for Accidents Increased Paperwork Breakdown on the Roads Labor Union

What are the advantages of Private Trucking

*Improved Service*: Convenience Flexible Operation Greater Control Lower Transit Times Lower Inventory Levels Reduced Damage, Driver/Sales-person Last Resort (special needs) *Lower Cost* Reduced Transportation Costs (Eliminates Carrier Profit) Reduced Inventory Levels Advertising For-Hire Authority to Backhaul Lower Driver Turnover

What are the top 5 revenue for Passenger Miles (millions)

1. American- 198,832 2.Delta- 189,707 3. United 185,187 4. SouthWest 124,801 5. JetBlue 45,627

List the different types of equipment (types of cars) in the rail road industry: And list their percent used

1. Covered hopper 32% 2. Tank Car 25% 3. Gondola 14% 4. Flatcar 12% 5. Hopper 9% 6. boxcar 7% 7. Refrigerated Car 1%

What are the top 4 commodities hauled by railroads

1. Miscellaneous and mixed shipments- 8,142 thousand carloads 2. Coal - 5442 thousand carloads 3. Chemicals and Allied products- 2,232 thousand carload 4. Farm products 1,574 thousand carloads 5. Motor vehicles and euipment 6. Food and kindred products 7. Nonmetallic minerals

*What are the type of commodities water carriers haul?* give percent's

1. Petro & petro products 39% 2. Crude materials 15% 3. Food and farm products 13% 4. Coal 12% 5.Chemicals and Rel products 8% 6/7: All manufactured equipment/ primary manufactured. Goods both 6% 8. other 1%

What are the top 5 passenger airlines by passengers transported

1. Southwest - 151,740 2. American 144,190 3. Delta 142,286 4. United 99,770 5. JetBlue 38,241 in millions

Top 5 operating revenue for freight ton (millions)

1. UPS 60,906 2.FedEx-50,365 3. American- 40,422 4. Delta- 39,850 5. United 36,556

List some fuel management decisions Know at least 5

1. fuel surcharge 2. off-peak delivery 3. reduce Engine idling time 4. Optimal Road Speed 5. Out-of-route miles 6. Network Truck Stops 7. Bulk Purchasing 8. Euipment adjustments 9. Prevent out-of-fule occasions 10.Prevent fuel leakage and theft 11. Fuel optimizer

Top 5 freight ton-miles (millions)

1.FedEx-10,791 2. UPS 7,741 3.Atlas-3,516 4.United-2805 5. Polar Air carog

When was the ICC eliminated

1935

Define open top (Special vehicles)

:Trailer is open to permit loading through the top

Define operating ratio

= (Operating expense/Operating revenue) x 100

Describe a Gondola

A freight car with a flat bottom, fixed sides, and no top used primarily for hauling bulk commodities

Describe a flatcar

A freight car with no top or sides used primarily for TOFC service and movements of machinery and building materials

Describe a Hopper Car

A freight car with the floor sloping to one or more hinged doors used for discharging bulk materials

Define Monopolistic competition and what fits in it.

A large number of relatively small firms with relative freedom of entry and exit due to limited capital requirement TL Sector

Describe the market structure of airlines

A relatively large number of airline companies exist, but a small number (10) account for more than 96% of the total revenue.

Define oligopolistic competition and what fits in it.

A small number of relatively large firms with some degree of capital constraint for entry LTL: Special Equipment Carriers: Large, National TL carriers: Significant capital investment for scale and geographic scope of operations

What are the General Advantageous Service Characteristics of the motor industry:

Accessibility EX: Door to Door services Speed EX: Transit Time Universal Modal Connector Carrying Capacity EX: Inventory levels and service frequency Loss and Damage EX: be Relatively Damage free

Short-run economics of plane size and utilization are significant in the air carrier industry How do airlines achieve economics of density

Achieved from having significant volume in both directions between an origin- destination pair Federal direct operating subsidies to regional carriers to service less populated geographical areas

Equipment adjustments- (fuel management decisions)

Adjustment to equipment to make it more aerodynamic.

Describe Security (issues in the airline industry)

Administrative Agencies: Security-related initiatives

What are the types of services classificationsof for-hire airlines

All cargo Commuter Charter/air taxi International

Describe internal water carriers

Barges & towboats on principal US rivers North-South traffic through central US

What are the similarities between for-hire and private motor carriers

Both provide a service and transports commodities

Describe a Box car

Boxcar- Standardized roofed freight car with sliding doors on the side used for general commodities (Plain) can be specially modified (equipped) for specialized merchandise, such as automobile parts

Define Cargo service pricing

Cargo pricing is dependent mainly on weight and/or cubic dimensions. Other factors affecting cargo rates: Over-dimensional charge for low-density cargo (<8 cubic ft.) Special services (e.g. armed guards)

Define high cube (Special vehicles)

Cargo unit is higher than normal to increase cubic capacity

What type of commodities are hauled in the pipeline industry

Commodities Hauled: Include: Oil and oil products Natural gas Coal and coal products Chemicals

describe Common vs. Contract

Common Carriers are required to serve the general public upon demand, at reasonable rates, and without discrimination. Further classified by the type of commodity authorized to haul Contract carriers service specific shippers with whom the carriers have a continuing contract Dedicated carriage over "dedicated" regular routes

What are the different classifications of drivers?

Company Driver and Owner Operated Driver

Describe smaller railroads (issues facing the railroad industry)

Cost disadvantage More flexible & adaptable Usually not unionized Financial assistance from local and state Gov

Define administrative agencies

Department of Homeland Security & Transportation Security Administration (TSA)

What type of market are railroads?

Differentiated Oligopoly: There are a small number of very large railroads. Few Market Areas are served by multiple railroads

Chapter 5: What is the Significance of the Motor industry:

Dominate Mode of Transportation today 10.5 Billion tons transported by motor carriers in 2015 70% of the total U.S. Freight tonnage in 2015 7.3 million people employed in the motor carrier industry in 2014 297.1 billion miles travelled by motor carriers for business purposes in 2014 Mode of choice for manufactured goods.

List the different types of Special Vehicles Designed to Meet Special Shipper Needs:

Dry van open top flatbed Tank trailer Refrigerated vehicles High Cube

What led to track abandonment? What are some alternative uses for land

Early over-expansion, increased competition between modes, and railroad bankruptcies Most abandonments involve duplicate track after mergers, both rural branches and mainlines Some track were taken over by smaller railroads. Alternative uses for land: Rails-to-track conservancy Rail-banking program

Private Carriage is more important in the motor carrier segment of our transportation industry than any of the other four major modal segments. Since deregulation in 1995, the private carriage industry has grown significantly due to these factors:

Ease of registration All commodities are freight able without oversight Low fleet requirements Low start up cost Easy financing for equipment Repeal of the Interstate Commerce act

Describe Safety in the airline industry

Even low accident rates attract much negative publicity Substance abuse.

Airlines have high fixed cost due to the cost of the airplanes and low variable cost?

False

Describe Terminals (equipment) in the airline industry

Federal and State governments invest in, and state and local governments maintain and operate airports. Air carriers preform passengers, cargo, and aircraft servicing. Certain airports in the carriers' scope of operation become hubs. Airport terminals provide services to passengers, such as restaurants, banking centers, souvenir and gift shops, and snack bars Users pay a tax on airline tickets and air freight charges.

List the constraints of the railroad indsutry:

Fixed rights-of-way impede door-to-door service Through service prone to delays in delivery

What is the difference between for-hire and private motor carriers

For-Hire Carriers: Provide services to the public Charge a fee for the service Private Carriers: Provide a service to the industry or company that owns or leases the vehicles. Do not charge a fee, but incur cost Transport commodities for hire as exempt for-hire carriers. Choice by the company to fill empty back haul

What are the types of Motor Carriers.

For-Hire and Private

Describe Generalized vs. Specialized

General freight trucking provides transportation of general commodities, while specialized freight trucking provides transportation of freight that requires specialized equipment because of the nature of freight, such as size, weight, and shape Specialized motor carriers haul a special commodity such as: Odd-sized and/or heavy freight Liquid products Freight requiring controlled temperature hazardous.

How much revenue does private trucking generate, what % of US GDP

Generate $217 Billion in revenue, 2.5% of GDP

define out of route (fuel management decisions)

Get truck drivers to take the shortest route in order to avoid out-of-route miles.

define optimal road speed (fuel management decisions)

Having truck drivers drive at the optimal speed to save more fuel (55MPH)

Describe the cost structure of Motor Carriers See table 5-1 in notes

High Levels of variable cost and relatively low fixed costs, with higher fixed cost in LTL operation due to terminal systems 70-90% are variable 10-30% are fixed

summary Describe the cost structure of the railroad industry

High fixed cost, low variable cost

summary: describe investments/capital outlays in the railroad industry

High investment/equipment, track

Describe the cost structure of the railroad industry:

High portion of fixed cost includes semi variable cost variable costs-biggest element is labor

Describe the cost structure of the pipeline industry:

High proportion of fixed and low proportion of variable cost

describe the fixed cost in the railroad industry:

High proportion of fixed cost: Right of way ownerships Terminal Facilities (e.g. freight yards, terminal areas and sidings) Equipment (especially locomotives) and various types of rolling stock

what makes the pipeline industry an oligopoly

High start up cost (capital cost) Existence of economics of scale make parallel competing lines uneconomic Complex procedural requirements for entry and associated legal cost Dominance of large oil companies.

What are the strengths of the airline industry

High terminal-to-terminal speed Reliability (low transit time variation) Low rates of damages Ideal for high value to volume shipments, or high opportunity value emergency shipments

What is the cost structure of the water carrier industry

High variable (85%) low fixed cost (15%)

Describe the cost structure of the airline industry

High variable cost (80%) and low fixed cost (20%)

Define a company Driver:

Hired by a specific carrier and the trucks they operate are owned by the employers The employer provides the equipment, fueling, cards, and all supporting systems necessary to operate trucks

Describe of number of locations are decided through management decisions

Hours-of-service Consideration of backhauls between terminals Market penetration and customer service desired

Describe intercoastal carriers

IService Between ports on Atlantic and Pacific oceans via Panama canal.

Describe regularlated vs. exempt

If regularlated than they are common or contract An exempt for-hire motor carrier transports exempt (unregulated) commodities owned by others for compensation The exempt commodities usually include unprocessed or unmanufactured goods, fruits and vegetables, and other items of little or no value

Describe the driver turnover issues in the motor carrier industry

Importance: Costly (3k-12k per driver) Turnover Rate> 100% Key Issues: Shortage because of challenging work environment Job hopping Carriers need better ways to attract and retain drivers

Describe the Financial stability in the motor carrier industry

Importance: Carrier financial stability is now an important aspect of carrier selection Key Issues: High operating ratios (exceeding 95%) are indications of financial plight and low competitive rates Recurring problem of overcapacity.

Describe the technology issues in the motor carrier industry

Importance: Enhance management control Enable Timely communications Enhance environmental safety in HazMat movement Key Technology: Satellite technology and GPS systems Electronic on-board recorders (EOBRs)

Describe the safety issues in the motor carrier industry

Importance: FMCSA rules for motor carrier safety fitness inspections Safety impact on probability Key Issues: Labor Safety Alcohol and drug abuse Drivers' hour of service and fatigue Vehicle size and weight

Describe technology (issues facing the railroad industry)

Important enablers of service and operations To become more efficient and consequently more competitive, the railroad industry is becoming a high-tech industry.

What are the primary reasons for a firm having a private truck fleet

Improve Service, and/or Lower cost

Summary: List general service characteristic of the Railroad indsutry

In competition with motor carriers; shippers of bulk products

Describe Equipment in the motor carrier industry: What is its configuration decisions? What is its position and deployment?

In most cases, equipment represents the Largest operating assets that a carrier maintains Configuration: two types of decisions: Tractor: Trailer: Position and Deployment: More important in an LTL operation than in a TL Operation

describe the semi-variable cost in the railroad industry:

Include Maintenance of right-of-way, structure & equipment Necessitated by exposure to weather rather than use Often deferred during financial difficulties

DQ: Compare and contrast the TL segment of the motor carrier industry with the LTL segment in terms of infrastructure, cost structure, market structure, and operating characteristics.

Infrastructure in the motor carrier industry is defined by the system of interstate highway roads and motor carriers who serve shippers' transportation demands TL (Truck-load) carriers serve shippers who meet minimum weight for a full truckload of weight or are willing to pay for the difference between the truckload rate and the actual freight rate. TL carriers pick up and deliver the same truckload, whereas LTL (less than truckload) carriers consolidate a load between several shippers with less than the minimum weight They are likely to handle that freight between the origin and the destination points; i.e. what they pick up is not what they deliver at a single destination. TL & LTL both have high variable cost and low fixed cost. The individual fixed and variable cost among LT and LTL carriers are very similar however the fixed cost are higher for the LTL carrier because they have a requirement for terminal facilities which need to be managed and maintained at additional cost. Tl = Monopolistic market LTL = oligopolistic market. Operating characteristics for the LTL carriers are much more involved than TL segments: TL most likely doesn't need terminals, often uses shippers facilities to handle freight. TL terminals are generally used for dispatching, maintenance, and fueling. LTL terminals are Hub-and-spoke systems that serve freight and driver services, require strategic positioning of equipment. TL carriers only need to position their equipment in relationship to seasonal demand, as they generally deliver the load they picked up with no stops between points.

What is the nature of intramodal and intermodal competition in the motor carrier Industry?

Intramodal competition (competition between carriers) is very high. Intramodal competition is driven by service to the shippers. Intermodal competition is done between different mode carriers. To increase value-of-service heavy LTL's have come into play filling the gap between filling the gap between weight for LTL and TL. Additional intermodal competitors are private carriers who satisfy service requirements of shipper and TL carriers who have lower fixed cost and variable cost than LTL carriers.

List the high variable cost of the motor carrier industry:

Labor (40% of total OC) (25-30% of reveune goes to labor cost) Fuel Maintenance Highway User fees (E.g. fuel tax and vehicle registration)

Air carriers pay for the use of the airport through:

Landing fees Rent and lease payment for space Taxes on fuel Aircraft registration taxes

List the strengths of the railroad indsutry:

Large carrying capacity (few size or weight constraints) Capable of handling almost any type of cargo Railroads assume liability for loss & damage

Describe energy (issues facing the railroad industry)

Large element of variable cost More energy efficient & less environmental damage than motor carriers

Short-run economics of plane size and utilization are significant in the air carrier industry. How do airlines achieve economics of scale.

Large-scale air carrier operations do have some economies of scale, which result from more extensive use of large-size planes or indivisible unit For aircrafts and integrated communication network The perishability of unused seats Sufficient demand must exist Due to high variable cost ratio it is easy to adjust capacity

Why do special equipment carriers have oligopolistic competition:

Larger investments in equipment and terminals than general freight

Railroads are the... Owned by..

Largest, safest, and most cost efficient mode of the transportation industry. They're Owned by private orgs and are responsible for own maintenance

What are the constraints of the airline industry

Limited accessibility Reduced frequency of flights Hub-and-spoke approach = congestion & limited slot availability at hubs High service rates Added access and terminal time and cost significant for shorter distances (under 800 miles)

describe intramodal competition with pipelines

Limited competition among pipelines due to: Small number of companies Oligopolistic market structure Economics of scale and high fixed cost has led to joint ownership of large diameter pipelines High capital cost preclude duplication of facilities.

Describe intermodal competition in the airline industry

Limited competition from other modes for time-sensitive long distance (800+ miles) trips both passengers and freight markets For short distances (under 800 miles), the access time and terminal time offsets the speed of the airline for the line-haul Air carriers have an advantage in providing time-sensitive, long-distance movement of people or freight. compete to some extent with motor carriers for the movement of higher-valued manufactured goods; they face competition from automobiles for the movement of passengers and, to a limited extent, from trains and buses. .

describe intermodal competition with pipelines

Limited competition from other mods Water carriers are principal competitors due to competitive rates and cost, and type of commodities hauled. Truck carriers complement rather than compete

Describe Intramodal competition in water carriers

Limited degree of competition between water carriers due to the relatively small number of carriers in the industry.

List the disadvantages of pipelines

Limited responsiveness due to slow speed Limited geographic flexibility Limited variety of products carried Precludes small shipments

*What are the different types of vehicles in the motor carrier industry?* (3) describe them briefly

Line Haul: Used to haul freight long distances between cities Usually a tractor-trailer combination of three or more axles City (straight): Used within a city to provide pickup and delivery service, Normally smaller than line-haul vehicles and are single units Special Vehicles

Define Load factor for airlines

Load Factor= (number of passengers/Total number of Seats)x 100

Describe Local vs. Intercity

Local carriers pick up and deliver freight *within* the commercial zone of a city Intercity carriers operate *between* specifically defined commercial zones Local carriers and intercity carriers often work in conjunction

List the different types of classifications for For-Hire Carriers

Local vs. InterCity Common vs. Contract TL vs. LTL generalized vs. Specialized Regular vs. Exempt

Describe the low fixed cost of the water carrier industry aka why

Low fixed cost structure can be attributed in part to public aid in construction an maintenance of water ways. Fixed cost include: depreciations & amortization and general expenses.

Describe the low fixed cost of the airline industry (20%)

Low fixed-cost structure in attributable to publicly provided airways and terminals.

Describe the low proportion of variable cost in the pipeline industry

Low proportion of variable cost Pipelines do not operate vehicles that are frequently a major source of variable expense Key variable cost: Labor cost- lower due to the high level of automation Cost of fuel for the power system

List the advantages of pipelines

Low service rates Low loss and damage rates Warehousing function (3-5MPH) High delivery dependability

Describe Cargo competition in the airline industry

Low transit time emphasis Door-to-door service through contracts with motor carriers or through own fleets of delivery vehicles Increased competition from surface carriers entering air cargo business Reduced passenger travel creates excess capacity and increased competition in cargo business.

What are the strength of water carriers

Low-cost transport service for large volumes over medium to long distances Relatively large carrying capacity Fuel Efficient

What are the measures of operating efficiency in the airline industry

Major and national airlines use a hub approach to their service, which contributes to operating efficiency. Operating ratio Load Factor

What are the annual revenue classifications of for-hire airlines

Majors-Annual Rev over 1B Nationals- annual rev 100M-1B Regionals- Annual rev under 100M

Describe the Market Structure and Competition of the Motor Carrier Industry: Describe the operating characteristics of the Motor Carrier Industry:

Monopolistic competition and Oligopolistic Competition TL sector is Monopolistic LTL, Special equipment Carriers and Large, national TL carrier are Oligopolistic Operating characteristics for the LTL carriers are much more involved than TL segments: TL most likely doesn't need terminals, often uses shippers facilities to handle freight. TL terminals are generally used for dispatching, maintenance, and fueling. LTL terminals are Hub-and-spoke systems that serve freight and driver services, require strategic positioning of equipment. TL carriers only need to position their equipment in relationship to seasonal demand, as they generally deliver the load they picked up with no stops between points.

Describe substance abuse (issues facing the railroad industry)

Nature of railroad work(long hours, away from home, & low supervision Employees Assistance Programs (EAPs)

Describe the pricing structure of the pipeline indsutry

No classification system used due to limited number and specialization of commodities No differential pricing due to nature of operations (one-way movement, limited geographic coverage, limited variety of products) Rates quoted on a per barrel basis: Point-to-point or zone-to-zone Minimum shipment sizes (tenders) required

What are the main 2 terminal management decisions:

Number of Terminals Location of terminals

Describe the market structure of the pipeline industry

Oligopolistic Industry: The Pipeline industry has a small number of very large carriers that dominate the industry.

Describe the operating ratio in the motor carrier industry (cost structure)

Operating Ratio is a measure of operating efficiency The operating ratio measures the percent of operating expense to operating revenue (Operating expenses/operating revenue) x 100 OR of 93 indicates that 93 cents of every operating revenue dollar is consumed by operating expenses, leaving 7 cents of every operating dollar to cover interest cost and return to owners

Define security-related initiatives

Passenger & luggage screening, carry-on limitations, and screening of freight carried on passenger airlines

summary: base of competition in the railroad industry

Price (intramodal) and service (intermodal)

Describe Service competition on the airline industry

Primarily in terms of the frequency and timing of flights on a route Advertising used to differentiate services (e.g. amenities, frequent flyer programs) No-frills service- i.e some of the services are cut out (ex: limited snack options)

What are the types of air carriers

Private and for-hire

Describe a Break-Bulk Terminal What services does it preform See figure 5-6

Provide an intermediate point where freight with common destinations from the PUD terminals is combined to facilitate higher utilization of vehicle capacity Services Preformed: Shipment consolidation and dispersion (or break-bulk) operations Long-haul Driver domiciles found in an LTL hub-and-spoke system

Define Pick and Delivery (PUD) terminals: These are also called satellite or end-of-the-line (EOL) terminals. See graph 5-5 in notes

Provide the pickup and/or delivery services for freight on peddle runs. The PUD terminal serves a local area and provides direct contact with both shippers and receivers Two elements of a peddle run: Stem Time Peddle Time Services preformed: Shipment consolidation and distribution operations Vehicle dispatch operations Other services: EX: tracing, rating and billing, sales, and claims.

Describe intermodal competition with Water carriers

Railroad Dry bulk commodities (grain , ores, *coal*) Focused around central US river system and the great lakes Pipeline: Bulk liquids (petroleum, chemicals) Focused along gulf, Atlantic, and pacific cost & Mississippi

Describe Intramodal competition in the railroad industry

Reduced intramodal competition due to mergers, with limited competition between railroads serving the same geographic region.

Define refrigerated vehicles (Special vehicles)

Refrigerated vehicles- Cargo unit has controlled temperature

Describe regulated carriers

Regulated water carriers are classified as either common or contract carriers. Economic regulation, similar to that controlling motor carriers, is administered by the STB. Although the majority of water traffic is exempt from regulation, a small number of regulated common and contract carriers does exist.

Describe a relay Terminal What services does it preform See figure 5-7

Relay terminals are *different from the PUD and break-bulk terminals in that freight is never touched* Services preformed: At the relay terminal, one driver substitutes for another who has accumulated the maximum hours of service (11 hours after 10 consecutive hours off duty). "Slip seat" and sleeper team: An alternative to the use of relay terminal Don't memorize:

The airline industry is dominated by:

Revenue from passenger service

Describe the Revenue of For-Hire Trucking from 2005 to 2015: Look at figure 5-1 in notes

Revenue was steadily increasing from 2005 to 2008. Then in 2009 it took a huge fall. From there it has gone up to 128 in 2015 Which is still less than the 134.6 High point in 2008.

Describe the high proportion of fixed cost in the pipeline industry

Right of way ownerships Pumping stations and terminal facilities Key fixed cost elements: property taxes, amortization of depreciation, return to investors, and preventative maintenance

A number of current issue face motor carriers including:

Safety Technology Driver turnover Need for green and sustainable operations Financial stability

Current issues facing the airline industry revolve around:

Safety Security Continued need to update technology.

What are the current issues in the airline industry?

Security Technology Safety

Describe Great lake carriers

Service Between Ports of five great lakes Access to Atlantic and gulf ports through St. Lawrence Seaway

Describe coastal carriers

Service between ports on Atlantic, or Pacific oceans, or gulf of Mexico Petroleum between Atlantic Cost and gulf and between pacific coast and Alaska

define off-peak delivery (fuel management decisions)

Shifting delivery times of some customers from normal business (daytime) hors to off-peak hours (ex: night time) Benefits: Reduced fuel consumption Lower pollution levels in daytime operations

Describe economics of scale in the railroad industry see graph in notes

Short-run economics of scale Given the high fixed costs, railroads operate under conditions of increasing returns until capacity is reached. Per-unit cost decline as fixed costs are spread out over an increased number of units.

Why do Large, National TL carriers have oligopolistic competition:

Significant capital investment for scale and geographic scope of operations

What are the trends in rail car size and fleet composition

Significant increases in average capacity of rail cars. Fleet composition shifted from the accommodation of manufactured commodities to bulk goods.

Why does the L TL sector have oligopolistic competition:

Significant investment in network of terminals

Describe a tank Car

Specialized car used for the transport of liquids and gases.

What are the constraints of water carriers

Speed of service (slowest mode for dry cargoes Vulnerable to ice, flood, and drought conditions Accessibility limitations Packaging requirements for high-value goods.

What did the staggers act allowed

Staggers act allowed companies to charge what they want to charge

Define a Stem time in a PUD terminal

Stem time is the time that elapses from when the driver leaves the terminal until the driver makes the first pickup or delivery it is also the time that elapses from when the driver makes the last pickup or delivery until returning to the terminal. This is nonrevenue-producing time because no shipments are handled.

List the typical equipment types. See graph 5-4 in notes

Straight Truck- Truck/Trailer- Truck 2-axle- Truck 3-axle- 3-Axle tractor Semitrailer- 4-Axle tractor Semitrailer- 5-Axle tractor Semitrailer- Twin Trailer or "Doubles"-

List the Current issues facing he railroad industry

Substance Abuse: Energy Technology: Smaller Railroads Local Drayage Customer Service Need to improve

TF: Pipeline service is relatively slow with limited accessibility and flexibility, but very reliable (little or no loss and damage).

T

TF: Both Private (predominantly passenger movement) and for-hire carriers operate as part of the airline industry

T

TF:: Ownership of pipelines by oil companies has continued to the present, but some oil pipelines are now owned by non-oil companies.

T

Describe TL vs. LTL

TL Carriers provide service to shipper who tender sufficient volume to meet minimum weights required for a truckload shipment LTL carriers provide service to shippers who tender shipments lower than the minimum truckload quantities "Heavy LTL" motor carriers (upper end of LTL Shipments) This type of carrier specializes in shipment sizes less than the TL carriers haul and more than LTL carriers haul. It has some fixed costs (because of the consolidation terminals), but not as much as in the LTL industry.

describe City Straight Vehicles vehicles What does "loaded to ride" mean

The city truck has the cargo and power unit combined in one vehicle The typical city truck is approximately 20-25 feet ling with a cargo unit 15 to 20 feet long. "Loaded to Ride"-Use of small trailers (28 feet) for pick up/deliver in the city and for line-haul

Describe of number of terminals are decided through management decisions

The degree of market penetration and customer service desired Terminal size vs. peddle run distance tradeoffs

What way are water carriers usually classified? List the different types

The domestic water carrier industry is most commonly classified by the waterway used Internal water carriers Great Lake carriers Coastal carriers Intercoastal carriers

Define for-hire airlines

The for-hire carriers are no longer regulated on an economic basis by the federal government and cannot be easily categorized into specific types because carriers provide many types of services.

Describe Pipeline ownership:

The for-hire carriers dominate the pipeline industry Private Carriers make up 10% Common Carriers make up 90%

DQ: Good one to know Describe the general service characteristics of motor carriers and explain how these service characteristics have contributed to the growth of the motor industry:

The general service characteristics of the motor carrier industry are those that describe *accessibility* to between almost every point of origin and destination Speed Volume discounts Lower inventory levels and carrying cost to shippers More frequent services Less loss due to damage with smoother transport Better response to customer service needs

Describe Intermodal competition for railroads

The major source of competition in the industry, particularly from the motor carrier industry, for non-bulk traffic Railroads have had trouble competing with other modes of transportation due to their service constraints pricing of commodity movements not easily diverted to motor carriers and water carriers can be controlled by the existing railroad firms

Define Private trucking

The movement of goods by a firm that also owns or leases and operates the transportation equipment to further its primary business

Describe local drayage (issues facing the railroad industry)

The pickup and delivery of trailers and containers in conjunction with a line-haul rail movement is usually referred to as local drayage Scare availability High Rates of services Additional transit time

define discount pricing

The price of seats on different flights and the price of the same seat on a particular flight can vary due to : Competition Time and day of departure/return Level of service (e.g. first class, coach Advance ticket purchase

List why there are low fixed cost in the motor carrier industry

The public investment in the highway system Ability to increase/decrease number of vehicles in short periods of time and in small increments of capacity

CHAPTER 5 summary ______________________________________has played a major role in the development of the motor carrier industry.

The public provision of highways

Describe the economics of scale in the motor carrier indsutry: (cost structure of motor carrier industry)

There do not appear to be major economies of scale for large-scale motor carrier operations Large number of small firms in, especially the TL segment, suggest that small-scale operations are viable and competitive Long-run economics of scale: Not significant in TL motor carrier segment Some degree of EOS and in the LTL segment through greater use of indivisible inputs such as terminals, management specialist, and information systems.

The so-called local carrier is also almost unique to the motor-carrier industry. Why?

They're unique because: Because they operate within the commercial zone of a city often coordinate with the intercity carriers They must serve public demand Can be bound by rules for common carrier or chose to serve contracts Intense competition with relatively few competitors Individualized customer service

Do water carriers compete with trucks?

To a very limited degree, water carriers compete with trucks. However, trucks are usually used to overcome the accessibility constraints of water carriers because trucks tie inland areas to the waterways for pickup and/or delivery.

Describe For-hire Truck Tonnage from 2005 to 2015: Look at figure 5-2 in notes

Tonnage was up and down from 2005 to 2008. In 2009 it took a huge drop and has risen from there up to 133.5 in 2015.

Describe Tractor in motor carrier equipment:

Tractor: Axle (single, twin), engine, and drive train combinations

Define flatbed (Special vehicles)

Trailer has no top or sides, used extensively to haul steel

Service Innovations: Describe intermodal (Piggyback services)

Trailer on Flat Car (TOFC) Container on Flatcar (COFC) Almost 14 million trailers and containers loaded in 2015 Designed to increase service levels to intermodal customers Largely segregated from regular to freight, with dedicated intermodal trains running on regularly scheduled departures and priority operating schedules Directed to non-bulk, manufactured products Competes directly with truckload (TL) service, but some TL carriers are also major customers

Describe Trailer on Flatcar (TOFC) Reasons for major growth

Trailer on flatcar Transports highway trailers on railroad flatcars Combines line-haul efficiencies of rail with flexibility of motor transport On-time deliveries, regularly scheduled departures, and fuel efficiency major reasons for growth

Describe Container on Flatcar (COFC)

Transports shipping containers on railroad flatcars Land-Bridge operations key component of international trade Double-Stack container trains greatly improves rail equipment and train productivity.

TF: Airlines face limited intermodal competition but intense intramodal competition in terms of pricing and service.

True

List the typical longer combination equipment types. See graph 5-4 in notes (vehicles operated in only certain states)

Tuck/Double Trailers Triple Trailer Rocky Mountain Doubles- Turnpike Doubles-

What is a converter dolly used for

Used to convert a semitrailer for operation as a full trailer.

define Fuel surcharge (fuel management decisions)

Used to offset the impact of rising fuel cost on their operations. Basic idea is to pass the increased cost of fuel price to shippers, at least partially.

Describe the high variable cost of the airline industry

Variable Cost (80%) Airport and airways usage fees are variable in nature. Fuel Cost (15.1%) and labor cost (32.6%) are major elements of operating cost. Operating cost vary by different types of aircraft used.

Describe the high variable cost of the water carrier industry aka why

Variable Cost (85%) Use charges (lock fees, docks fees, and fuel taxes) are variable in nature Not labor-intensive Major variable expenses are line-operating cost, operating rents, and maintenance

describe variable cost in the railroad industry

Vary substantially with traffic volume Labor Cost: Largest element Multiple Labor unions Outdated Work rules Fuel and Power Cost: Second Largest More productive and fuel efficient locomotives

Define aPeddle Run

\a route that is driven daily out of the PUD terminal for the purpose of collecting freight for outbound moves or delivering freight from inbound moves. (sometimes called milk run) A PUD terminal will have several peddle runs in its customer operating area.

Define Private air carriers

a firm that transports company personnel or freight in planes to support its primary business

Advantageous service characteristics of motor carriers include

accessibility, speed, reliability, frequency, and lower loss and damage rates.

Describe regional for-hire airlines

annual revenues of less than $100 million have operations similar to the nationals. The carriers operate within a particular region of the country, (such as New England or the Midwest) connect less-populated areas with larger population centers.

Describe Commuter carriers

are technically regional carriers. The commuter publishes time-tables on specific routes that connect less-populated routes with major cities.

Describe all cargo carriers

as the name implies, primarily transports cargo Ex: USPS & FedEx airlines

What are the types of motor carriers

for-hire Private

What is the operating ratio for LTL motor carriers:

between 93 and 96

Describe intramodal competition in the airline industry

compete in terms of rates and service as driven by: New entrants in selected routes (markets) Markets coverage expansion Excess Capacity Airlines compete with one another through service competition, pricing, and cargo competition

Describe for-hire water carriers

consist of regulated and exempt carriers that charge a fee for their services. Exempt carriers are excluded from the federal economic regulations administered by the Surface Transportation Board (STB)

What are line haul vehicles cargo carrying capacity determined by

determined by: Size (length) Federal/state Density of the freight

Pipelines have high levels of _________________ because of the ___________________________

fixed cost heavy investment necessary in infrastructure.

Describe a refrigerated car

freight car with refrigeration equipment for temperature control

The cost structure of motor carriers is dominated by variable cost such as

fuel, labor, equipment maintenance, and highway user fees such as fuel and registration taxes

What is the operating ratio for TL motor carriers:

high 80s to low 90s

summary: markets of competition in the railroad industry

high-value chemicals, long-haul but large commodities

describe the owners of pipelines

individual, vertically integrated oil companies Jointly owned pipeline companies Others: Railroads Independent oil companies Other industrial companies

Summary: The domestic water carrier system can be classified in terms of

inland carriers (rivers, canals, and Great Lakes) and coastal/inter-coastal carriers

Pipelines are __________ in the markets they serve and commodities they can haul Pipelines are the only mode that are ___________________ with no

limited unidirectional backhaul

For hire carriers can be classified as:

local vs. intercity common vs. contract regulated vs. exempt general vs. specialized TL vs. LTL

Describe major for-hire airlines

major carriers have $1 billion or more in annual revenues provide service between major population areas within the United States such as New York, Chicago, and Los Angeles. The routes served by these carriers are usually high-density corridors, and the carriers use high-capacity planes.

define Network Truck Stops (fuel management decisions)

make a contract with a specific truck stop chain (for example, Flying J and Pilot), such that a carrier commits to a certain (minimum) amount of fuel purchases within a given time period from the chain, and receives a price discount in exchange

summary: market structure in the railroad industry

oligopoly/monoploy

Define a Owner Operated Driver

own their own trucks; the drivers are entrepreneurs who have their own companies and equipment Hard to receive freight demands, they usually work with larger carriers as contractors so that they can haul the freights of the contracting carriers

What are the two ways pricing in done in the airline industry

passenger service pricing Cargo Pricing

Pipelines are very specialized in terms of the commodities that they carry:

primarily oil and oil products, natural gas, chemicals, and coal

What are the different types of Water Carriers

private and for-hire

Describe National for-hire airlines

revenues of $100 million to $1 billion operate between less-populated areas and major population centers. operate scheduled service over relatively short routes with smaller planes. They "feed" passengers from outlying areas

What are the two different ways to classify for-hire airlines

service annual revenue

summary: industry structure in the railroad industry

small number of large carriers

Define Fuel Optimizer (fuel management decisions)

software used to reduce the fuel procurement cost of takes advantage of price variances across locations (truck stops) to reduce the cost of buying fuel

Define technology: (issues in the airline industry)

sophisticated EQUIPMNT AND PROGRAMS FACILITATE HIGH-SPEED TRANSPORT Automated information processing programs Air traffic control system

Why does the TL sector have monopolistic competition:

strong competition with private carriers

summary: current issues in the railroad industry

substance abuse, energy, technology, small railroads, local drayage, and need to improve customer service

Describe Passenger service pricing

through discount pricing

Air carriers have an advantage in providing:

time-sensitive, long-distance movement of people and small shipments of high-value, perishable, and/or emergency freight

Describe Charter/air taxi carriers

use small- to medium-size aircraft to transport people or freight. The supplemental carrier has no time schedule or designated route. The carrier charters the entire plane to transport a group of people or cargo between specified origins and destinations

Define Tank Trailer (Special vehicles)

used to haul liquids like petroleum products

Airline's cost structure is highly variable in which what are important elements

which fuel and labor cost are important elements