Where did the Coal go, and why? Part 2

 Something I wanted to add to this, in the Steam era it’s important to remember that the Railroads themselves could NOT set rates. A railroad could not charge more if they could get a product somewhere  faster than their competition. They could not charge LESS either.

 Of course, as a shipper, you knew it was going to cost you $10 a ton to ship a car load of widgets to Peoria, but Railroad B could get them there two days faster. This might be an inducement. If the All-Rail route saves you the demurrage charges because your widgets are in those cars five days LESS than other routes, than that might be an inducement.

If, on the other hand, you could move your widgets to Boston for $8 a ton, but part of the trip was in an inter-coastal freighter that was going to take a week longer, Is the delay going to be a problem ? 

If it isn’t,  then that’s the routing you’re going to choose.

It’s the way the routes are sewn together. The all-rail route, no matter which way you cobble the routing is going to cost the same. But the steam ship is only going to charge $2 a ton for the 600 mile trip. The cost over that distance is going to allow you to put together an overall rate that is a significant savings.

So your shipping department needs to determine if the Rail-Ship route is a realistic option for you.

So it’s these factors that relate to the proximity I discussed earlier. It’s all about total over-all cost. And that’s why railroads of the Steam era chose to skin their cats the way that they did.

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