9W EVALMTEG‘H 0F EEOTGR WKMOH GfiRfiER
SENCES

Thwésfettfiebegreeoffiw.
maze-am STATE SEWERSITY
CHARLES L. i-ELTON
1973

This is to certify that the

thesis entitled

 

AN EVALUATION OF mTOR COMDN
CARRIER SERVICES

presented by

Charles 1.. Hilton

has been accepted towards fulfillment
of the requirements for

421370— degree mutation—Administration

’77
/ (\1 // /

Major prof

Date g/j/‘7 .7?

 

 

llfllII'J-l‘lil‘lll

AN EVALUATION OF MOTOR COMMON CARRIER SERVICES

BY

Charles L. Hilton

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY

Department of Marketing and Transportation Administration

1973

ABSTRACT

AN EVALUATION OF MOTOR COMMON CARRIER SERVICES

/\V By

n
TAW Charles L. Hilton

W

This thesis was an evaluation of services offered
by motor common carriers. A service was broadly defined
for the purposes of the study to include anything that a
motor common carrier does for its customers, whether charged
for or not, which helps customers perform procurement or
distribution activities.

The evaluation consisted of an analysis of responses
to two mailed questionnaires. One was sent to a sample of
motor common carriers doing business in the midwest. The
other questionnaire was sent to a sample of transport user.
firms in the same area. Responses of the motor common
carriers were analyzed to identify the services mixes offered,
to assess the perceived profitability of each service to the
carriers, and to determine how the carriers view the useful-
ness of their service offerings in terms of transport users'

procurement and distribution activities.

Charles L. Hilton

Major findings of the study included:

1. Motor common carriers have unique services mixes.
The typical motor carrier has approximately forty to sixty
identifiable services available to transport users. The
number of services varied only slightly with the size of
carriers.

2. The composition of the services mix not only
varied as between motor common carriers, but it also was
subject to change during the ten year period under study.
Carriers added new services in the area of coordinated
transportation and specialized equipment. They discontinued
services where they perceived profitability and usefulness
was low. Changes in the composition of the services mix
was apparently a strategy to improve profit performance.

3. The study found that small carriers that offered
fewer services tended to have better operating ratios than
those that offered more. On the other hand, medium size
carriers with more services had the better operating ratios.
For the remaining groups of carriers there was no statisti-
cal relationship between the number of services and the
actual carrier profits.

4. Motor common carriers used "judgments" as the
primary method of evaluating the profitability of services.
This method was most important for the small carriers and
less important for the larger ones. Responses from the

larger carriers typically were from management specialists

Charles L. Hilton

\fihO indicated the use of cost studies, forecasts, and break-
even factors.

5. Some services were more difficult to evaluate
than others. The direct revenue line-haul, pickup and
delivery, and special equipment services were the most often
evaluated while the terminal and advisory services were
often omitted in the evaluations.

6. Motor common carriers that failed to evaluate a
substantial proportion of services offered had poorer
operating ratios than those that evaluated almost all of
the services offered. This implies that knowledge about
profitability may have been important to the carrier in
controlling the performance of the services.

7. The overall perception of profitability of
services was just above the breakeven level. This seemed
to reflect the generally poor profit conditions present in
the industry at the time. Some services were viewed as
more profitable than others, e.g., line-haul and special
equipment were rated much higher than pickup and delivery,
terminal and advisory services. Other services were offered
that the carriers perceived as definitely unprofitable to
them.

8. Variation was found between each carrier's
perception of profitability of services. It was found that
profitability estimates were partially related to actual

profits for small, medium large, and large carriers. Also

Charles L. Hilton

important, was the method or factor used to evaluate services
and the title of the executive responding to the question-
naire.

9. Motor common carriers tended to over-estimate
the usefulness of their services to transport users. While
the ratings of usefulness were higher, line-haul, pickup and
delivery, and terminal services were positively correlated
with transport user ratings of the same services. Only the
responses received from marketing or sales executives
closely approximated the transport users' ratings.

10. The study revealed the need for motor common
carriers to refine the process of evaluating both profita-
bility and usefulness estimates of the services they perform.
Already several carriers are eXperimenting with new services
in a way that indicates they could take a previously rated
unprofitable non-revenue service and convert it into a
profitable one. More carriers need to examine carefully
the importance of customer oriented services, e.g., the
shipper information and advisory services, in developing
loyal followings of customers which in turn can result in
more traffic and higher profits. The Opportunity for market-
ing differentiation exists in the area of services in the
motor common carrier industry. Greatest differentiation is
possible using a list of discretionary services which the
study developed. Individual carriers can elect to offer

specific services from this list which are compatible with

Charles L. Hilton

the carrier's operating authority, profit objectives,
customer needs, and the competence of its management. The
process of evaluation of present or prospective services
whould be continuous and should include the inputs of various
other executives within the carrier's management. Profita-
bility of services should include information from finance,
accounting, traffic, and Operations executives. Usefulness
evaluations must recognize the contributions and insights of
marketing and sales executives.

The findings of the study of motor common carrier
services probably can be generalized to apply to motor
carriers throughout the United States. However, subsequent
studies could be undertaken using samples of carriers and
transport users who do business essentially in other regions.
In addition, the specific process employed to evaluate
profitability and usefulness of services by each carrier
should be examined in order to determine the relationship
between each factor or method of evaluation and the most
accurate assessment possible for specific services or types
of services. The present study was macro in nature. The
follow-up study should be a micro-study of a selected group

of carriers.

© Copyright by
CHARLES L. HILTON

1973

ACKNOWLEDGMENTS

Several people have contributed suggestions, ideas,
time and skills to assist me in this endeavor. I would
like to mention those who have given special guidance and
made significant contributions to this research.

The dissertation committee included:

Dr. John L- Hazard, Professor of Marketing and
Transportation, chairman of the committee, who was most
helpful-during the formulative and planning stages of the
research questionnaires. In addition, his encouragement
and personal interest from the beginning to end are par-
ticularly appreciated.

Dr. Frank H. Mossman, Professor of Transportation,
who provided valuable assistance in the final stages of the
study and who has been a stimulant to my interest in the
field of transportation.

Dr. William J. E. Crissy, Professor of Marketing,
whose inspiration and constructive comments were indispensible.

Also, my appreciation goes to the many representa-
tives of the motor carriers and transport user firms who so
painstakingly completed the questionnaires that provided
the raw data for the study.

Finally, my gratitude is expressed to my wife, Mary
Lou, and my family, who participated in the many anxieties

associated with the task.

TABLE OF

ACKNOWLEDGMENTS . . . . . . '.

CONTENTS

LIST OF TABLES . . . . . . . . . . . .
LIST OF FIGURES . . . . . . . . . . . .
Chapter

I. INTRODUCTION . . . . . . . . . .

II.

III.

Rationale for Study . . . . . .
Statement of Objectives . . . . .

SERVICES IN THE MOTOR COMMON CARRIERS
INDUSTRY 0 O O O O I O O O 0

Importance of the Industry . . . .
Types of Highway Carriers . . . .
Motor Common Carrier Services . . .
Definition of Service. . . . . .
Typology of Services . . . . . .
Group I. Line-Haul Services . . .
Group II. Pickup and Delivery
Group III. Services Requiring
Equipment . . . . . . . .
Group IV. Terminal Services . . .
Group V. Advisory Services . . .

THE SURVEY OF MOTOR COMMON CARRIERS AND
TRANSPORT USERS . . . . . . .

Selection of Samples. . . . . .

The Motor Common Carrier Questionnaire.

The Transport User Questionnaire. .

Services
Special

Characteristics of Responding Motor Common

Carriers . . . . . . . . . .
Location . . . . . . . . . .
Long-Haul and Short-Haul. . . . .
Revenue . . . . . . . . . .

Operating Ratios and Growth Indices

iii

Page
ii
vi

ix

14

14
16
21
30
31
32
32

35
35
36

37

37
39
40

41
41
42
44
44

Chapter

Characteristics of Responding Transport

Users . .
Location .
Sales . .

Plant and Warehouse Location . . . .
Annual Freight Bill . . . . . . .
Primary Products . . . . . . . .
Use of Transportation . . . . . . .

IV. ANALYSIS OF MOTOR COMMON CARRIER SERVICES .

Number of Services . . . . . . . .
Changes in Number of Services . . . . .
Number of Services and Motor Carrier

Operating Ratios . . . . . . . .
Motor Carrier Ratings of Services . . .
Evaluation of Services . . .

Method of Weighting Services Ratings . .
Services Evaluated to Services Offered .
Motor Carriers' Profitability Ratings .
Average Ratings by Service . . . .
Average Ratings by Motor Carrier. .
Motor Carrier Ratings of Services'

Usefulness
Usefulness
Usefulness
Relationship
Usefulness
Transport User
Usefulness

to Transport Users . . .
Ratings by Services . . .
Ratings by Motor Carrier .
of Profitability Ratings and

Ratings . . . . . . .
Ratings of Services'

Comparison of Motor Carrier and Transport

User Ratings

Line-Haul Services . . . . . . . .
Pickup and Delivery Services . . . .
Services Requiring Special Equipment . .
Terminal Services . . . . . . . .
Advisory Services . . . . . . . .
Total Services . . . . . .
Ratings and Motor Carrier Profitability .
Ratios of Ratings . . . . . . . .
Relative Profitability Ratios . . . .

Revenue Size
Factors Used
Factor "a"
Factor "b"
Factor "c"
Factor "d"

Title of Executive Completing Questionnaire

in Evaluating Services . .

H II N f. H

e

iv

Page

52
52
53
54
54
56
57

59

59
64

69
71
71
76
77
81
81
87

91
91
95

97
101

104
104
106
107
107
109
109
110
110
112
115
120
120
122
123
123
125

Chapter
V. CONCLUSIONS . . . . . . .

General Findings of Study . .

The Services Mix of Individual Carriers

Changes in Services Mix . .

Number of Services Offered and Carrier

Profitability . . . . .
Factors of Evaluation . .

Number Evaluated to Number Offered
Perception of Services' Profitability
Perception of Services' Usefulness
Implications of the Study For Motor

Managements . . . . .
Implications for Future Study .

APPENDIX 0 O O O O O O O O O O
I. MOTOR COMMON CARRIER QUESTIONNAIRE

II. TRANSPORT USER QUESTIONNAIRE . .

III. LIST OF CARRIERS RESPONDING TO SURVEY

IV. LIST OF RESPONDING TRANSPORT USERS

V. SURVEY DATA BY MOTOR COMMON CARRIER.

VI. SURVEY DATA BY MOTOR COMMON CARRIER SERVICE

BIBLIOGMPHY O O O O O O O O O 0

Carrier

Page

131
131
131
132
133
134
136
137
138

139
149

152
153
160
167
171
175
179

183

Table

1.

11.

12.
13.

14.

15.

LIST OF TABLES

Identifiable Motor Common Carrier Customer
Services . . . . . . . . . . . . .

Respondent Motor Carriers by State of Domicle. .

Distribution of Carriers: Short-Haul and Long—
Haul by State of Domicle . . . . . . . .

Distribution of Motor Carriers by Revenue Size .
Average Operating Ratios and Average Growth Index
for Surveyed Carriers by Short-Haul and Long-

Haul and Revenue Size . . . . . . . . .
Correlation Coefficients for Average Operating

Ratios vs. Growth Index for Individual Motor

Carriers by Revenue Size . . . . . . . .

Transport Users by State of Major Facility
Location 0 O O O O I O O O O O O 0

Transport Users by Major City . . . . . . .
Distribution of Annual Sales of Transport Users .

Number and Location of Establishments of
Responding TranspOrt Users . . . . . . .

Distribution of Approximate Annual Freight Bill
For Responding Transport Users . . . . . .

Number of Services Offered by Motor Carriers . .
Number of Motor Carriers Offering Each Service .

Average Number of Carriers Offering Each Service
by Functional Groupings . . . . . . . .

Average Number of Services Offered: By Revenue
Size and Short-Haul and Long-Haul . . . . .

vi

Page

33
42

43

45

46

49

53
53

54

55

56
60
62

63

64

Table . Page

16. Services with Greatest Increase in Motor

Carriers by Time Period . . . . . . . . 66
17. Correlation Coefficients: Operating Ratio and
Number of Services . . . . . . . . . . 70
18. Factors Used by Motor Carriers to Determine a
Service's Contribution to Net Revenues . . . 73
19. Number of Carriers Using Each Evaluation Factor
by Revenue Size . . . . . . . . . . . 74
20. Services Evaluated to Services Offered by
Functional Groupings . . . . . . . . . 78
21. Distribution of Services Evaluated to Services
.Offered by Motor Carrier . . . . . . . . 80
22. Distribution of Motor Carrier Profitability
Ratings of Services . . . . . . . . . 82
23. Profitability Ratings by Service Groups . . . 82

24. Distribution of Standard Deviations for
Profitability Ratings by Service . . . . . 86

25. Distribution of Average Profitability Ratings
for Each Motor Carrier's Services Mix -. . . 88

26. Average Ratings of Profitability, Average
Operating Ratios and Correlation

Coefficients by Revenue Size. . . . . . . 89
27. Standard Deviations of Profitability Ratings by

Carrier . . . . . . . . . . . . . 90
28. Distribution of Motor Carriers Usefulness

Ratings by Service . . . . . . . . . . 92
29. Average Usefulness Ratings by Functional Groups

of Services . . . . . . . . . . . . 93
30. Distribution of Standard Deviations for

Usefulness Ratings by Service . . . . . . 94
31. Distribution of Average Usefulness Ratings for

Each Motor Carrier's Services Mix . . . . . 96
32. Standard Deviations of Usefulness Ratings by

Carrier . . . . . . . . . . . . . 97

vii

Table Page
33. Correlation Coefficients: Profitability
Ratings vs. Usefulness Ratings by Service
Group . . . . . . . . . . . . . . 98

34. Distribution of Ratios: Usefulness/Profitability
Ratings by Service . . . . . . . . . . 99

35. Distribution of Ratios: Usefulness/Profitability
Ratings by Carrier . . . . . . . . . . 100

36. Distribution of Transport User Average Ratings
of Usefulness . . . . . . . . . . . 101

37. Transport Users‘ Ratings of Usefulness by
Functional Groups of Services . . . . . . 102

38. Distribution of Standard Deviations for Transport
Users' Ratings of Usefulness . . . . . . 103

39. Comparison of Motor Carrier Ratings with
Transport User Ratings . . . . . . . . 105

40. Distribution of MCSP/TUSU Ratios . . . . . . 112
41. Distribution of MCSU/TUSU Ratios . . . . . . 112
42. Distribution of Relative Profitability Ratios . 114

43. Comparison of RP Ratios with MCSP/TUSU and
MCSU/TUSU Ratios by Revenue Size . . . . . 116

44. Comparison of RP Ratios with MCSP/TUSU and

MCSU/TUSU Ratios by Factors Used to

Evaluate Services . . . . . . . . . . 121
45. Comparison of RP Ratios with MCSP/TUSU and

MCSU/TUSU Ratios by Title of Executive

Completing Questionnaire . . . . . . . . 126
46. List of Essential Services . . . . . . . . 143

47. List of Discretionary Services . . . . . . 144

viii

LIST OF FIGURES

Figure Page

1. Types of Highway Carriers by Major Operating
Characteristics . . . . . . . . . . . 19

ix

CHAPTER I

INTRODUCTION

Rationale for Study

 

The nation's transportation system is currently under-
going searching criticism and thorough examination. Debates
are ranging from the halls of Congress, to the news media,
to carrier and shipper meetings and conferences, to trade
journals and magazines, and to the academic community.1 A
sampling of articles during the last several years shows a
consistent theme: What needs to be done to permit the
private common carrier system to survive?2 The discussion
varies, but usually centers on reasonableness of rates,
adequacy oquervice, and carrier profitability of all common
carriers whether rail, highway, air or water.

Shippers are complaining that they cannot obtain

adequate service at reasonable charges. Carriers counter

 

lArt Todd, "You heard it here--on these pages,"
Handling and Shipping, May, 1972, pp. 50-52.

2See: Gilbert Burck, "Transportation's Troubled
Abundance," Fortune, July, 1971, pp. 59-62, 137-139; Lester K.
Kloss, "Can Private Enterprise Continue to Provide Common
Carriage?, Part I," Handling and Shipping, October, 1972,
pp. 45-48; Byron Nupp, 1rCan PfIvate Enterprise Continue to
Provide Common Carriage, Part II," Handling and Shipping,
November, 1971, pp. 47-50; W. K. Smith, "Can Private Enter-
prise Continue to Provide Common Carriage, Part III," Handling

 

that their operating costs have increased to the point that
they can no longer serve some small towns or rural points

nor handle small shipments without losing money.3 Government
and regulatory officials are reacting to the fact that
carriers sometimes violate their operating authorities by
refusing to provide service to all their points or all
industries. The economic conditions of some points or

some industries are being adversely affected by poor or
absent common carrier services.

Common carriers are the only type of transportation
firm obligated to perform service for the general public.
This obligation was clearly outlined in a recent Interstate
Commerce Commission report as arising from their status as
"public institutions" and includes: (1) the duty to serve
equally and fairly all who request their service, (2) the
obligation to transport shipments in whatever volumes they
may be tendered, and (3) to serve their authorized points

without unjust discrimination.5 The I.C.C. went on to say

 

and Shipping, March, 1972, pp. 62-64; Lawrence M. Lesser,
1rWill Privately Owned Transport Survive?" Traffic Management,

 

3Terry P. Brown, "Many Small Truckers Go Out of
Business; Costly Labor Pact and Recession Blamed," The Wall
Street Journal, Wednesday, February 4, 1971, p. 28.

 

 

4"New I.C.C. Regulation Vitally Important to All
Carriers," Trucking Business, May, 1970, p. 42.
5

"Restrictions on Services by Motor Common Carriers;
Ex Parte No. MC-77," February 18, 1970, as found in SEE
Federal Carriers Cases, 1968-1970, Vol. 18, Commerce Clearing
House, Inc., Chicago, Illinois, 1971.

that in the enjoyment of their benefits as common carriers
"they may not exercise their rights to the end that they
carry only that traffic which is particularly lucrative,
while they refuse service for less desirable traffic."6
Yet, some common carriers are faced with financial conditions
such that drastic cutbacks of service are necessary in order
to avoid bankruptcy.

During the last two years several major railroads
and a number of motor carriers, both large and small, have
been forced to bankruptcy.7 Railroad financial problems
are so serious that direct subsidy or government ownership
are being considered as alternatives to keeping them a part
of the transport system. Motor carriers probably do not
face the prospect of government takeover; nevertheless, a
continuance of the failure rate among motor carriers could
lead to very serious curtailments or limitations of available
motor common carrier service. One source puts the situation
this way, "Common motor'carriers face no less serious a
challenge than the railroads."8 Another source also
recognizes that the problem applies to motor common carriers

as well:

 

61bid.

7Brown, p. 28.
8Peter S. Douglas, "Logistics and Common Carrier

Myopia," I.C.C. Practitioners' Journal, July-August, 1968,
p. 725.

Although the decline in common carriers can largely be
attributed to the decline in railroads, regulated motor
carriers have also shown a decline in thSir position
relative to private and exempt carriers.

A plethora of recommendations has been made to solve
railroad problems. Few are being advanced to deal with the
motor common carrier. On their own, though, motor carriers
have tried two ways to reverse the downward trend. They
have sought higher rates or tried to restrict their service.
Both methods, however, have the effect of causing diversion
of traffic to specialized, private, or exempt carriage. One
writer, commented on the effect of rate increases:

But rate increases have a limited future within the
trucking industry especially-~for the industry is
particularly vulnerable to traffic diversion to 'do-
it-yourself‘ private carriage operators. The past few
years have seen a marked growth in private trucking to
the point where it poses a serious challenge to the
for-hire industry.‘ Further diversion seems inevitable
as rates continue to rise--and then the industry may
be forced to jack up rates still further to make up
for the traffic losses, in a vicious circle that could
seriously harm the industry if it cannot stabilize the
wage-price cycle soon.10

The loss of adequate common carrier service is
particularly acute for some areas and shippers. One source

referred to the situation as follows:

Other truckers have been cutting back operations,
refusing to pick up small shipments and reducing or

 

9Ann F. Friedlaender, The Dilemma of Freight

Transport Regulation, The Brookings Institution, Washington,
D. C., 1969, p. 111.

10"The Economy: Review and Preview," Transportation
and Distribution Management, January, 1971, p. 21.

 

 

eliminating service to small towns, even though they
often are violating operating charters in doing so.
Shippers in some out-of—the-way spots are finding 11
themselves hard-pressed to get any service at all.
The practice of motor common carriers restricting points
served, commodities handled, and refusing to accept interline
traffic has been the subject of several I.C.C. investigations.
In one instance, the I.C.C. ordered carriers to stop the
restrictive practices or lose their authority altogether.12
The order in this case ". . . resulted from many complaints--
from shippers and Carriers alike-—that the growing trend in
restrictions is increasing shipping cost and limiting
service."13 In another I.C.C. decision, a carrier seeking
to obtain new authority was opposed in the application by
several carriers that had formerly handled the traffic but
had recently restricted their service to the points. The
I.C.C. granted the new authority and added:
. . . when the operating policies of existing carriers
become so oppressive and limited as to prevent shippers
from receiving a service suited to their reasonable
transportation requirements, we cannot allow such
practices (especially as to interline refusal and

higher interline rates) to continue to the exclusion
of all competition.1

The practice of limiting service also leads to private
carriage. In explaining why his firm.went into the private

truck business, one source made the following comment:

 

11Brown, p. 28.

lex Parte MC-77.

l3"New I.C.C. Regulation . . . ," p. 42.

l4Ryder Truck Lines, Inc.--Michigan and Short

Routes, ll4 MCC 852.

We presently have several substantial service gaps
that must be filled. First we are using our long—
haul private carriage to move, per week, approximately
60 to 80 loads that existing carriers cannot or will
not handle. Approximately 60 per cent of our long
haul private fleet loads are multiple pickup and
delivery loads to all destination areas. Also, when
we have equipment shortages to certain destination
territories, we use our fleet to move our products

to those areas. W3 operate this private fleet not
because we want to, but because we_have to (italics
are editOY's). I? i§_fineconom1c§I and it—diverts
company resources from our primary business. We
therefore consider each load that must move in private
carriage to be a failure of existing for-hire service.

 

15

Along the same line of reasoning, another source concluded:

. . . that the fact that fifty-six per cent of the
nation's shippers engaged in some form of private
carriage (and presumably many, if not most, made

this commitment after exhausting all for-hire possi-
bilities) is indicative of the fact that even the most
persistent efforts to improve for-hire service will
not always succeed.l6

An answer to the dilemma facing common carrier
managements may be to increase productivity. But the
carriers also feel that "they have done about all that is
possible in this area under present operating conditions."17

Changes in the state highway weight and length laws could

provide the needed increment in productivity, but these

 

15Starr H. Lloyd, "Food Distribution: A Study in

Beef," Transportation and Distribution Management, September,
1972, p. 23.

16Colin Barrett, "The Elements of Private Carriage:
Part III, "The Managerial Decision," Transpprtation and
Distribution Management, September, 1970, p. 22.

17"The Economy: Review and Preview," p. 21.

changes are not immediately foreseen.18 The likelihood of
getting relief in the form of regulatory changes is,
similarly, remote.19 Nor is it possible that motor carrier
management standing alone can stem the tide of rising wages
and equipment costs. A very dismal future awaits the motor
common carrier unless some way can be found to solve the
dilemma.

A number of motor common carriers have operated
very profitably contrary to the general decline among motor
common carriers. Their managements have apparently found
ways of retaining traffic and/or prospering from the traffic
that they do get. What are these carriers doing differently?
The answer may be found in the following statement: ". . .
the mode whose special peculiarities enable it to Offer the
best cost/service package to the shippers gets the bulk of

the traffic."20

While this refers to "mode," it could
equally apply to the carrier or carriers within a mode.
"Cost/service" package suggests a combination of two very

complex factors. Costs translate into rates. And rates

must be approved through carrier rate bureaus and, also,

 

18"Technology and Highway Transportation," Handling
and Shipping," January, 1971, p. 54.

19John P. Doyle, "General Doyle Comments on Highway
Technology," Handling and Shipping, January, 1971, p. 55.

20"To Eat and Keep Warm," Transportation and Distri-
bution Management, March, 1971, p. 36.

 

 

 

the I.C.C. Shippers are traditiOnally opposed to rate
changes which cause their freight costs to increase. So
the remaining factor, "service," seems to offer the greatest
opportunity for innovative action to solve the problem.

A study of services in the airline industry contained
the following pertinent statement:

Due to the competitive nature of transportation, the
quality aspect of a carrier‘s mix of customer services
has also been brought in sharp focus. There has been

a growing recognition that improvement in quality of
'carrier services is a key to achieving a differential
advantage over competition leading to significant
increases in patronage. Moreover, since government
regulations frequently limit carrier pricing and
routing flexibility, transportation firms are primarily
restricted to competing for new traffic via the quality
of their services. Thus providing the appropriate
level of services in terms of customer preference

and competitive activities has becpme a central area

of concern to carrier management.2

Since airline managements have recognized services as an
area for attaining differential advantage, do not motor
common carriers have a similar opportunity? Is this perhaps
what the successful motor common carriers are doing dif-
ferently? One carrier representative suggests that this
may very well be what happened.

. . . If shippers and carriers would face up to their

mutuality of interests and apply themselves to the

study of potential and the necessary cooperative

efforts to accomplish them, much could be accomplished
for the benefits of all concerned.2

 

21James C. Cotham, III, "Measuring the Quality of
Transportation Services," Transportation Journal, Fall,
1969, p. 27.

22C. D. Hardesty, Jr., "The Problem is Economics,"
Transportation and Distribution Management, June, 1970,
pp. 42.730

 

A shipper representative, in explaining a "last-resort" move
to specialized common carriage instead of general common
carriage, stated that their first step in solving service
problems was always to work with existing carriers and try
to get the services they needed.23 Not all shippers make
their needs known to motor common carriers, however.

. . . many firms, through habit or custom or simple

inertia, are failing to make the best possible use of

existing for-hire services; others might profit by the

solicitation of new servicgi to supplement or replace
those currently available.

The reason for not working as closely as possible
with common carriers to solve service problems is a tradi-
tional mutual antagonism that exists between shippers and
carriers. Such feelings are deeply rooted and are extremely
hard to overcome. Yet, one source claims:

The future of the common carrier depends on its ability
to specialize its services, so that the shipper may
realize operating economies as a result of better
scheduling, integrated materials-handling systems,

and better communications with its carrier-suppliers.

. . . In order to promote efficiency and eliminate
duplication of effort, shippers and carriers must
engage in cooperative systems where neither party

can easily substitute for the services of the other.25

 

 

23"Common Carrier Capabilities: The View from
Xerox," Transportation and Distribution Management, March,
1972, p. 35.

24Barrett, p. 22.

25

Frederick J. Beier, "Carrier-Shipper Interface,"
Transportation and Distribution Management, July, 1970,
p. 36.

10

Common carriers also need to be flexible, adaptive, and
responsive to shipper needs. Another source contends:

Common carriers have thus far retained a prominent

place in our economy by stressing increased flexibility
in their reaction to the new logistics-oriented environ-
ment. This flexibility has most often taken the form
of new vehicles designed to integrate the transporta-
tion function more closely with shippers' manufacturing
and storage facilities.

. . . What many common carriers have learned, to their
sorrow, is that if they are unable to provide the
service modifications a shipper may require so that

he may effect inventory or packaging cost reductions,
the shipper will substitute contract carriage or even
private carriage for the services of common carriers.
Most galling to such common carriers is to see the
shipper actually willing to increase his transportation
expenditures but not for the services offered by common
carriers.2

A subtle danger to both common carriers and their
shipper customers was brought out by the example of a manu-
facturing firm serving two major customers at distant points
via common carrier trucking service:
One of the customers decided to enter private carriage,
using his own trucks to pick up from the shipper's
plant. The common carrier, having lost half of its
traffic, may be forced to increase rates, which in
turn may cause the remaining customer to seek another
source of supply nearer home.27

Thus, the motor common carrier lost business, but signifi-

cantly, so did the manufacturer. The two traditional

antagonists have a mutual interest in finding ways to

 

26Douglas, p. 722.

27Warren Blanding, "The Secret of Service: Entre-
preneurship in Trucking," Handling and Shipping; Presidential
Issue, Fall, 1969, p. 88.

11

improve the quality of transportation services. Yet the
initial action to prevent diversion of traffic must be taken
by the motor carriers. This depends on the carriers' freedom
and willingness to act. One source discusses the freedom of
action of motor common carriers as follows:

Carriers should be free within broad limits to work

with shippers and consumers to develop methods and

rates that will efficiently distribute the goods.

. . . Another freedom of action badly needed is for

carriers to be allowed to respond quickly to oppor-

tunities as they arise. Fast action is a business

,necessity, but for transportation today speed in

improvements in pricing and service is impossible

because of regulatory and fraternal restraints.
There is already evidence that regulatory restraints have
become a major concern of the I.C.C. and should not be as
serious a deterrent to service improvement in the future as
in the past. This, then, would leave only the fraternal
restraints. The ability to overcome fraternal restraints
would seem to depend on informed motor common carrier
managements. They need to know which services are needed
by shippers, which are profitable or unprofitable, and,
just as importantly, which services not currently Offered
may be provided to better respond to shipper needs. To
date, no one has indentified or enumerated all service

possibilities, nOr have services ever been evaluated in

the context of a motor common carrier's total mix of services.

 

28R. L. Bryant, "More Freedom of Action," Transpgzr
tation and Distribution Management, January, 1972, p. 17.

12

The solution to the dilemma facing motor common carriers
may be found in an evaluation of services offered to

transport users. Thus, the need for the present study.

Statement of Objectives

This study will focus on motor common carriers.
The basic objective is to identify services offered in
terms of each carrier's services mix. Next, the study
will seek to determine the relationship, if any, between
the motor common carrier's perceived profitability and
perceived usefulness of services and the carrier's actual
success as measured by average operating ratios. Another
basic Objective of the study is to determine if there is
competitive differentiation among motor common carriers
based on services offered.

In order to accomplish these objectives, the study
will analyze the responses to two mailed questionnaires,
one to a sample of motor common carriers and another to a
sample of transport users. Among the specific questions
which the analysis will seek to answer are the following:

1. Is there an identifiable list of services for
motor common carriers? How can these be classified for
analysis purposes?

2. How many services do motor common carriers
provide? Are there any services that all carriers offer?

3. Is there a relationship between the number of

services offered and a carrier's actual success? Growth?

13

4. Is there evidence that motor common carriers
respond to transport user needs in terms of offering new
services?

5. How do motor common carriers evaluate the relative
profitability of each identifiable service that they provide?
What happens when a carrier does not have knowledge of its
services' contribution to net revenues?

6. Is there a relationship between a carrier's
overall average profitability ratings of services and its
actual success as measured by average operating ratios?

7. How do motor common carriers perceive their
services in terms of usefulness to transport users? Are
these ratings close to the ratings given the same types
'of services by transport users.

8. How do transport users rate the usefulness of
-motor common carrier services?.

9. Are there certain services that can be considered
basic or essential to a motor common carrier's services'

mix?
10. What opportunities exist for competitive dif-
ferentiation in the services offered by motor common carriers?

The results of the analysis of motor common carrier
services should have important implications for the problems

currently facing many carrier managements.

CHAPTER II

SERVICES IN THE MOTOR COMMON

CARRIER INDUSTRY

Importance of the Industry
Highway transportation has attained a remarkable
record of growth since World War II.1 'One measure of growth
is its share of total ton-miles of intercity freight traffic,
which has increased from 9.1 per cent in 1946 to 22.3 per

cent in 1971.2

The nation's railroads, by comparison,
suffered a decline during the same period from 66.6 per cent
in 1946 to only 38.5 per cent in 1971. Freight revenues are
another measure of relative importance, but unfortunately,
accurate data for highway carriers are available only for
the federally regulated segment of the industry. The
regulated motor carriers increased their share of revenues
from slightly over 20.5 per cent in 1946 to 53.1 per cent

3

in 1971. Railroads dropped from 74.4 per cent to 38.8 per

 

1C. M. Glenn, "Long Run Industry Trends Hint at

Future of Trucking Industry," Trucking Business, January,
1971. pp. 8-10.

 

2American Trucking Trends 1972, American Trucking
Associations, Inc., Washington, D. C., 1972, p. 7.

31bid., p. 16.

14

15

cent in the same time period. In fact, the regulated motor
carriers have exceeded railroad revenues in every year since
1963. Omitted from the motor carrier revenues are any
amounts for for-hire carriers that operate in intrastate,
local, or exempt service, and the value of services generated
by the rapidly increasing private carriage operators. If
these were estimated and added in, one source suggests that
the total value of all highway transportation service would
approximately triple the federally regulated motor carriers
revenues.4 According to T.A.A., highway transportation
probably accounts for over 70.0 per cent of the nation's
total expenditures for the movement of freight traffic.
Regardless of the basis of measurement, then, highway
transportation represents a vital part of the nation's
transportation system.

The growth of the highway transportation industry has
been credited to the truck's ability to improve the procure-
ment and distribution activities of transport users.5 The
highway vehicle is conceded to have an inherent advantage
over competing modes of freight movement when performing
door-to-door service, when the shipment moves over short to
medium distances, and when prompt delivery is necessary.

Highway carriers are both competitive with and complementary

 

Transportation Facts & Trends, Transportation
Association of America, 8th Edition, 1971. 3

5Glenn, p. 8.

16

to other modes. They are competitive when they strive to
move the same commodities or provide Similar services to

meet transport user needs; they are complementary when they
coordinate their facilities or services with other modes.

The highway vehicle is particularly suited to assist the
modern businessman in attaining a reduction of inventory
costs yet avoiding the costs of stock-outs. Orders can be
placed more frequently and in smaller quantities with
reliance on the motor carrier to provide prompt delivery

for replenishment of inventories. Many transport users

are almost exclusively dependent on motor carriage for all
transport needs, i.e., for inbound delivery of raw materials
or supplies as well as the movement of finished products to
customers. Highway transport has been an important factor in
the market expansion of many businesses through its ability
to reach and serve almost every city or hamlet in the country.
It contributes, therefore, to the decentralization of
pOpulation and industry, and is a major reason this country

is a nation on wheels.

Types of Highway Carriers
The nation's transport system has a great stake in
the continued existence and Operating efficiency of motor
common carriers. Only the common carrier holds itself out
to serve the large or small shipper, the rural as well as

the metropolitan area, and the regular or infrequent shipper.

17

Yet, the motor common carrier is not the only type of highway
carrier. In addition to the cOmmon carrier, other specific
types of carriers have been defined by the Interstate Com-
merce Commission to include contract carriers, private
carriers, and exempt carriers.6 While these definitions

are significant from a regulatory standpoint, a more detailed

 

6Part II of Interstate Commerce Act, Act of August,

1935 (Public No. 255, 74th Congress: 49 Stat. 543; U. S.
Code, Title 49, Sec. 303).

Section 203 (a) (14). The term "common carrier by motor
vehicle" means any person which holds itself out to the
general public to engage in the transportation by motor
vehicle in interstate or foreign commerce of passengers or
prOperty or any class or classes thereof for compensation,
whether over regular routes or irregular routes. . . .

Section 203 (a) (15). The term "contract carrier by motor
vehicle" means any person which engages in transportation
by motor vehicle or passengers or property in interstate or
foreign commerce, for compensation (other than transporta-
tion referred to in paragraph [14]), under continuing
contracts with one person or a limited number of persons
either (a) for the furnishing of motor vehicles for a
continuing period of time to the exclusive use of each
person served or (b) for the furnishing of transportation
services designed to meet the distinct needs of each indi-
vidual shipper.

Section 203 (a) (17). The term "private carrier of property
by motor vehicle" means any person not included in the terms
"common carrier by vehicle" or "contract carrier by motor
vehicle," who or which transports in interstate or foreign
commerce by motor vehicle property of which person is the
owner, lessee, or bailee, when such transportation is for
the purpose of sale, lease, rent or bailment, or in further-
ance of any commercial enterprise.

Section 203 (b) contains the list of carriers.exempted from
the economic regulations of the Interstate Commerce Act.

This list includes essentially the following: school
vehicles, taxicabs, hotel vehicles, park vehicles, OOOperative
vehicles, vehicles transporting farm products, newspapers, or
any transportation incidental to rail or air, within com-
mercial zones, and vehicles used for occasional or reciprocal
transportation.

l8

typology of highway carriers is necessary for this study.
Figure l on the following page uses eight Operating
characteristics to define differences among motor carriers.

The broadest differentiation in the typology occurs
on the basis of for-hire or private carriage, as can be seen
at the first nodal point. A further breakdown of the private
carriage classification into intercity or local, interstate
or intrastate, and long haul or short haul is possible but
not necessary. Since private carriage must be incidental
to another business activity, a private vehicle operation
may become almost anything the owner desires it to be in
fulfilling the transport needs of that business.

The second nodal point divides for-hire carriers
between intercity and local Operations. A local carrier
limits its Operations entirely to a city or the adjacent
commercial area. On the other hand, an intercity carrier
is primarily concerned with freight movements between cities.

The third nodal point distinguishes types of carriers
on the basis of whether they are regulated or not. The
regulations involved could be those of the I.C.C. or one
of the state regulatory agencies. Most local carriage is
not subject to economic regulation by either federal or
state agencies.

- The fourth nodal point separates interstate from
intrastate Operations. Interstate carriers handle shipments
between states, while intrastate carriers transport shipments

within a state.

19

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mu—hm—xukugu 9.2.53.5 sons. 5 935—5. ><Iau= no mum»... .~ 5.52...

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20

The fifth division of carriers is made according to
definitions contained in the Interstate Commerce Act for
common and contract carriers. Since contract carriers
tailor their Operations to the specific needs of each shipper
they serve, no additional classification of them is necessary.

Common carriers, though, can be further sub-divided
several times on the basis of long-haul or short-haul oper-
ations, regular route or irregular route, and general purpose
or specialized, as shown at all subsequent nodal points. The
long-haul common carrier concentrates on movements of freight
between a specified number of key points some distance apart.
The short-haul common carrier handles shipments to or from
many points in an area or along a route; shipments may have
had prior or will have subsequent movement by a "long-haul"
carrier. 1

The distinction between regular route and irregular
route common carriers is made on the basis of specification
of highways used or points served. Regular route carriers
use named routes to reach specified points and typically
provide service with known or advertised frequency. Ir-
regular route common carriers operate to or from named points
and surrounding areas, or between all points within a defined
territory whenever sufficient volume of freight is available.

The general purpose common carrier looks to a broad
base of customers for traffic and seeks to handle all freight

tendered to it for movement. The specialized carrier,

21

however, handles only a limited type of freight or serves
only those shippers desiring movement of a particular type
of freight for which it had equipment and/or operating
authority.

Most common carriers operate under several combina-
tions of the above facts. For example, they may have applied
for and received operating authority which fits them into
more than one type, or they may have purchased another
carrier which already possessed other types of authority
and Operations. The present study will use this typology
to define precisely the type of mOtor common carrier to
be examined. Carriers to be studied will be those highway
carriers that are for-hire, intercity, regulated, inter-
state, common, and any combination of long-haul or short-
haul, regular or irregular route, and general purpose or

specialized carriage.

Motor Common Carrier Services
According to economists in the field, the basic
service of a carrier is transportation and involves the
creation of time and place utility by the movement of

property or passengers.7 Essential to the present study

 

7See: G. Lloyd Wilson, Transportation and Com-

munications, Appleton-Century-Crofts, Inc., New York, 1954,
p. 5-7; Frank H. Mossman and Newton Morton, Principles of
Transportation, The Ronald Press Company, New York, 1957,
p. 3; Dudiey Pegrum, Transportation Economics and Public
Polic , Richard D. Irwin, Inc., Homewood, IIlinois, 1963,
p. 4; Marvin Fair and Ernest W. Williams, Jr., Economics
pf Transportation, Revised Edition, Harper & Brothers
Pfiblishers, New York, 1959, p. 3.

 

 

22

is the fundamental question, "What does a motor common
carrier do?" Other considerations pertinent to the funda-
mental question might be: Are there variations on the basic
service of transportation which are identifiable as such?
Does a motor carrier have just one thing to offer, i.e.,
transportation service? If the latter question is answered
affirmatively, then there would be little need for this
study.

A recent study by Oi and Hurter contends that there
is only one service and variations that exist are only
attributes of its quality:

The concept of 'service' simply refers to the quality
of transportation. Under the mantle of 'service' are
included such features as speed, damage to goods,

night deliveries, flexibility of schedules, and split
deliveries. These features, or attributes, are related
to, but are not an essential part of, the spatial
movement of goods. Taken together, they constitute

the quality of the transportation activity.8

In a footnote the authors go on to explain further their
concept of "service."

This treatment of service is analogous to that of
quality for physical goods. An automobile thus is
basically a four-wheeled vehicle with an internal
combustion engine. The addition of such features

as greater horsepower, cushioned seats, and automatic
transmissions contributes to the quality of an auto
but does not alter the basic product. In the case

at hand, the only intrinsic difference is that
transportation is itself a service and not a tangible
good.

 

8Walter Y. Oi and Arthur P. Hurter, Jr., Economics
of Private Truck Transportation, Wm. C. Brown Company
Publishers, Dubuque, Iowa, 1965, p. 49.

9

 

Ibid.

23

They seem to reject the existence of an assortment of
services performed by motor common carriers, at least in
the context of the quality of service. This is, however,
where they differ with other authorities.

A leading motor common carrier's president recently
commented on the subject by saying, "Motor carriers have only
one product line--service--and each unit of service must make

a profit contribution."10

While he used the term "one
prOduct line" he does refer to "each unit of service," which
suggests that there may exist more than one service within
a motor carrier's service line.

Ample support for the argument that motor common
carriers offer more than just one service can be found in
a survey of transportation literature.

A textbook on motor transportation by Charles A.
Taff, Commercial Motor Transportation, contains the following

references to services:

The primary duty of the sales department is to sell
the services provided by the Operating department of
the company. . . . He (the salesman) must know the
services which can be rendered by each department oil
tHe company when it appears desirable or necessary.

Stopping-in-transit . . . is an extra transportation
service for which the carrier is entitled to receive
add1t10nal compensation.

 

 

10W. D. Baker, "Motor Carrier Management Strategy,"

Transportation Journal, Fall, 1968, p. 48.

11Charles A. Taff, Commercial Motor Transportation,

Richard D. Irwin, Inc., Homewood, Illinois, 1969, p. 365.

lzIbid., p. 337.

24

Q 0 O I O O l
D1ver51on or recon51gnment IS an accessorial serV1ce. 3

l4

 

Consolidated pickup and delivery service . . .

In-bond shipments also are treated somewhat differently
from ordinary shipments.15

Leased equipment operating in interchange service can
be scheduled for return to the originating carrier.l6

 

Seven types Of trailer-on-flat car (piggyback) service
have been develOped.l7

Regular route scheduled service may be performed . . .18

There are some motor carriers which operate certain
scheduled hours of departure for over-the—road runs.
Others may have only one scheduled departure at a
specific time, which is referred to as a 'hot-shot'
run. A number of carriers which have made use of the
hot-shot run have found that too many shippers desire
all their freight to go on that particular run. Hence,
many carriers which had instituted this service have
discontinued the operation.19

Before shipments are accepted from a shipper or a
connecting carrier, all pieces of each LTL shipment
should be tagged or marked showing the consignee's
name and destination. It is the shipper's responsi-
bility to mark and tag each piece of freight, but if
he fails to do this the carrier's representative
receiving the freight must mark and tag it.20

Distribution service . . .21

There are many additional services for which charges22
are made, but the ones discussed are representative.
There are often times when a transportation salesman
will make suggestions that will improve packing methods
or aid in solving problems in the shipping department.23

 

13 14 15

Ibid., p. 345. Ibid., p. 270.
17

Ibid., p. 264.

16 18

Ibid., p. 221. Ibid., p. 130. Ibid., p. 415.

19 20 21

Ibid., p. 268 Ibid., p. 264. Ibid., p. 336

221bid., p. 346. 23Ibid. p. 367.

25

Another authority, Fritz R. Kahn, in his book
entitled, Principles of Motor Carrier Regulation, also
supports the idea of many services:

Services which a carrier is not required to perform
are known as accessorial services, and the charges
therefore, should in themselves be compensatory.2

Unloading freight from rail pool cars and segregating
the several shipments prior to loading them on the
carrier's line-haul vehicles is an accessorial service
that differs from the usual pickup ofitraffic at a
shipper's warehouse platform and is not embraced in
the functions of receiving and preparing freight for
transportation.25

 

Partial deliveries or stops to partially unload in
transit have been distinguished as separate services
from split deliveries at destination . . .25

Express service is marked by undertakings to provide
services superior to that normally required and
furnished for ordinary freight.2

The collection and remittance of C.O.D. charges is an
extra service which is of value to the shipper and
consignee 28

Refrigeration is another ancillary service for which
a charge separate from the transportatiOn charge
should ordinarily be maintained. 9

 

Loading and unloading are transportation services
normally performed by a motor carrier and are included
within his line-haul charges. Transit service, however,
is of a special nature.30

The performance of pickup and delivery service at the
basement or floors not directly accessible to thI
highway vehicle would be an extra service . .2.3

 

 

24Fritz R. Kahn, Principles of Motor Carrier
Re ulation, Wm. C. Brown Company Publishers, Dubuque,
Iowa, I958

 

 

 

I p. 197.
2511616. 26Ibid. 26Ibid. 27Ibid., p. 198.
28.I_b_i_<_ji_. 2911939. BOIbid. 3llbid., p. 199.

26

When viewed from the transport user's side, the
same support for a number of services is found. Taff, in
his new book entitled, Management of Physical Distribution
and Transportation had the following comments.

Carriers offer many special services that have been
designed to accommodate the physical distribution
manager and influence his selection of carriers.

. . . There are many others, the titles of which are
explanatory, such as exclusive use of vehicles, inside
delivery, Saturday and Sunday collection and delivery,
segregation of shipments, redelivery, and articles
requiring special handling.32

A most important special service, and one which
possesses many technical aspects, is the transit
privilege.33 ‘

Storage is a service in connection with transportation
and is an actual part of transportation service only
to the extent of normal and necessary holding of
property during the movement and fOr the period
normally required to make delivery. . . . Storage
generally is thought of as only applying to less-than-
carload (LTL) shipments warehoused by carriers before
transportation service has begun or after it has been
completed.34

Colton and Ward in their book entitled, Practical

 

Handbook of Industrial Traffic Management, add to the
evidence of an assortment of services in the following

comments on service:

 

32Charles A. Taff, Management of Physical Distri-

pption and Transportation, Richard D. Irwin, Inc., Homewood,
Illinois, 1972, p. 411.

33Ibid.

34Ibid., p. 417.

27

Wherever possible, it is advisable to choose a carrier
that offers single line service from origin to desti-
nation.35

Some motor carriers do place on their trailers pallets
that may be interchanged with an equal number of
pallets either at origin or destination.36

Expediting is making arrangements for the transport of
goods prior to shipment so as to get them to their
destination quicker than they would arrive without
assistance. Tracing is following the shipment to get
a record of its movement. Both are services normally
provided many times every day . . 7

Warren Blanding, in his article for the 1969
Presidential Issue of Handling & Shipping magazine entitled,
"The Secret of Service: Entrepreneurship in Trucking," uses
the concept of a "service complex" primarily in connection
with a carrier's routes and commodities. He does, however,
discuss what might be classed as a consultative service
' being provided by Mason & Dixon Lines through "marketing
coordinators:"

These men are assigned to single industries or groups
of closely related industries and are specially trained
in the transportation requirements and distribution
economies of those industries. They are, in effect,

a type of consultant, both to their shippers and to
their employers: to their shippers in the most
efficient use of transportation services, based on
considerations of procurement, production, distribution,

inventory, marketing practices and trade customs as well
as competitive situations and product requirements; and

 

35Richard C. Colton and Edmund S. Ward, Practical
Handbook of Industrial Traffic Management, The Traffic
Service CorporatiOn, Washington, D. C., 1965, p. 124.

36

 

Ibid., p. 186.

37Ibid., p. 317.

28

to their employers in terms of the types of services
that can be developed to best serve customers and at
the same time provide a fair rate of return.38

In an article entitled, "Common Carrier Capabilities,"
Transportation and DistributiOn Management, George Gecowets
describes another type of consulting service performed by
Consolidated Freightways. This carrier has an information
center containing 3500 tariffs and guides. They staff the
center with eight trained researchers who can provide
detailed answers to shipper's problems:

A shipper of aluminum products had volume commodity
rates established to specific points. He also had
shipments to various other points. What he needed
was a detailed guide that indicated routings over
which the LTL points could be served and at the same
time be held intermediate to the key volume points.
This would let him consolidate the LTL shipments into
truckloads and benefit through the savings by stopping
in transit for partial unloading at the various LTL
points.

He called in the information center. Center researchers
contacted numerous carriers to verify many of the
routings, especially with intermediate applications
involved.

The guide they prepared proved to be so successful
that he periodically returns it to the center for
updating.39

Frederick J. Beier, writing in the Transportation

 

Journal, in an article, "The Role of the Common Carrier in
the Channel of Distribution," describes other advisory or

consultative activities:

 

38Blanding, p. 88.

39George Gecowets, "Common Carrier Capabilities,"
Transportation and Distribution Management, May, 1968,
p. 49.

29

Further, carriers may be able to provide information
concerning means of reducing transportation costs either
through strategic locations or technical assistance in
the area of packaging and materials handling. Thus,

the carrier is able to provide input information con-
cerning market research and Operational problems of the
shipper. When these activities are clearly lacking
within a firm, the carrier should be willing to assume
them to the extent of his ability and act as a staff
consultant to the shipper.

Another function which can be performed by the carrier
is to act as a clearing house of information and a
coordinator of action by channel participants. For
example, the carrier can gather information as to the
transportation and materials handling requirements of
those firms in the channel with whom it deals. After
the data are digested and analyzed the carrier may be
in a position to suggest compatible handling systems
and techniques to all relevant channel participants.
Such a process is often necessary, for example, in
order for succeeding members of a channel to adopt
compatible materials handling systems. Where many
carriers participate in the channel movement they may
further pool their information so that needs of all
channel members can be made known to all carriers.

In this case, a single carrier can act as a middleman
between the shipping firm and the rest of the trans-
portation industry. This is presently done in regard
to rate making and routing procedures--there appears
to be no reason why it cannot be done in terms of an
information exchange. The individual carrier's
responsibility is to turn such data into meaningful
programs for the shipping firm.4O

An examination of motor common carrier advertisements
also reveals many instances of unique services carriers
provided. One example found in a carrier's house organ
will illustrate what a new service can mean to the carrier:

ATL's new 'Protect' program for special shipments is

exceptional service, says George C. Powell, manager
of cargo claims and customer service.

 

40Frederick J. Beier, "The Role of the Common
Carrier in the Channel of Distribution," Transportation
Journal, Winter, 1969, pp. 17-18.

 

30

It costs more money, and it doesn't bring in any
additional revenue itself. But it's the kind of
prOgram that makes for satisfied customers, for
repeat customers, for new customers.

Each shipment is specially marked and specially
handled all the way through the ATL system.

It cost more to 'Protect' a shipment, sure, but it
pays off in customers who are pleased and gratified
to know that something they want delivered in a
hurry can be delivered in a hurry.

It is working—-and it means more business every day
for ATL.41

Many variations on the basic transportation service,
therefore, can be identified and are commonly used by carriers

and the bulk of writers on the subject.42

Definition of Service

 

The word "service" will be defined for the purpose
of this study to mean anything that a motor common carrier
does for its customers, whether charged for or not, which
helps customers perform procurement and distribution activi-
ties. This brOad definition also allows the examination of
any indirect non-transportation services the carrier provides,
recognizing that the latter group of services may contribute
indirectly to carrier profitability by developing more

satisfied or loyal customers. Some services may be required

 

41"New 'Protect' Program Pays Dividends," ATL
Dispatcher, September, 1972, p. 4.

42Gayton E. Germane, Nicholas A. Glaskowsky, Jr.,
and J. L. Heskett, Highwserransportation Management,
McGraw-Hill Book Company, New York, 1963, p. 123.

31

by either regulatory authority or by competitive pressures
from other carriers. However, discretionary managerial
action could be used to elect to provide other services,
thus attaining a degree of differentiation.

Two broad classifications of services, based on the
degree of competitive differentiation possible, can be
identified. The first, an essential group, would include
services that almost all carriers provide. The second, a
discretionary group, would include those services that
some, but not all, carriers provide.

The combination of services in the first essential
group with some of those from the second discretionary group,
provides each carrier with the opportunity to have a unique
Offering of services and represents an individual carrier's
"services mix." Specifically, a "services mix" is defined
as that assortment of services which, from its operating
authority, managerial interest or competence, and response
to competitive and customer pressures, the carrier offers
to its perceived market. The "services mix" provided by a
carrier may be its only opportunity to become differentiated

in a highly competitive industry.

Typology of Services
A list of sixty-eight specific and four "other"
services can be developed using the sources mentioned in

the foregoing discussion as found in the available literature,

32

from motor common carrier advertisements, tariffs, and
routing guides, and from interviews with carrier manage-
ments. The seventy-two unique and identifiable services
fall naturally into five functional groupings.

Group I. Line-Haul Services

Group II. Pickup Or Delivery Services

Group III. Services Requiring Special Equipment

Group IV.- Terminal Services

Group V. Advisory Services
There are twenty-three Group I services, seven Group II,
fourteen Group III, eighteen Group IV, and ten Group V.
A complete listing of each service is shown in Table l and

also in the Sample Questionnaires included as Appendix I.

Gropp I. Line-Haul Services

 

Services in this group are related directly to the
basic line-haul transportation in the movement of freight
between the origin and destination. These are services
that are offered by most carriers. Yet some discretion and
selectivity would be possible for the individual carrier.
For example, all carriers offer LTL and TL services, but
not all necessarily operate with published dispatch
schedules, nor would all have a small package express

service.

Group II. Pickup or Delivery Services

 

This group includes pickup and delivery services in

addition to the ordinary pickup and delivery activities

33

 

 

 

 

 

TABLE l.--Identifiable Motor Common Carrier Customer Services.
Service
Number Description of Service
Group I. Line-Haul Services
1 Less-than-truckload
2 Truckload
3 Volume
4 Direct or single line
5 Interline
6 Trailer interchange
7 Air/Truck connections
8 Rail/Truck connections
9 T.O.F.C.
10 Water/Truck connections
11 Published dispatch schedules
12 Special handling for emergency shipments
13 Expedited shipments
14 Exclusive use of vehicle
15 Loading/Unloading service
16 Reconsignment/Diversion
17 Consolidation/Distribution
l8 Stop-Offs in transit for partial loading or unloading
19 Other In—transit privileges
20 Bonded or Customs shipments
21 Small package express
22 Return of empty pallets, bins, racks, cages, etc.
23 Other Line-Haul services
Group II. Pickup or Delivery Services
24 Scheduled pickup or delivery
25 Intra—plant split P & D
26 P & D at private residences
27 P & D at off-hours
28 P & D at positions not immediately adjacent to vehicle
29 Redelivery
30 Other pickup or delivery services
Group III. Services Requiring Special Equipment
31 Refrigerated or humidity controlled trailers
32 Heated or insulated trailers
33 Tank or bulk liquid trailers
34 Hopper or dry bulk trailers
35 Open-top trailers
36. Flat-bed or low-boy trailers
37 Converter-vans
38 Hi-cube vans
39

Air-ride trailers

34

 

 

 

TABLE l.--Continued.

Service

Number Description of Service
40 Containers (any size)

41
42
43
44

Bins, cages, racks, or pallets provided by carrier
Tie-down & special stowage devices

Double-floors, stabilizers or compartments

Other special equipment

Group IV. Terminal Services

 

45 C.O.D. shipments
46 Order/Notify shipments
47 Export documentation
48 Sorting or segregating shipments
49 Marking or tagging freight
50 Storage or warehousing
51 Packing or crating (including re-packing or recrating)
52 Armed guard and/or escort vehicle
53 Furnishing extra driver
54 Furnishing helper labor
55 Direct advertising on carriers vehicle
56 Rate quotations
57 Route selections
58 Shipment tracing
59 Proof of delivery
60 Advanced notification of arrival to consignee
61 Pre-arrival confirmation to shipper
_62 Over, short, or damage location
Group V. Advisornyervices to Customers
63 Distribution cost studies or audits
64 Loss & damage claims prevention programs
65 Advice on packaging materials, packing methods and
loading techniques
66 Advice on order size or shipment quantities
67 Assistance in shipment documentation
68 Advice on materials handling or shipment preparation
techniques '
69 Advice on inventory control systems
70 Warehouse or plant site location studies
71 Advice-on shipping and receiving facilities
72 Other advisory services

 

35

contemplated in regular LTL or TL freight movements. The
opportunity to meet particular customer needs would seem
to exist in the carrier electing to provide one or more of

these.

Group III. Services Requiring Special Equipment

Among these services are those things a carrier can
do for a shipperwhich are related to the acquisition and
use of special equipment. Prime examples are Service No. 40
(Containers), Service No. 41 (Bins, cages, racks, or pallets
provided by carrier), and Service No. 43 (Double-floors,

stabilizers or compartments).43

While several services may
seem to be linked to special Operating authorities (and
many are), e.g., tank or bulk liquids, hopper or dry bulk,
or refrigerated or humidity controlled trailers, most motor
common carriers have an opportunity to respond to a variety
of shipper demands for Group III services requiring special

equipment and therefore can differentiate their service

offerings from other carriers.

Group IV. Terminal Services

 

Included in this group are all activities of a
motor common carrier normally performed within freight
terminals and functionally related to freight movements.

Among them are information services such as rate quotations,

 

43All service numbers refer to Table 1, pages 33

and 34.

36

route selections, shipment tracing, proof of delivery,
advanced notification of arrival to consignee, or pre-

arrival confirmation to the shipper.

Group V. Advisory Services

This last group includes the non-transportation
and non-revenue activities of a motor carrier. They
usually are performed by the sales or customer relations
department and are not functionally related to the freight
movement as such. The consulting activities referred to
earlier44 would be included in this group. The extent to
which a carrier offers advisory services is probably a
true measure of its total responsiveness to the physical
distribution environment that has evolved among transport
users during the decade of the 1960's.

Individual services included in the total of the
seventy-two listed are in each instance different ; yet,
they are not mutually exclusive but are inter-related. The
aggregate of a carrier's services represents the quality of
service a carrier seeks to provide for its customers, and

this "services mix" will be the subject of investigation

in this study.

 

44Blanding, p. 88.

CHAPTER III

THE SURVEY OF MOTOR COMMON CARRIERS

AND TRANSPORT USERS

Selection of Samples

The data for the study was obtained from two mailed
questionnaires. One was sent to motor common carriers. The
other was sent to transport users. Responses to the question-
naires were analyzed to find answers to the questions con-
cerning the number of services offered, the motor common
carrier ratings of profitability and usefulness, transport
user ratings of usefulness and the inter-relationships of
these ratings with motor carriers' actual profitability.
Transport user responses were used primarily as a check of
the actual usefulness of services Offered by motor common
carriers.

Motor common carriers in the survey were those that
had operations in the area defined by the I.C.C. as the
Central Region, which includes the four states, Ohio,
Indiana, Michigan, and Illinois. The transport users were
those industrial and retail firms that had plants and/or
warehouses in the same four states.

Three technical criteria were used in selecting the

specific motor common carriers for the survey:

37

38

1. Carriers had to be domiciled or had to have
Operations and terminals in the Central Region. (This
permitted the inclusion of a number of carriers that had
home offices outside the Central Region but nevertheless
had substantial competitive impact within the region.)

2. A carrier's Operating characteristics included
for-hire, intercity, regulated, interstate, common carrier,
and any combination of long-haul or short-haul carrier,
regular or irregular route, and Operating under general
purpose or specialized authority.

3. Operating statistics were available from the
carrier's annual reports to the I.C.C. for the period
1960-1971. (This would mean that the carrier had been in
existence and had survived as an entity during the period.)

A total of 178 motor common carriers were selected
using the above criteria. In 1969 these carriers represented
slightly over 5 per cent of the total number of motor common
carriers in the nation, but they accounted for over $4
billion in revenues, or over 30 per cent of the total
freight revenues for regulated motor common carriers.
Operating statistics were obtained from a publication

entitled Carrier Reports.1

 

 

1Carrier ReportsslfiFinancigl Rsports on the Nation's
Leading Carrier, Carrier Reports, Old Saybrook, Connecticut,
Annual issues, 1960-1971. '

39

A total of 150 transport users were chosen from the
Official Directory of Commercial Traffic Executives,2 a
publication which lists names of traffic oficials for
approximately 7000 firms. Approximately 1500 of these
firms had facilities in the four Central Region states. A
systematic 10 per cent sample of 150 firms was selected by
picking at random a number between one and ten and taking
every tenth firm thereafter. The 150 firms chosen in the
sample represented a cross-section of business activities,
including heavy steel, fabrication, assembly, food
products, manufacturing, rubber, plastics, and retailing.
They had plants and/or warehouses in large cities as well

as small towns.

The Motor Common Carrier Questionnaire

The questionnaire mailed to the sample carriers is
included as Appendix I. Three questions in Part II of the
questionnaire were used to evaluate services of motor common
carriers. Question # 1 determined approximately when each
service was first offered. Every motor common carrier's
assortment of services could be identified, therefore,
within each of the three time periods, 1960 or before,

1961-1965, and 1966-1970. Any change in services offered

 

2The Official Directory of Industrial and Commercial

Traffic Executives, The Traffic Service Corporation,
Washington, D. C., 1971.

40

could be determined by the additions or deletions from the
carrier's mix during each period.

Question # 2 sought the carrier's estimate of the
contribution by each identifiable service to the carrier's
net revenues, either directly or indirectly. The specific
method used by the carrier to evaluate services was requested
in Part I, (4), of the questionnaire.

Question # 3 sought the carrier's estimate of useful-
ness to a transport user for each identifiable service.

This would be a measure Of the motor carrier's perception
of contribution to a transport user's procurement or distri-
bution activities.

In each instance, the questionnaire was directed to
the carrier's president or top executive officer for
completion. A stamped self-addressed envelope was included,
and an Offer to send a summary of survey results was made

in order to facilitate response.

The Transport User Questionnaire

This questionnaire is included as Appendix II. It
was directed to the traffic executive in the transport user
firm and was designed to obtain information about exactly
the same services that the motor carriers were asked to
evaluate. Specifically, the traffic executive was asked
to indicate the usefulness of motor common carrier services
in the effective performance of procurement or distribution

activities within his firm. Responses would give an

41

indication of the services actually used by the transport
users as well as the usefulness of the service.

I No attempt was made to match up individual transport
user needs with any specific carrier's services mixes. The
survey sample did not permit this type of comparison. Both
motor common carriers and transport users are identified by
coded numbers only in order to maintain anonymity of
responses. Services are identified by a consecutive
numbering system running from one through seventy-two,
with one exception. When comparisons are made between
motor common carrier questionnaire services and transport
user questionnaire service, Service # 23 is omitted. This
service, "Other Line-Haul Services," was inadvertently
omitted from the transport user questionnaire, and no
transport user responses were received. Since only three
motor carriers listed this service, the omission is not
viewed as seriously affecting the services mix analysis.

Characteristics of Responding Motor
Common Carriers

 

Location
A total of seventy-eight motor common carriers
responded to the survey.3 This represented a 43.8 per cent

response rate. Almost half of the seventy-eight responding

 

3A complete listing of the responding motor common
carriers is included in Appendix III.

42

carriers, thirty-eight or 48.7 per cent, were domiciled in
the Central Region. The remaining 51.3 per cent were based
all over the United States, with five each in Wisconsin,
Pennsylvania, and Iowa, four in North Carolina, three each
in Minnesota and Missouri, two each in Florida, Arkansas,
and California, and one each in Kentucky, Nebraska, New
Jersey, Colorado, Maryland, Alabama, Tennessee, Georgia,
and Utah. Table 2 contains a breakdown by state within

the Central Region and other states. All of the responding
motor common carriers offered transportation services to
transport users in the Central Region and competed with

each other for a share of the total traffic available.

TABLE 2.--Respondent Motor Carriers by State of Domicile.

 

Number
State of Per Cent
Motor Carriers

 

Indiana 12 15.4
Ohio 11 14.1
Michigan 11 14.1
Illinois 4 5.1
Other States 40 51.3

Total 78 100.0

 

Long-Haul and Short-Haul

 

The classification of responding carriers into
either short-haul or long-haul reveals that thirty-one,
or 39.7 per cent, were short-haul while forty-seven, or

60.3 per cent were long-haul. The criteria for_classifying

43

a carrier as a short-haul were: (a) no two major points

in its Operating authority were more than 500 direct miles
apart, (b) most points served were within 300 miles of

point of domicile, or (c) all operating authority was

within a maximum of two states. Carriers not fitting

these criteria were classed as long-haul. The distribution
of carriers between short-haul and long-haul for the Central
Region and other states is shown in Table 3. Proportionately
more short haul carriers would be expected in the respondent
group from the Central Region. In fact, 57.9 per cent of
the carriers in the four states were short-haul, while only
22.5 per cent were short-haul from all other states.
Similarly, 71.0 per cent of all short-haul carriers were
from the Central Region. Only 34.0 per cent of the long-
haul carriers were from the region.

TABLE 3.--Distribution of Carriers: Short-Haul and Long-Haul
By State of Domicile.

 

 

 

 

Domicile No. Short-Haul No. Long-Haul Total
Point

Per- Per Per Per

Cent Cent Cent Cent

of from of from

S—H Area L-H Area
Central Region 22 71.0 57.9 16 34.0 42.1 38
Other States 9 29.0 22.5 31 66.0 77.5 40

Total 31 100.0 47 100.0 78

 

44

Revenue

The responding sample carriers tended to follow the
trend for all the motor carrier industry in terms of revenues.
A few very large carriers accounted for the largest share of
revenue dollars while a large number of small carriers
received only a small share of the market.4 Table 4 contains
the distribution of motor carriers by revenue sizes for the
year 1971. Specifically, the table shOws that 66.7 per cent
of the carriers accounted for only 21.1 per cent of the total
revenues. At the other extreme, 20.5 per cent of the carriers
received a total of 61.9 per cent of the revenue. In fact,
it can be seen that only 7.7 per cent of the motor carriers
had 36.7 per cent of the revenue dollars in 1971. This is
a pattern of concentration of business in a few large firms

that Patton refers to as characteristic of the entire

industry.

Operating Ratios and Growth Indices

The performance of the surveyed carriers can be
compared to the industry on the basis of two factors:
operating ratios and growth. This is shown in Table 5.
The average operating ratio for the period 1960-1971 was

5

95.72. This compares closely to the average of 95.48 for

 

4Edwin P. Patton, "Implications of Motor Carrier
Growth and Size," Transportation Journal, Fall, 1970, p. 47.
5Operating Ratio = Operating Expenses
Operating Revenues

45

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46

 

 

 

 

 

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47

the Class I and II motor carriers of general freight for
the same period.6 Growth is measured in terms of increases
in revenues, which is acceptable as an actual indicator of
growth in output even though it may be affected by rate
increases.7 A growth index was computed for each of the
seventy-eight.responding carriers using their 1960 revenues
as a base. The average growth index for all responding
carriers in 1971 was 299.5. The comparable growth index
for Class I and II motor carriers of general freight was
236.7.8 Though the surveyed carriers apparently had a
growth index higher than the industry average, it must be
recognized that this index represented a composite for all
carriers and does not reflect the effect of mergers or
acquisitions. A merger or acquisition by one of the
surveyed carriers would have been reflected immediately
in the growth index of the surviving carrier. Since the
surveyed carriers did acquire others during the period,
their true growth indices may tend to be overstated in
comparison to industry figures. Increases in revenues by
other than acquisition for the sample carriers were not
differentiable, hence no real direct comparison was possible.
More information about the surveyed carriers can

be obtained by grouping them according to revenue size, as

 

6American Trucking Trends, 1970-1971.

7Patton, p. 35.

8American Truckipg Trends, 1972, p. 17.

48

well as short-haul and long-haul. Table 5 contains this
grouping together with average operating ratios and average
growth indices for each group. There were only six surveyed
carriers with revenues under $10 million that were long-haul
and twenty-two that were short-haul. On the other hand,
only nine short-haul carriers had revenues over $10 million
and the rest were long-haul. No short-haul carriers had
revenues over $50 million. The average Operating ratio
for the thirty-one short-haul carriers was 96.24 and for
the forty-seven long-haul carriers, 95.38. Neither was
statistically different from the other, nor from the
industry average. In terms of operating ratios, the only
conclusion that can be drawn from the averages is that the
short-haul carriers probably did no worse than the long-
haul carriers during the twelve year period.

The average growth index for the surveyed short—haul
9 carriers was 288.5, while for the long-haul carriers it was
311.0. Both were relatively close to the average of the
surveyed carriers and no statistical difference was found
between the two means. Thus, while it would appear that the
long-haul carriers had increased revenues more than the short—
haul and also had better operating ratios, such conclusions
cannot be substantiated statistically.

The groupings of surveyed carriers by revenue size
does reveal some differences in average operating ratios

and growth indices, however. The greatest differences are

49

found between the small carriers and the medium large
carriers. The fifteen small carriers had an average
operating ratio of 96.95 and an average growth index of
209.9. The ten medium large carriers, on the other hand,
had an average operating ratio of only 92.77 with a growth
index of 338.9. The small carriers had the lowest growth
index while also having the highest operating ratios.
The medium large carriers had the greatest increase in
revenues, and also attained the lowest operating ratios.
The forementioned differences in the two revenue
sizes suggest a relationship between a carrier's growth
rate and its profitability as measured by the Operating
ratio. Simple correlation coefficients were calculated
to compare individual carrier operating ratios and growth
indices for each revenue size. The coefficients for each
revenue size are shown in Table 6. The correlation
coefficient for small carriers, as expected was relatively
low at -.234.
TABLE 6.--Correlation Coefficients for Average Operating

Ratio vs. Growth Index for Individual Motor Carriers by
Revenue Size.

 

 

Revenue Size Correlation Coefficients
(r's)
Small carriers -.234
Medium small carriers -.604
Medium carriers -.116
Medium large carriers -.681
Large carriers -.613

A11 carriers -.47l

 

50

The negative coefficient is explained by the fact that the
two sets of data would normally move in opposite directions
from each other for the better level of performance, i.e.,
as the Operating ratio improves it would go down, while
greater growth would be reflected in a higher growth index.
With a coefficient of -.234, there is only a slight relation-
ship between operating ratios and growth for these carriers.
The low coefficient suggests that growth had a lesser impact
on improving these carrier's profits than possibly might be
expected.

The coefficient for the medium small carriers was
fairly high at —.604. At least for this group of carriers
increases in revenues were reflected generally in lower
operating ratios.

The medium size carriers had the least relationship
between operating ratios and growth. Their coefficient was
only -.116. Apparently for many of these carriers increases
in revenues resulted in higher rather than lower operating
ratios.

The highest coefficient was found for the medium
large carriers, -.681. For these carriers an increase in

I O I 9
revenues was accompan1ed by lower operat1ng ratios.

 

An interesting example of what can happen to
operating ratios following an acquisition is found for a
carrier in this group. Two carriers of approximately the
same size were combined in 1967. The operating ratios and
growth indices by years from 1960 for the two carriers are
shown as follows:

51

The large carriers had a correlation coefficient
of -.613. For this group of carriers there was also
apparently a fairly good relationship between growth and
profitability.

The experience of the carrier illustrated in footnote
9 suggests a tempering of any conclusion regarding the rela-
tionship of growth and profitability; growth attained by

acquisition is usually followed by a period of approximately

 

Year Carrier A Carrier B
Operating Growth Operating Growth
Ratio Index Ratio Index
1960 94.27 100.0 95.4 100.0
1961 87.70 110.5 95.9 100.3
1962 85.11 126.9 95.8 115.4
1963 84.85 139.9 95.3 124.2
1964 81.94 156.6 95.4 126.8
1965 79.80 180.8 92.5 143.7
1966 79.82 198.4 94.6 159.6
1967 81.61 204.7 97.9 145.3
1968 92.46 453.6 - -
1969 ' 97.07 585.5 — -
1970 102.14 577.2 - -
1971 95.46 703.5 - -

The combination involved a carrier that had an exceptional
operating ratio record and average growth with another
carrier which was attaining only average Operating ratios

and average growth.

The result was that the surviving

carrier's operating ratio went up almost immediately and

by 1970 was over 100.0.

Revenues also had drOpped slightly
in 1970 probably as a result of the intervention of exogenous

factors affecting the entire industry such as a prolonged

strike and an economic slow-down.

Thus, a very profitable

medium size carrier had suddenly become an unprofitable

medium large carrier.

To the credit of the management and

the removal of the exogenous factors, in 1971 the carrier
had apparently solved many of its problems and was again

attaining a respectable 95.46 operating ratio.

The experience

of this carrier is not isolated in the motor carrier industry
and may be found in the record of such carriers as Consoli-
dated Freightways and Spector Freight System.

52

three to four years of higher operating ratios. During

this period assimilation of the acquired carrier's authority,
facilities, and personnel must be accomplished. Once this
has been done, the combined operatiOns take on the charac-

teristics of the previous acquiring carrier.

Characteristics of Responding Transport Users

One hundred and fifty transport users were mailed
questionnaires and eighty-nine useable responses were
received.10 This was a response rate of 59.3 per cent.
Three other responses were received from firms which
indicated that they did not use motor common carriers
but relied exclusively either on water, rail, or private
carriage. Their responses were not included in the

analysis.

Location

Over two-thirds of the responding transport users
were located in the states of Ohio and Illinois, with the
remainder spread over Michigan and Indiana. Five cities
accounted for 54.0 per cent of the total transport users'
responses. These cities were Chicago, Cleveland, Detroit,
Cincinnati, and Indianapolis. The responding motor common

carriers had terminals located in these same cities from

 

10A complete listing of the responding transport

users is included as Appendix IV.

 

 

 

53

'PABLE 7.-—Transport Users by State of Major Facility
Location.

 

 

State Number Per Cent
Ohio 38 42.7
Illinois 22 24.7
Michigan 16 18.0
Indiana 13 14.6
Total 89 100.0

 

TABLE 8.--Transport Users by Major City.

 

 

Maj” City Number miii $225.32..
Chicago 13 20.2
Cleveland ' 10 11.2
Detroit 7 7.9
Cincinnati 7 7.9
Indianapolis 6 6.7

Total 48 54.0

 

which they could provide service. The rest of the transport
users were scattered throughout the four states in smaller

cities and towns.

Sales

 

The greatest number of transport users, thirty-four
had annual sales between $10 million and $50 million.
Eighteen large firms had sales over $100 million. The

complete distribution according to sales is shown in

Table 9.

54

TABLE 9.--Distribution of Annual Sales of Transport Users.

 

 

Sales Number Per Cent
Less than $5 million 13 14.6
$5 million but less than
$10 million 12 13.5
$10 million but less than
$50 million 34 38.2
$50 million but less than
$100 million 12 13.5
$100 million or more 18 20.2
Total 89 _ 100.0

 

Plant and Warehouse Location

The number and location of plants and warehouses for
responding transport users is shown in Table 10. The total
for the Central Region does not total eighty-nine because
several firms did not indicate the number of establishments.
Most responding transport users had less than five plants
or warehouses in the Central region, but 11.2 per cent had
ten or more. The national and international character of
the responding transport users was suggested by the number

that have facilities throughout the United States and abroad.

snnual Freight Bill

 

The approximate annual freight bill for responding
transport users is shown in Table 11. The largest per-
centage, 38.2 per cent, purchased transportation of over
$1 million while only 14.6 per cent had freight bills of

less than $100,000 annually. These expenditures represented

55

 

 

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56

TABLE ll.--Distribution of Approximate Annual Freight Bill
for Responding Transport Users.

 

 

Freight Bill Number Per Cent
Less than $100,000 13 14.6
$100,000 but less than $500,000 28 31.5
$500,000 but less than $1,000,000 14 15.7
$1,000,000 or more 34 38.2
Total 89 100.0

 

purchases of transportation conservatively estimated at over
$50 million annually, for which the surveyed motor common

carriers would be competing for a share.11

PrimarysProducts

 

The responding transport users manufactured or sold
a mixture of industrial and consumer products. Fifty—nine,
or 66.3 per cent handled industrial products; forty-two, or
47.2 per cent were concerned with consumers. Many handled
both industrial and consumer products. Only seven firms,
or 7.8 per cent, felt that their primary market area was
only within the Central Region while thirty-three, or 37.1
per cent, had both national and international markets for

their goods.

 

11This was calculated by taking the mid-point of
each range and multiplying it times the number of firms,
except in the case of the highest annual freight bill, $1
million was used.

57

Use of Transportation

In terms of their usage of various modes of trans—
portatiOn, over two—thirds indicated they used railroads
for either procurement or distribution. While all used
motor carriers, some transport users indicated motor common
carriers were utilized for procurement only or distribution
only. Contract carriage was used by 46.1 per cent and
private carriage, 52.8 per cent. Many transport users
were utilizing some combination of common or contract,
common or private, or common, contract and private carriage.

The characteristics of the transport users responding
to the survey suggests that they were sufficiently repre-
sentative of the need for motor common carrier services to
be used as a check on the motor carriers evaluation of its
own services rendered. Evidence to support this assumption
is found in the variety of sizes, locations, and types of
.operations involved.

In summary, responses to both questionnaires_
represented acceptable cross-sections of the respective
industries. The responding motor common carriers were
found to include a number of short-haul and long-haul
carriers, a variety of carriers of different sizes, and
a range of carriers with different operating ratios and
growth rates. The responding transport users were found
to represent many different sizes of firms and locations,

with varied products, markets, and usage rates of motor

58

common carriage. The ratings of services contained in these

responses will be analyzed in the next chapter.

CHAPTER IV

ANALYSIS OF MOTOR COMMON CARRIER SERVICES

Responses to the survey questionnaires will be
analyzed in order to find answers to the questions raised
earlier. The first part deals with the number of services
offered by each carrier and the number of carriers offering
each service. Changes during each time period will also be
examined. The second part examines carriers' estimates of
profitability of services and their perceptions of usefulness
to transport users. The third part deals with the transport
users' responses to the questionnaires. The last section
will link motor common carrier ratings of profitability and
usefulness to the transport users' responses in an analysis
to determine the relationship between how well carriers
estimated these factors and how they related to carriers'

actual profitability.

Number of Services

 

A summary of services offered by the seventy-eight
responding motor common carriers is shown in Table 12 by
major time periods—-1960 or before, 1961-1965, and 1966-1970.
In 1960, the average number of services offered by all
carriers was 40.3. Major groupings of carriers were found

in the thirty to fifty services brackets. With the addition

59

 

60

 

 

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61

of services in the period 1961-1965, the average for all
carriers increased to 42.4. Most carriers were still
grouped in the thirty to fifty brackets, but it can be
seen that the carriers Offering more than fifty services
now accounted for 28.2 per cent of the total. During the
years 1966-1970, the highest number of carriers were
offering more than fifty services, 37.2 per cent, and the
average number had increased to 44.0 services. There was
an increase of approximately two services per carrier in
each of the five year time periods.

The number of carriers offering each service varied
during the time periods, also. Table 13 contains the
distribution of carriers offering each service. In 1960,
seventeen services had less than twenty carriers; at the
other extreme, nineteen services were provided by more than
seventy carriers. During 1966-1970 only thirteen services
were offered by fewer than twenty carriers. At the same
time, twenty services were Offered by more than seventy
carriers.

The average number of carriers offering each service
by functional groupings of services is shown in Table 14.
The highest averages are found in Group I and Group II

services and the lowest in Group III and Group V.1 Overall

 

1References to services by functional groupings or
by service number are referring to the list of services
contained in Table 1 pages 33 and 34 or in the Questionnaires
found in Appendix I or Appendix II.

62

 

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nan om

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OhmHlmme mmeIHmmH OHOwwm HO ommH m0 HOQESZ

 

.mOH>Hmm comm mafinmmwo mumwuumu Houoz mo HmoEDZII.MH mqmde

63

TABLE l4.--Average Number of Carriers Offering Each Service
By Functional Groupings.

 

 

Functional 1960 1961-1965 1966-1970
Groupings or
Before

Group I 53.0 55.9 58.3
Group II 58.4 49.4 60.0
Group III 27.7 31.6 35.1
Group IV 47.1 47.8 48.1
Group V 28.3 30.5 31.8

Overall Average 43.7 46.0 47.7

 

averages for each time period increased by approximately two
carriers per year.

Table 15 shows the number of services by carrier
according to revenue sizes. The small carriers offered
fewer services than did the larger carriers. In fact, the
number of services appears to increase with the size of the
carrier. If a difference of means statistical test is used
to compare the average of 39.9 for the small carriers and
47.0 for the large carriers, a "2" value of —l.742 is found.
This value for z is too low to show any significant dif-
ference between the means at the a = .05 level. Nor was
there any difference between the average number of services
for short-haul and long-haul carriers. The variance within
each set of data, i.e., every group of carriers had a wide
range in number of services, accounts for the lack of
statistical significance in the comparison of means or

averages.

64

TABLE 15.--Average Number of Services Offered: By Revenue
Size and By Short-Haul and Long-Haul.

 

 

Revenue Short-Haul Long-Haul Total
Size
of Average Average Average
Carrier Number Number Number
Small 39.3 42.0 39.9
Medium Small 42.4 41.3 42.2
Medium 42.3 46.2 45.2
Medium Large 48.0 44.0 45.2
Large - 47.0 47.0
Total 41.7 45.5 44.0

 

Changes in Number of Services

 

.All of the surveyed motor common carriers except five
had as many or more services in 1970 as they did in 1960.
Fourteen had no changes in services, thirty-two increased
by at least ten per cent, eighteen increased between ten
and twenty per cent, and ten had more than twenty per cent.
The greatest difference was found for Carrier # 70 which
reported an increase in services of eighty-two per cent
between 1960 and 1970.

Changes in number of services was generally associated
with those motor carriers that had a considerable variation
in operating ratios year to year in the time period 1960-1971.
Among the carriers increasing their services more than ten
per cent there were some that had a trend toward lower
Operating ratios; others in the group were experiencing

higher ratios. Almost every carrier which added only a

65

few services had virtually no variation in the level of
their operating ratios, i.e., if operating ratios were
low, they stayed low and, if operating ratios were high,
they remained high. An increase in number of services was
probably a strategy to improve profits for some carriers
and was an attempt to reverse a trend toward lower profits
for others. It was likely that a few carriers actually
made their profit situation worse as they added or dropped
services. The precise relationship between changes in
number of services and profitability was not clear, therefore.

Services that were dropped by motor common carriers
during the time period, 1961-1970, were perceived as
unprofitable by the carriers which discontinued offering
them. One carrier listed a total of eight services dis-
continued. Seven different carriers dropped Service # 31
(refrigerated trailers), four others stopped offering
Service # 20 (bonded or customs shipments) and Service # 37
(converter-vans), three discontinued service # 17 (consoli-
dation/distribution), Service # 39 (air—ride trailers),
Service # 41 (bins, cages, racks, etc.), and Service # 46
(order/notify shipments). Ratings of usefulness to transport
users by these carriers were lower than for other services.
A few carriers, though, chose to drop services with low
perceived profitability even though these same services
were given a reasonable level of transport user need.

There were services in each functional group that

had an increase in the number of carriers offering them.

66

Group III special equipment services increased the most at
over twenty-five per cent. Group I, line-haul services,
and Group V, advisory services, went up by about ten per
cent, while Group II, pickup and delivery services, and
Group IV, terminal services, remained almost the same. The
specific service having the greatest increases are listed
in Table 16.

TABLE l6.--Services With Greatest Increase in Motor Carriers
By Time Period.

 

 

Service 1960 1961—1965 1966-1970
Number or
Before Number of Index Number Index
Number of Carriers of of of
Carriers Increase Carriers Increase

(1960) (1960)
Service # 7 31 42 135.5 48 154.8
Service # 8' 27 40 148.1 47 174.1
Service # 9 26 42 161.5 57 219.2
Service #10 23 27 117.4 35 152.2
Service #11 16 17 106.3 21 131.3
Service #19 28 32 114.3 33 117.3
Service #22 52 58 111.5 64 123.1
Service #37 24 27 112.5 30 125.0
Service #38 50 60 120.0 70 140.0
Service #40 8 18 225.0 27 337.5
Service #41 16 25 156.3 30 187.5
Service #42 29 35 120.7 36 124.1
Service #43 9 17 188.9 29 322.2
Service #48 38 43 113.2 46 121.1
Service #63 20 26 130.0 29 145.0

Service #64 38 42 110.5 47 123.7

 

67

Services involving coordination with other modes of
transportation had particularly significant increases during

the ten years. These services included:

Service # 7 Air/Truck connections
Service # 8 Rail/Truck connections
Service # 9 T.O.F.C.

Service #10 Water/Truck connections

The development of inter-modal containers, as well as an
improved atmosphere and general acceptance by the transpor-
tation industry, contributed to the increase of motor common
carriers offering these services. In every instance, motor
carriers perceived these services as both profitable and
useful. They may have been perceiving an opportunity to
respond to a growing transport user demand for coordinated
transportation, also.

Increases in Service # 11 (published dispatch
schedules) and Service # 19 (other in-transit privileges)
represented an attempt by carriers to attract and hold new
customers by offering regular and dependable service.
Published dispatch schedules could be advertised and
stressed as a sales appeal. Other transit privileges
include all privileges, other than those included in
Service # 18 (stop-offs in-transit for partial loading
or unloading), which allowed the Shipper to stop a shipment
for fabrication, processing, sorting, storage, etc., yet
permitting a through rate to apply on any subsequent
movement of the freight. This service gave the motor

carriers flexibility in competing with railroads for traffic.

68

Service # 22 (return of empty pallets, bins, racks,
cages, etc.) would be linked to the special equipment
services provided in Group III and could be expected to
increase along with them.

All of Group III services, except Service # 31,
(refrigerated or humidity controlled trailers), Service # 32
(heated or insulated trailers), and Service # 36 (flatbed or
low-boy trailers), increased in the number of carriers
offering them. Technological improvements in design of
highway equipment were made during the 1960's, and many
have found their way into the motor common carrier service
offerings.

Only one of the Group IV terminal services increased
during the ten year period. Service # 48 (sorting or
segregating shipments) was a service which enabled motor
common carriers to meet the small shipment needs of transport
users. This service usually took one of two possible forms.
The first was the unloading and segregating of pool car
shipments with a subsequent line-haul movement by the motor
carrier.' The second possibility occurred when a carrier
accepted a number of small shipments loaded and tendered
to it by the shipper at a truckload rate. The motor carrier
broke down the shipment at a point near the destinations and
then distributed each small shipment to its specific con-
signee. Unlike other services which were added, the motor

common carriers adding Service # 48 perceived its

69

profitability to them consistently below the breakeven
point. Ratings of usefulness to transport users were also
below that which were given other services these carriers
offered. The offering of a sorting or segregating service
was probably influenced by the carriers' desire to meet a
definite shipper need and could have been inspired by the
"small shipment problem" discussions.

Two services in Group V were offered by more carriers
in 1970 than in earlier periods. Service # 63 (distribution
cost studies or audits) and Service # 64 (loss & damage
claims prevention programs) were evidence that motor common
carriers were trying to become more customer oriented.
Distribution cost studies or audits and advice on inventory
control systems are services which might give a carrier an
inside track with some customers.

In general, the increases in specific services
during the two five-year periods does suggest that motor
common carriers may have been responding to customer needs.
Technological developments seemed to have contributed
significantly to the increase in number of carriers
offering specific services, also.

Number of Services and Motor Carrier
Qperating_Ratios

 

 

A possible relationship between the number of
services offered by a motor carrier and its profitability

is suggested by comparing the average operating ratios and

70

the average number of services for carriers grouped by
revenue size.2 The less profitable small carriers had fewer
services than the more profitable medium large and large
carriers. A simple correlation coefficient was calculated
using each carrier's operating ratio and its number of
services. The overall coefficient obtained was .015. The
coefficient was so low as to indicate almost no relationship
existed between the two factors. What little that did exist
can be interpreted to mean that higher operating ratios were

associated with a lower number of services and vice versa.

 

Correlation coefficients were next calculated for

each revenue class and are shown in Table 17.

TABLE l7.--Corre1ation Coefficients: Operating Ratio and
Number of Services.

 

 

Revenue Size Correlation Coefficients
of Carrier "r's"
Small .484
Medium Small ' .120
Medium -.298
Medium Large .084
Large .021
All Carriers .015

 

The best relationship was found between operating

ratios and number of services for the small carrier group.

 

2Refer to Table 5 for average operating ratios and

Table 15 for average number of services by size of carrier.

71

‘The correlation coefficient was .484. This positive
coefficient indicated that at least for small carriers
lower operating ratios were found with carriers having
fewer services, and higher operating ratios were associated
with carriers having higher number of services. In fact
none of the small carriers having more than forty services
earned an operating ratio below 96.0, and on the other
hand, four carriers with fewer than forty services each

had average operating ratios of 95.0 or less.

A negative correlation coefficient of -.298 was
found for the medium carriers group. While the relation-
ship is fairly weak, the medium carriers with higher
operating ratios were also the ones typically with fewer
services, and carriers with lower ratios had the greatest
number of services. For this group of carriers, then,
greater diversity in the services mix was somewhat associated
with carriers having better operating ratios. Other than
with the small and medium carrier groups, the coefficients
for groupings of carriers were so low as to preclude the
conclusion of a relationship between each carrier's profit-

ability and its services.
Motor Carrier Ratings of Services

Evaluation of Services

 

The responding motor common carriers were asked to

rank the factors used in determining each service's

72

contribution to net revenues. A summary of the rankings is
shown in Table 18. Factor "a" (judgments) was used by all
except five carriers and received a first ranking by forty-
three carriers. Factor "b" (breakeven factors for customers,
shipments, vehicles, routes, loads, terminals, etc.) was
used by all except sixteen carriers and seventeen ranked

it as first. Factor "c" and Factor "e" (periodic and
continuing cost studies) were next in importance.

The carriers were grouped by revenue size and by the
number ranking each factor of evaluation as first in impor-
tance. This is shown in Table 19. Size of the carrier made
a difference in the factors used. The small carriers used
judgments almost exclusively to determine profitability,
while the larger carriers used other more sophisticated
methods. This finding tends to agree with a recent study
of management styles of different size motor carriers.3 In
it the author found that small carriers relied on informal
controls and used the "eye—ball" method of managing. The
large carriers were found to use a more formal style of
management and more specialized control tools. Middle-sizes
of carriers tended to use a combination of styles because
they were sometimes too large for one-man contrOl but too
small to support a more conventional management organization

or use specialized controls.

—.__

3Daryl Wyckoff, "Must Success Spoil the Small Motor
Carrier?" Transportation and Distribution Management,
October, 1972, p. 51.

73

 

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75

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76

Method of Weighting Service Ratings

In Part II of the motor common carrier questionnaire,
the carrier was asked to rate the profitability of each
service on the basis of one of the following criteria:

a. Information Not Available

b. Net Loss

c. Breaks Even

d. Average Net Revenue

e. High Net Revenue
Numberical weights were necessary for each criteria in order
to facilitate evaluation and inter-service and inter-carrier
comparisons in the subsequent analysis. The weights used

were as follows:

Weights
a. Information Not Available "0"
b. Net Loss . "1"
c. Breaks Even "2"
d. Average Net Revenue "3"
e. High Net Revenue "4"

The weights for each service then could be added and an
average rating determined. For example an average rating

of profitability for Service #1 was as follows:

No. of Carriers Weights
a. Information Not Available 11 11 x 0
b. Net Loss 6 6 x 1 = 6
c. Breaks Even 5 5 x 2 = 10

77

d. Average New Revenue 36 36 x 3 = 108
e. High Net Revenue 20 20 x 4 = 80
Total carriers rating 67

Average rating = 204 % 67 = 3.044
The eleven carriers that rated Service #1 (less-than-truckload)
as Information Not Available may not have offered the service,
may have just not wanted to rate it, or may have not known in“
its rating of profitability. These were not used, therefore,
in calculating the average. The use of similar weights will
permit the analysis of the ratings of usefulness of service.

Interpretation of ratings then will be in terms of an average

of numerical weights rather than qualitative criteria.

Services Evaluated to Services Offered

 

Many services were not evaluated by carriers that
offered them. The percentage of services evaluated in the
questionnaire to those offered by the carriers is shown in
Table 20 by functional groupings of services. Overall, 82.8
per cent were evaluated on a profitability basis and 88.4
per cent were rated on the basis of usefulness to transport
users. Within each functional grouping there were differ-
ences in percentages. Group III services had the highest
percentage of evaluations under both questions while Group V
had the lowest. Specific services with the highest per-
centage of evaluations included:

Service # 1 Less-than-truckload

Service # 2 Truckload
Service # 3 Volume

78

TABLE 20.--Services Evaluated to Services Offered by
Functional Groupings.

 

Profitability Usefulness
Service Group Percentage Percentage
Evaluated/Offered Evaluated/Offered

 

Group I. Line—Haul
Services 84.6 90.3

Group II. PickUp and
Delivery Services 86.5 83.3

Group III. Services
Requiring Special

Equipment 91.1 92.5
Group IV. Terminal
Services 79.2 89.6
Group V. Advisory
services 67.5 77.4
Total 82.8 88.4

 

Service # 4 Direct or single line

Service # 5 Interline

Service #26 P & D at private residences

Service #29 Redelivery

Service #31 Refrigerated or humidity controlled
trailers

Service #32 Heated or insulated trailers

Service #40 Containers '

Service #41 Bins, cages, racks, or pallets provided
by carrier

Service #43 Double-floors, stabilizers or
compartments

Service #52 Armed guard and/or escort vehicle

Service #53 Furnishing extra driver

In each case the service was related to individual freight
shipments and required the commitment of labor or equipment
in the movement of the shipment. Costs were readily linked
to the performance of the service and to the revenue derived

from it.

79

The services having the lowest percentage of evalua-

tions included:

Service #11 Published dispatch schedules

Service #56 Rate quotations

Service #57 Route selections

Service #58 Shipment tracing

Service #59 Proof of delivery

Service #60 Advanced notification of arrival to
consignee

Service #61 Pre-arrival confirmation to shipper

Service #62 Over, short, or damage location

Service #64 Loss & damage claims prevention
programs

Service #65 Advice on packaging materials, packing
methods, & loading techniques

Service #66 Advice on order size or shipment
quantities

Service #67 Assistance in shipment documentation

Service #68 Advice on materials handling or
shipment preparation techniques

Service #69 Advice on inventory control systems

Service #70 Warehouse or plant site location studies

Service #71 Advice on shipping and receiving
facility design for plants or ware-
houses

These services were more nebulous in nature and were more
difficult to associate with specific freight movements and
to revenue. In general, these services were non-revenue in
character and required the person responding to the question-
naire to exercise judgment in terms of the indirect profit
contribution to be obtained from the performance of them.

One of the factors causing some carriers not to
rate some of the services offered was probably the diffi-
culty in assessing the contribution made by customer loyalty.
Another factor may have been a company policy preventing the
disclosure of information which might aid competition. Six

responding carriers did not rate the profitableness of any

80

services and four failed to rate the usefulness of services
to transport users. A last possible reason for not rating
a service may have been the inability of the person who
evaluated the service to arrive at a rating.

Variation of percentages was found for motor
carriers. ‘A distribution of percentages for profitability
and usefulness of services by motor carrier are found in
Table 21. In rating usefulness to transport users the
responding carriers evidently had less difficulty or had
no company policy preventing them in rating usefulness.

In fact a number of carriers rated more services' usefulness
than they were actually offering.

TABLE 21.--Distribution of Services Evaluated to Services
Offered By Motor Carrier.

 

 

Profitability Usefulness
Percentages Number Per Cent Number Per Cent
of of
Carriers Carriers
Less than 60.0 19 24.4 10 12.8
60.0 but less
than 80.0 9 11.5 9 11.5
80.0 but less
than 100.0 27 34.6 20 25.7
100.0 or more 23 29.5 39 50.0
Total 78 100.0 78 100.0

 

The relationship between the percentage of services
evaluated on the basis of profitability and each carrier's

average Operating ratio was tested by comparing the average

81

operating ratios of two groups of motor carriers--one group
of nineteen carriers which had forty per cent or more of
services not evaluated against another group of twenty-three
carriers which had evaluated all of their services. The
average operating ratio for the first group was 96.3, and

for the second the average was 94.7. While there was some
variation within each group of carriers the average operating
ratios were statistically different. This fact seems
intuitively correct because carriers with knowledge of

their services' profitability should have the ability to
control more carefully those that are unprofitable and to
exploit those services that are profitable. If the carrier
had no knowledge of its services' profitability, no effective

control could be exercised over them.

Motor Carriers' Profitability Ratings

Average Ratings by Service.--Motor common carriers
felt that very few services they provided should be rated
at average net revenue contribution or higher. A summary
of the distribution of ratings by service is included in
Table 22. Only nine services received an average rating
of over 3.000 and twenty received average ratings less than
2.000. The average for all services was 2.351.

Average ratings for services by functional groups
are shown in Table 23. Line-haul and special equipment

services groups received the highest ratings, while pickup

82

TABLE 22.--Distribution of Motor Carrier Profitability
Ratings of Services.

 

 

Average Ratings Number of Per Cent
Services

Less than 2.000 20 27.8
2.000 but less than 2.500 24 33.3
2.500 but less than 3.000 19 26.4
3.000 but less than 3.500 7 9.7
3.500 or more 2 2.8

Total 72 100.0

Average of all services 2.351

Standard deviation .963

 

and delivery and terminal services received the lowest. In
fact, the terminal services as a group were rated at an

average of only 1.884.

TABLE 23.--Profitabi1ity Ratings by Service Groups.

 

Groups Average Ratings Standard
Deviations of
Average Ratings

 

Group I. Line-haul 2.603 .941

Group II. Pickup and
delivery 2.021 .902

Group III. Services
requiring special

equipment 2.700 .792
Group IV. Terminal services- 1.884 .889
Group V. Advisory services 2.345 .968

Total 2.351 .981

 

83

Services with the highest perceived average profit-

ability ratings included:

Service # l Less—than-truckload
Service # 2 Truckload

Service # 3 Volume

Service # 4 Direct or single line

Service #14 Exclusive use of vehicle

Service #24 Scheduled pickup or delivery

Service #33 Tank or Liquid bulk trailers

Service #34 Hopper or dry bulk trailers

Service #38 Hi-cube vans
The first four were basic line haul transportation services
from which the carrier obviously would derive the greatest
revenues for freight movements and, also, would be able to
associate these revenues with costs of performance.

Service # 14 (exclusive use of vehicles) received
the highest average rating of all services, 3.677, and when
performed, it has historically proven to be a valuable
source of net revenue contributions for most motor common
carriers. Higher productivity resulting from the use of
Service # 24 (scheduled pickup or delivery), similarly, was
rated at the average revenue contribution level. Service
# 33 (tank or bulk liquid trailers) and Service # 34 (hopper
or dry bulk trailers) were rated by only four and five
carriers respectively, but were given ratings of 3.00 by
each. They apparently felt these specialized trailers
were justified in serving certain transport users. Increased

carrying capacity doubtlessly contributed to the higher

rating for Service # 38 (hi-cube vans).

84

Specific services with average profitability ratings
less than the breakeven level (average < 2.000) included:

Service #12 Special handling for emergency
shipments

Service #21 Small package express

Service #22 Return of empty pallets, bins, racks,
cages, etc.

Service #26 P & D at private residences

Service #27 P & D at off—hours

Service #28 P & D at positions not immediately
adjacent to vehicle

Service #29 Redelivery

Service #45 C.O.D. shipments

Service #46 Order/Notify shipments

Service #48 Sorting or segregating shipments

Service #49 Marking or tagging shipments

Service #51 Packing or crating

Service #53 Furnishing extra driver

Service #54 Furnishing helper labor

Service #58 Shipment tracing

Service #59 Proof of delivery

Service #61 Pre—arrival confirmation to shipper

Service #62 Over, short, or damage location

Service #69 Advice on inventory control systems

Service # 12 (special handling for emergency shipments) was
probably rated at less than breakeven because it usually
necessitates extra attention and effort on the part of the
carrier, without any additional revenue for the shipment.
Service # 21 (small package express) presents handling and
cost problems for many carriers and faces strong resistance
to higher charges on the part of shippers. Service # 22
(return of empty pallets, bins, cages, racks, etc.) would
cause the carrier to incur costs but receive little or no
revenue from the effort. The four pickup and delivery
services, Services # 26-# 29, are all necessary but very

costly services for carriers to perform, usually requiring

85

(nonsiderable effort and time to complete. Service # 45
(C.O.D. shipments) and Service # 46 (order/notify shipments)
:require additional time on the part of all carrier personnel
11andling the paper work involved with the shipment. Appar-
ently the carriers felt that charges for these services were
not sufficient to cover their costs. Service # 48 (sorting
or segregating shipments) and Service # 49 (marking or
tagging shipments) involve additional handling of the
freight in terminals, as would be true also for Service # 51
(packing or crating). Service # 53 (furnishing extra driver)
and Service # 54 (furnishing helper labor) probably result
in higher total labor costs to the carrier than the revenue
collected for them. Shipment information services, which
include Service # 58 (shipment tracing), Service # 59 (proof'
of delivery), Service # 61 (pre-arrival confirmation to
shipper), and Service # 62 (over, short, or damage location)
require manpower in the terminals without any direct revenue
generation. Service # 69 (advice on inventory control
system) was an advisory service for which no revenue could

be directly identified.

Individual carriers typically rated each service as
it contributed to net revenues for that carrier. Closeness
of agreement in ratings by carriers of each service can be
measured by the standard deviation of the ratings. For
example, if all carriers rated the service exactly the same,

the standard deviation would be zero. If some rated it high

86

rust revenue while others rated it net loss, the standard
Ideviation would be greater than 1.000. Table 23 shows the
standard deviation for all services was .981. The lowest
standard deviation was for Group III at .792 and implies
that there was less disagreement among carriers in evaluating
these services than was true with other functional groups.

Table 24 contains a distribution of standard
deviations for all services. There were only six services
where the carriers' ratings were generally in agreement.
These included the following:

Service # 2 Truckload

Service # 4 Direct or single line

Service #33 Tank or bulk liquid trailers

Service #34 Hopper or dry bulk trailers

Service #38 Hi-cube vans
Service #39 Air-ride trailers

TABLE 24.--Distribution of Standard Deviations for
Profitability Ratings by Service.

 

 

Range of ' Number Per Cent
Standard Deviations of
Services
Less than .500 , 6 8.3
.500 but less than .750 19 26.4
.750 but less than 1.000 47 65.3
1.000 or more 5 7.0
Total 72 100.0

 

All of the above services, except Service # 39, were

perceived as having greater than average profitability

(> 3.000).

87

The greatest disagreement occurred in the services
with standard deviations of the average profitability
ratings above 1.000. Two services in this group from the
"other" categories were not considered. The remaining
three included Service # 12 (special handling for emergency
shipments), Service # 61 (pre-arrival confirmation to
shipper), and Service # 63 (distribution cost studies or
audits). Some carriers felt that Special handling
for shipments could be profitable even though the majority
did not. The same was also true for Service # 61 (pre-
arrival confirmation to shipper). The average rating for
the advisory service, Service # 63 (distribution cost
studies or audits), was barely above the breakeven level
(I = 2.095), but considerable dispersion of profitability
ratings by carriers was evident.

Further evidence of a wide range of opinion about
the profitability of services can be seen in the fact that
25.0 per cent of the ratings were at the net loss level,
24.8 per cent were at breakeven, 40.2 per cent were at
average net revenue, and 10.0 per cent were at high net
revenue.

Average Ratings by Motor Carrier.--The average

 

profitability Of each carrier's unique service offering
was also determined. Table 25 contains the distribution
of carriers' average ratings. Fourteen carriers rated

their services at less than the breakeven level while four

88

TABLE 25.-~Distribution of Average Profitability Ratings
For Each Motor Carrier's Services Mix.

 

 

Average Ratings Number Per Cent
of
Carriers
Less than 2.000 14 18.0
0
2.000 but less than 2.500 39 50.0
2.500 but less than 3.000 21 26.9
3.000 or more 4 5.1
Total 78 100.0

 

carriers had average ratings greater than 3.000. An
examination of the average operating ratios reveals that

the fourteen had higher, hence poorer, actual profitability
performances than did the four carriers. Specifically, the
average Operating ratios were 96.63 as compared to 91.78.
This suggests that the fohrteen carriers knew they were
losing money on many of the services they were performing
and, at the same time, the four knew they were making money.
It also suggests that there may be a relationship between a
carrier's average rating and its operating ratio.

A correlation coefficient was calculated using the
two factors profitability ratings and Operating ratios for
each carrier. The result was a coefficient of -.l74 which
reflected only a weak relationship for carriers as a whole.
When they were grouped according to revenue sizes, however,
a somewhat stronger relationship was found for at least two

groupings of carriers: the small carrier and the large

89

carrier groups. Table 26 contains a summary of average
ratings, average operating ratios, and correlation coeffi-

cients for each group.

TABLE 26.--Average Ratings of Profitability, Average
Operating Ratios, and Correlation Coefficients
By Revenue Size.

 

 

Revenue Average Average Correlation
Size Profitability Operating Coefficients
of Carrier Ratings Ratios

Small 2.538 96.95 -.456
Medium Small 2.288 96.08 .111
Medium 2.364 96.16 .038
Medium Large 2.424 92.77 -.l30
Large 2.366 95.48 -.383
Total 2.393 95.57 —.l74

 

carrier groups. Table 26 contains a summary of average
ratings, average Operating ratios, and correlation coeffi-
cients for each group.

Within the small carrier group the higher average
ratings were associated with lower operating ratios while
lower ratings were found with carriers having higher
operating ratios. The same situation was found generally
within the large carrier group. Medium small and medium
size groups of carriers showed the reverse; lower ratings
were found with carriers also having the lower Operating
ratios. Only the small and large carriers had average

ratings which closely reflected their actual profitability.

90

Carriers tended to have wide ranges of ratings within
their services mixes, as indicated by the distribution of
standard deviations by carrier shown in Table 27. Eleven
had standard deviations of less than .500; one in fact rated
all of its services at the average revenue level. Twenty,
however, had standard deviations of 1.000 or larger. Some
carriers appeared, then, to have rather substantial pro-
portions of their services rated at net loss. A comparison
of operating ratios for carriers that had as high as forty
to fifty per cent of their services rated net loss to
carriers that had no services rated net loss failed to
show a statistically significant difference between averages,
although the former had slightly poorer average operating

ratios.

TABLE 27.--Standard Deviations of Profitability Ratings by

 

 

Carrier.
Standard Deviations Number Per Cent
of
Carriers

Less than .500 11 14.1
.500 but less than .750 9 11.5
.750 but less than 1.000 38 48.8
1.000 or more ' 20 25.6
Totals 78 100.0

 

Only the small and large motor carriers seemed to
perceive the average profitableness of their services at

levels which reflected their average Operating ratios. For

91

whatever reasons, the other carriers' ratings did not
approximate actual profit performances. Among the small

and large carriers were some that had a number of unprofit—
ably rated services that they continued to offer even though
Operating ratios were poor. A possible explanation for
offering low rated services may be found in the motor
carriers' perception of usefulness to transport users of

its services. This is discussed in the following section.

Motor Carrier Ratings of Services' Usefulness
E9 Transport Users

 

Usefulness Ratings bysServices.--Motor common
carriers did have ideas concerning the usefulness of their
services to transport users. One carrier, for example,
replied that all of the services it provided were useful
and that it would not offer any service that was not needed.
The process of rating usefulness required the carrier to
assess carefully the need for and the benefits derived
from each of its services by the transport user in the~
performance of procurement and/or distribution activities.

The distribution of average usefulness ratings by
services are contained in Table 28. The overall average
for usefulness was 3.284, considerably higher than the
average for profitableness ratings by the carriers. Also,
no services were given an average rating by motor carriers
of not useful. Motor carriers felt that each service on

the list of seventy-two was at least marginally useful to

92

TABLE 28.-—Distribution of Motor Carrier Usefulness Ratings
By Service.

 

 

Average Usefulness Number of Per Cent
Ratings Services
Less than 2.000 0 -
2.000 but less than 2.500 2 2.8
2.500 but less than 3.000 17 23.6
3.000 but less than 3.500 33 45.8
3.500 or more 20 27.8
Total '72 100.0
Average Rating , 3.284
Standard Deviation .875

 

transport users. In fact, almost three-fourths of the average
ratings were close to the highly useful level.

Highest average ratings by functional group were
given Group I and Group III services. The lowest average
ratings were for those services in Group II and Group IV.
Average ratings for each functional grouping are shown in
Table 29.

All services in the line-haul group were rated at
more than average usefulness, except four. These four
included Service # 9 (T.O.F.C.), Service # 11 (published
dispatch schedules), Service # 19 (other transit privileges),
and Service # 21 (small package express). On the other
hand, only three of the seven pickup and delivery services
received average usefulness ratings above the 3.000 level,

Service # 24 (Scheduled pickup and delivery), Service #25

93

TABLE 29.--Average Usefulness Ratings by Functional Groups
of Services.

 

Service Groups Average Standard
Ratings Deviations

 

Group I. Line-Haul services 3.408 .821
Group II. Pickup & delivery services 3.086 .925

Group III. Services requiring
special equipment 3.368 .796
Group IV. Terminal services 3.152 .936
Group V. Advisory services 3.220 .875
Total 3.284 .875

 

(Intra-plant split P & D), and Service # 27 (P & D at off-
hours). The rest were rated at less than average usefulness.
All of the special equipment services except Service # 41
(Bins, cages, racks, or pallets) received average ratings
above 3.000. In the terminal services, nine services were
rated at less than average usefulness. These services
included:

Service #46 Order/Notify shipments

Service #48 Sorting or segregating shipments

Service #49 Marking or tagging freight

Service #50 Storage or warehousing

Service #51 Packing or crating

Service #52 Armed guard and/or escort vehicle

Service #53 Furnishing extra driver

Service #54 Furnishing helper labor

Service #55 Direct advertising on carrier's

vehicle

On the other hand, the terminal services which involve
providing shipment information to transport users were

perceived at well above the moderately useful level. The

specific services included:

94

Service #56 Rate quotations

Service #57 Route selections

Service #58 Shipment tracing

Service #59 Proof of delivery

Service #60 Advanced notification of arrival to

consignee

Service #61 Pre—arrival confirmation to shipper

Service #62 Over, short, or damage location
These same services had been found unprofitable to the
carrier in the profitability analysis in the previous 'w
section. Among the Group V advisory services all were
found to be more than average in usefulness.

Motor carriers tended to agree on the ratings of
usefulness to about the same extent as they did on profit-
ableness. The range of standard deviations by service is
shown in Table 30.

TABLE 30.--Distribution of Standard Deviations for Usefulness
Ratings by Service.

 

 

Range of Number Per Cent
Standard Deviations of
Services
Less than .500 6 8.3
.500 but less than .750 16 22.2
.750 but less than 1.000 40 55.6
1.000 or more 10 13.9
Total 72 100.0

Substantial agreement on the perception of usefulness
was found for only six services:
Service # l Less-than-truckload

Service # 2 Truckload
Service # 3 Volume

95

Service # 4 Direct or single line

Service #34 Hopper or dry bulk trailers

Service #72 Other advisory services
The first four were basic line-haul services and were rated
high on the profitability scale as well as high usefulness
by most motor common carriers. Service # 34 (hopper or dry
bulk trailers) was rated by only seven carriers but was
given highly useful ratings in each instance. Service # 72
was an "other" advisory service.

Disagreement among the carriers on the perception
of usefulness was evident for the following services:

Service # 9 T.O.F.C.

Service #11 Published dispatch schedules

Service #21 Small package express

Service #49 Marking or tagging freight

Service #50 Storage or warehousing

Service #51 Packing or crating

Service #52 Armed guard and/or escort vehicle

. Service #53 Furnishing extra driver

Service #69 Advice on inventory control systems
All except Service # 69 were among the lowest rated services
on the perceived usefulness scale by motor common carriers.

Over half of the ratings given for individual
services were at the highly useful level, while approxi-
mately a fourth were at the average usefulness level, and
the remainder were below. Only 2.9 per cent of the ratings
were recorded at the not useful level.

Usefulness Ratings by Motor Carrier.--The average
usefulness of each carrier's services mix was calculated,

and a range of these averages by carrier is found in

Table 31. Four carriers did not evaluate any of their

‘b 03-]

96

TABLE 31.--Distribution of Average Usefulness Ratings for
Each Motor Carrier's Services Mix.

 

 

Average Ratings Number Per Cent
of
Carriers
Less than 2.000 5 6.4
2.000 but less than 2.500 2 2.6
2.500 but less than 3.000 11 14.1
3.000 but less than 3.500 33 42.3
3.500 or more ‘ 27 34.6
Total 78 100.0

 

services on the usefulness scale, but among those that
evaluated a substantial proportion, there was a range from

a low of 1.919 to a high of 4.000. Carrier # 5 had evalu-
ated over three-fourths of its services and rated them at

an average of less than marginally useful. On the other
hand, Carrier # 31 rated all of its forty-two services at
the highly useful level. Sixty carriers had average ratings
for usefulness at the 3.000 level or higher.

Motor carriers also had a range of ratings of useful-
ness as indicated by the standard deviations of their ratings
in Table 32. A comparison of Table 32 with Table 27 shows
that the carriers had less variety of ratings for usefulness
than they did for profitability. Only 14.1 per cent of
carriers had standard deviations of less than .500 when
rating profitableness, while 23.1 per cent was found in

rating usefulness. Similarly, over 25.6 per cent of the

97

TABLE 32.--Standard Deviations of Usefulness Ratings by

 

 

Carrier.
Standard Deviations Number Per Cent
of
Carriers
Less than .500 18 23.1
.500 but less than .750 23 29.5
.750 but less than 1.000 29 37.2
1.000 or more 8 10.2
Total 78 100.0

 

carriers had standard deviations over 1.000 for profitableness
but only 10.2 for usefulness. This fact suggests the need to
examine the relationship between the two factors as rated by
each carrier.

Relationship of Profitability Ratings and
Usefulness Ratings

 

 

The qualitative rating factors for usefulness and
profitableness may be viewed as approximately equal at each
level. The rating of "Not Useful" is essentially equivalent
to a rating of "Not Profitable"; a rating of "Marginally
Useful" is the same as "Breakeven"; "Moderately Useful"
equals "Average Net Revenue"; and "Highly Useful" is
equated to "High Net Revenue." This assumption seems
reasonable since a "Not Useful" service probably would
be unprofitable also to the transport user, and conversely,
a "Highly Useful" service would be very profitable. A

direct numeric comparison of the two different evaluations

98

can be made for the responding carriers' ratings of profit-
ability and usefulness of services, therefore.

Correlation coefficients for each functional group
of services were calculated using each service's average
rating of profitability and its rating of usefulness.

Table 33 contains these coefficients. The overall coeffi-
cient of .512 indicates a small amount of association of
lower profitability ratings with the lower usefulness ratings
and higher profitability ratings with higher user ratings.
The greatest relationship existed for Group II services.

A small but negative relationship was found for Group IV
services. This negative coefficient was the result of low

TABLE 33.--Correlation Coefficients: Profitability Ratings
vs. Usefulness Ratings by Service Group.

 

 

Service Group Correlation

Coefficients
Group I. Line-Haul services .538
Group II. Pickup and delivery services .935

Group III. Services requiring special

equipment .306
Group IV. Terminal services -.154
Group V. Advisory services .392
Total .512

 

profitability ratings for a group of shipment information
services, e.g., Services # 58-# 62, while at the same time
the carriers were rating them very high on the usefulness

scale.

99

Ratios of the usefulness ratings to profitability
ratings for each service and each carrier were also calcu-
lated. The distribution of the ratios by service is shown
in Table 34. The average ratio between the two evaluations
was 1.426 which indicated that the responding motor carriers
were rating usefulness considerably above profitability for
each service. Only two services were rated lower on the
usefulness scale than on the profitability while ten were
given ratings that were seventy-five per cent or more

TABLE 34.--Distribution of Ratios: Usefulness/Profitability
Ratings by Service.

 

 

Range of Ratios Number Per Cent
of
Services
Less than.1.000 2 2.8
1.000 but less than 1.250 20 27.8
1.250 but less than 1.500 23 31.9
1.500 but less than 1.750 17 23.6
1.750 or more 10 13.9
Total 72 100.0
Average ratio 1.426

 

higher. The two that received lower usefulness than profit-
ability ratings were Service # 14 (exclusive use of vehicle)
and Service # 55 (direct advertising on carrier's vehicle).
Among services that had the highest ratios were Service # 12
(special handling for emergency shipments), Service # 21

(small package express), Service # 22 (return of empty

100

pallets, bins, etc.), Service # 26 (P & D at positions not
immediately adjacent to vehicle), Service # 48 (sorting
and segregating shipments), Service # 56 (rate quotations),
Service # 58 (shipment tracing), Service # 59 (proof of
delivery), and Service # 62 (over, short, and damage
location).

Similar ratios were calculated for usefulness and
profitability ratings of the services offered by each
carrier. The distribution of ratios by carrier is contained
in Table 35. The range of ratios was very similar to that
found for services in Table 34. Clearly, the majority of
motor carriers were rating usefulness much higher than
profitability.

TABLE 35.--Distribution of Ratios: Usefulness/Profitability
Ratings by Carrier.

 

 

Range of Ratios Number Per Cent
of
Carriers
Less than 1.000 3 4.2
1.000 but less than 1.250 15 21.1
1.250 but less than 1.500 30 42.3
1.500 but less than 1.750 13 18.3
1.750 or more 10 14.1
Total 71 100.0

 

Both ratings of profitability and usefulness of
services by motor carriers would need to be related to

similar ratings by transport users of the same services

101

in order to have any real value. Comparisons, therefore,
of motor carrier and transport user ratings were made in
a later section.

Transport User Ratings of Services'
Usefulness

 

A measure of each service's actual usefulness can
be obtained from the responses of the sample of transport
users. Eighty-nine midwestern industrial and retail firms,
all of which used motor common carriers, rated the same
list of services with an average rating of 2.672. This
in qualitative terms is an average rating below the moder-
ately useful level. There was a considerable range of
ratings, however, as shown by Table 36. Thirteen services,
or 18.3 per cent, were rated at less than marginally useful.

TABLE 36.--Distribution of Transport User Average Ratings
of Usefulness.

 

 

Range of Ratings Number Per Cent
of

Services
Less than 2.000 13 18.3
2.000 but less than 2.500 27 38.0
2.500 but less than 3.000 15 21.1
3.000 but less than 3.500 8 11.3
3.500 or more 8 11.3
Total 71* 100.0

Average rating 2.659

 

*

Note: One service, # 23 (other line-haul services),
was inadvertently left off of the Transport User Question-
naire and was not evaluated.

102

Sixteen or 22.6 per cent, were given average ratings at or

above the moderately useful level.
When the ratings by transport users are broken down
by functional groups of services as shown in Table 37,
Group I is found to have received the highest average
'rating, 2.954. The advisory services in Group V were the
lowest with an average rating barely above the marginally "a

useful level.

TABLE 37.--Transport Users' Ratings of Usefulness by
Functional Groups of Services.

 

Service Groups Average Standard
Ratings Deviations

 

Group I. Line—Haul services 2.954 1.067.

Group II. Pickup and delivery
services 2.691 1.090

Group III. Services requiring
special equipment 2.413 1.199
Group IV. Terminal services 2.630 1.182
Group V. Advisory services , 2.152 1.130
Total 2.672 1.149

 

Substantial disagreement among transport users was
also apparent from the standard deviations of the average
ratings. All groups had standard deviations above 1.000
with Group III having the highest at 1.199. High standard
deviations reflected the fact that while some transport
users may have rated a service low or not useful others

were at the same time finding it highly useful.

103

The distribution of standard deviations for each
service in Table 38 shows the disagreement among transport
users over the perceived usefulness of the motor common
carrier services. There were only eight, or 11.3 per cent,
with standard deviations of less than .750. On the other

hand, there were forty-three, or 60.5 per cent, with standard

u"!

TABLE 38.-~Distribution of Standard Deviations for Transport
Users' Ratings of Usefulness.

 

 

Standard Deviations Number Per Cent
of
Services
Less than .500 _ 2 2.8
.500 but less than -750 6 8.5
.750 but less than 1.000 , 20 28.2
1.000 or more 43 60.5
Total 71 2100.0

 

deviations of 1.000 or more, reflecting a wide degree of
disagreement. Among the services where little disagreement
was evident are the following:

Service # l Less-than-truckload

Service # 2 Truckload

Service # 4 Direct or single line

Service #13 Expedited shipments

Service #52 Armed guard and/or escort vehicle

Service #58 Shipment tracing

Service #59 Proof of delivery
All were perceived as having high usefulness except Service
# 52. It was rated by twenty-eight of thirty-one transport

users at the not useful level. Six special equipment

104

services reflected considerable disagreement and had
standard deviations above the 1.200 level. They were

as follows:

Service #31 Refrigerated or humidity controlled
trailers

Service #32 Heated or insulated trailers

Service #33 Tank or bulk liquid trailers

Service #34 Hopper or dry bulk trailers

Service #42 Tie-down & special stowage devices 2“
Service #43 Double-floors, stabilizers or
compartments

Comparison of Motor Carrier and Transport
User Ratings

 

A summary of all ratings of services by motor
carriers and transport users is shown in Table 39. The
data were taken from Tables 23,29, and 37. Also included
in the table are correlation coefficients for services by
functional groups to determine the relationship between
motor carrier ratings of usefulness. The following sections
will examine each functional grouping of services by

comparing motor carrier to transport user ratings.

Line-Haul Services

 

Both profitability and usefulness average ratings
by motor carriers differed from the transport user ratings
of Group I services. Motor carrier average profitability
ratings were below and their estimates of usefulness were
above the similar ratings by transport users. Almost no
relationship existed between the motor carrier profitability

and transport user ratings while their estimates of usefulness

105

 

 

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106

were associated with those of transport users. In the
latter case, motor carriers were closely estimating the
relative usefulness of their services to shippers. Profit-
ability ratings, on the other hand, did not seem to be
related to usefulness; sOme services that were profitable
to carriers were not as useful to shippers. The opposite
was also true.

Differences between average profitability ratings
and transport user ratings were found in Service # 11,
Service # 12, Service # 13, and Service # 21. Service # 11
(published dispatch schedules) was rated 2.636 by motor
carriers but only 1.875 by transport users. Service # 12
(special handling for emergency shipments) was given a
rating of 3.433 by transport users but only 1.980 by
carriers. Service # 13 (expedited shipments) had an
average profitability rating of 2.280 but a usefulness
rating of 3.614. And Service # 21 (small package express)
received an average of only 1.461 by motor carriers and
3.086 by shippers.

Motor carriers slightly overestimated the transport
user usefulness for Service # 11. The rest of Group I
services were relatively close to the transport users

ratings.

Pickup and Delivery_Services
Profitability ratings were again low and estimates

of usefulness were high relative to the transport user

107

ratings for pickup and delivery services. However, the
ratings were very closely associated with each other. A
service that was rated high by motor carriers was also
rated high by transport users. Coefficients of .928 and
.882 reflected a high degree of association between the
sets of ratings. Motor carriers and transport users were
in close accord on their relative ratings of profitability

and usefulness.

Services Requiring Special Equipment

 

Both motor carrier ratings for this group of
services were higher than the transport user ratings.
Profitability ratings did seem to be related with a coeffi-
cient of .601. This, tOgether with the fact that the
average profitability ratings were only slightly higher
than transport user ratings, would indicate that the motor
carriers believed special equipment was important to their
operations. On the other hand, they over-estimated the
usefulness of these services. There was only a small
relationship present between their estimates and transport
user ratings of usefulness. The coefficient was only .375.
Many carriers apparently had high hopes of filling customer
needs with specialized equipment but may not have known

what these needs actually were.

Terminal Services

 

An interesting anomaly appeared when the ratings

of terminal services were compared. Profitability ratings

108

were not only lower than usefulness ratings, but the cor-
relation coefficient between them was negative. At the
same time, the carriers' ratings of usefulness were higher
than the transport users' and were very positively correlated.
Most differences in ratings occurred in the shipment infor-
mation services. Transport users felt that these were
extremely important to them in performing their procurement
and distribution activities. Motor carriers agreed in their
ratings of usefulness. These same services, however,
required carriers to perform activities that were not
normally covered in the rate structure. Thus, the carriers
rated profitability as low. The possibility of an indirect
profit contribution was generally overlooked by most
carriers. On the surface it would appear that these
services were offered by motor carriers only as a response
to transport user need for them. Two examples were found
in Services # 58 (shipment tracing) and Service # 59 (proof
of delivery). Motor carriers rated the profitability of
Service # 58 at only 1.686 while transport users gave it

an average usefulness rating of 3.747. Service # 59 had

a profitability rating of 1.653 and a usefulness rating of
3.511. Several carriers had rated each of these services
at high net revenue contribution level recognizing the
opportunity to make an indirect profit through satisfied

customers.

109

Advisory Services

 

Both average ratings by motor carriers were higher
than transport user ratings for advisory services. Profit-
ability was rated only a little higher but usefulness
estimates were considerably higher. The profitability
ratings correlated positively with the transport user ‘
ratings; motor carrier estimates of usefulness, on the
other hand, were unrelated.

Motor carriers, then, tended to error in their
perception of the usefulness of advisory services. A
possible explanation may be in the fact that all services
involved were non-transportation and non-revenue services.
In addition, advisory services are such that a carrier
must offer them rather than expect the shipper to request
that they be performed. High usefulness may exist in the
minds of motor carrier management, only. Unless the motor
carrier communicates its willingness and ability to perform
advisory services to those shippers unable to perform them
for themselves, the services will not have any general

usefulness.

Total Services

 

The overall average rating of profitability was
fairly close to transport users ratings. The correlation
Coefficient of .198 belies the fact that several functional
groups were highly related and one was even negatively

related.

110

As a whole, motor carriers tended to over-estimate
usefulness. Especially was this true for advisory services.
A strong relationship generally was indicated for usefulness

estimates with the correlation coefficient of .613.
Ratings and Motor Carrier Profitability

Ratios of Ratings

 

This section will examine the relationship between
individual motor carrier ratings and transport user ratings
and link these with carrier profitability. In order to
compare the sets of ratings it was necessary to compute
the average rating by the transport users for each carrier's
unique services mix. This involved identifying every
service offered by the carrier and computing an average
of the ratings for them by transport users. Once this
figure was obtained for each carrier, a ratio could be
obtained between the average rating by the carrier of
services profitability and usefulness and the adjusted
average rating of transport users. The calculation is
illustrated for Carrier # 1:

Motor Carrier Services Profitability Rating _ 2.429

Transport User Services Usefulness Ratihg — 2.808 = .865

 

 

MCSP/TUSU Ratio

 

The ratio of .865 reflects the fact that Carrier # 1 rated

the profitability of its services at a lower level than did

111

the transport users for the same set of services. Similarly,
a ratio between the carrier's estimate of usefulness and an
adjusted transport user rating was obtained.4 This ratio
was 1.111 for Carrier # 1 indicating that it had rated
usefulness higher than transport users. Ratios were calcu-
lated for all carriers in the same way. ‘

The distribution of ratios between individual
carrier profitability ratings and adjusted transport user
ratings is contained in Table 40. The ratios ranged from
a low of .539 to a high of 1.194. The average ratio for
all carriers was .860. The fact that most carriers had
rated profitability lower than the transport users had
rated usefulness has already been pointed out. This table
supports the findings by relating it to just those services
which each carrier offered. It should be noted, however,
that two-thirds of the motor carriers had ratios that were
within twenty per cent of the transport users ratings. A
vast majority of motor carriers had average profitability
ratings for their services mixes that were close to the
transport users ratings of the same services.

The ratios for carriers' ratings of usefulness and
transport users' ratings are shown in Table 41. Here the
ratios ranged from a low of .717 to a high of 1.556. The

average ratio was 1.195. These ratios were higher by about

 

4Motor Carrier Services Usefulness Ratings _ MCSU/TUSU

Transport User Services Usefulness Ratings_ Ratio

112

TABLE 40.-—Distribution of MCSP/TUSU Ratios.

 

 

Range of Ratios Number Per Cent
of
Carriers
Less than .700 8 V 11.1
.700 but less than .800 16 22.2
.800 but less than .900 25 34.7
.900 but less than 1.000 13 18.1
1.000 or more 10 13.9
Total 72 100.0

 

TABLE 41.--Distribution of MCSU/TUSU Ratios.

 

 

Range of Ratios Number Per Cent
of
Carriers

Less than 1.000 4 5.4
1.000 but less than 1.100 15 20.2
1.100 but less than 1.200 20 27.0
1.200 but less than 1.300 17 23.0
1.300 but less than 1.400 9 12.2
1.400 or more 9 12.2

Total 74 100.0

 

the same amount that the profitability to usefulness ratios
were lower, except that only 52.6 per cent of the motor
carriers had ratios within twenty per cent of the transport

users' ratings.

Relative Profitability Ratios
In earlier sections of this study the "operating

ratio" was used as a measure of motor carrier actual

113

profitability. It must be recognized, though, that average
Operating ratios for carriers not only were influenced by
management action but were also subject to exogenous factors
such as strikes and general economic conditions experienced
by the entire industry. A measure of carrier profitability
was needed which would relate individual carrier profits ‘
to the motor carrier industry profits. Such a measure was
found in the concept of Relative Profitability Ratios for
each carrier.5 Specifically, a Relative Profitability

Ratio (RP) could be calculated for each carrier by taking
the difference between the carrier's operating expenses

and operating revenues (profit margin) for each year in

the period 1960-1971. This difference was then divided

by the carrier's operating revenues in each year. The
percentage thus determined for each year was divided by

the industry's percentage, using all Class I and Class II
motor carriers of general freight. An annual Relative
Profitability Ratio for each carrier was the result. Next,
the average of each carrier's RP ratios for the twelve years,
1960-1971, was calculated. This ratio for each carrier
related its profitability to the rest of the motor carrier

industry and smoothed out the annual fluctuations that

occurred because of exogenous factors. If a carrier, during

 

5

Relative Profitability Carrier Profit Margin/
Carrier Operating Revenue
Industry Profit Margin/
Industry Operating Revenue

RP

Relative Profitability

114

the period under study, had a better operating ratio than

the industry, its RP ratio would be greater than 1.000.

If its profit performance was poorer than the industry's,

the average RP ratio would be less than 1.000. If in fact,

a specific motor common carrier had done very poorly during

the period, it possibly could have a negative relative

profitability ratio. H
The distribution of relative profitability ratios

for all seventy-eight responding motor carriers is presented

in Table 42.

TABLE 42.--Distribution of Relative Profitability Ratios.

 

 

Range of Ratios Number Per Cent
of
Carriers

Less than .500 '24 30.8
.500 but less than 1.000 19 24.4
1.000 but less than 1.500 20 25.6
1.500 but less than 2.000 9 11.5
2.000 or more 6 7.7

Total 78 100.0

Average .976

 

The overall average relative profitability ratio,
RP ratio, was .976 or an amount very close to the industry.
However, it can be seen from the table that almost one-third
of the responding carriers had ratios that were less than
.500. In that group of twenty—four carriers there were

three that had negative RP ratios. Thirty-five carriers

115

had ratios higher than 1.000, and among them, there were
six with ratios greater than 2.000.
The following sections will use the RP ratios and
the MCSP/TUSU and MCSU/TUSU ratios. Motor carriers will
0
be grouped into several categories for a comparison of the
ratios. The first grouping to be studied will be revenue

,Jl

size of carriers.

Revenue Size

 

The size of the carriers based on revenues is a
grouping used previously. The significance of size is based
primarily on the management styles used by carriers as they
increase in number of customers and revenues. The smaller
carriers have more informal management styles and the owner/
manager is involved in day to day operations of the carrier
and frequently contacts customers. Larger carriers have
more formal management styles and employ specialists in the
functional operating areas. Their top executives would be
less involved with daily operations and would have fewer
direct contacts with customers. A comparison of MCSP/TUSU
and MCSU/TUSU and RP ratios for carriers grouped by revenue
sizes are shown in Table 43.

Small carriers had the lowest average RP ratio at
.652, reflecting the higher average operating ratio previously
mentioned. They had the highest MCSP/TUSU ratios, however.
The ratio of .899 suggests that the small carriers were

estimating their services profitability at close to what

116

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117

shippers were estimating the same services' usefulness. The
correlation coefficient between these ratios and RP ratios
for small carriers was .401. The relationship was not too
strong but did indicate that the higher MCSP/TUSU ratios
were generally associated with higher RP ratios for most
carriers. The fact that the two sets of ratios were posi-
tively correlated is significant, also. Since most MCSP/TUSU
ratios were less than 1.000 (less than the transport user 1
ratings of usefulness), it is not surprising that the closer
the MCSP/TUSU ratios came to 1.000 the higher the average
RP ratios of the carriers.

Small Carriers had an average MCSU/TUSU ratio of
1.179 which was slightly below the average for all responding
carriers. The correlation coefficient for MCSU/TUSU ratios
and RP ratios for the small carriers was .151. The coeffi-
cient was too low to indicate a significant relationship
between the two factors. The positive coefficient showed
that higher MCSU/TUSU ratios were somewhat associated with
higher RP ratios. Since all of the MCSU/TUSU ratios for
the small carrier group were greater than 1.000 it would
seem that what little relationship existed was in favor of
over-estimating the usefulness of services to transport
users.

The thirteen medium carriers had an average RP
ratio of .878 which was below the industry. Their MCSP/TUSU

ratio was the lowest of all groups of carriers at .823. A

118

coefficient of -.100 was obtained when MCSP/TUSU ratios were
correlated to the individual carrier RP ratios. Such a low
coefficient demonstrated virtually no relationship between
the two ratios, and further it was negative in sign. Any
relationship that did occur was between the lower MCSP/TUSU
ratios and higher RP ratios. The medium small carriers
average MCSU/TUSU ratio was 1.226 and was the highest of
the revenue groupings of carriers. The correlation coeffi-
cient between MCSU/TUSU and RP ratios was -.258. While
relatively low, it reflected a small association of lower
MCSU/TUSU ratios and higher RP ratios. I

Twenty-four carriers were in the medium revenue size
group but only twenty evaluated services in terms of profit-
ability and twenty-two evaluated services on the basis of
usefulness. The average RP ratio for medium carriers was
.833. The average MCSP/TUSU ratio was also low at only .839.
A very slight relationship was found between RP ratios and
MCSP/TUSU ratios; the correlation coefficient was .129. The
average MCSU/TUSU ratio was 1.171, but no relationship
existed between them and RP ratios for individual carriers
within the group. The coefficient was only .006.

Medium large carriers had the best average RP ratio
at 1.650, indicating that as a group these carriers were
considerably more profitable than the industry. The
average MCSP/TUSU ratio was the second highest of all

revenue groups at .877. The correlation coefficient for

119

MCSP/TUSU ratios and RP ratios was only .070, so low as to
indicate practically no relationship. On the other hand,
the average MCSU/TUSU ratio was 1.136 and it correlated
with RP ratios with a coefficient equal to -.319. The
negative relationship indicated by the coefficient shows
the association of lower MCSU/TUSU ratios with higher RP

ratios and vice versa.

 

The sixteen large carriers had an average RP ratio
very close to the industry profitability at .990. The
average MCSP/TUSU ratio was .875, and those for the indi-
vidual carriers were somewhat related to individual RP
ratios. The correlation coefficient was .401. The large
carrier average MCSU/TUSU ratio was the highest of any
group at 1.256 but no relationship was evident between
the individual carrier MCSU/TUSU and RP ratios. The coeffi-
cient was only .045.

The analysis found that the small and large carrier
groupings had the best relationship between MCSP/TUSU and
RP ratios, but these groupings of carriers displayed
limited correlation between MCSU/TUSU and RP ratios. The
medium small and medium large carrier groupings had the
highest negative correlation coefficients for MCSU/TUSU and
RP ratios. Almost no relationship existed between MCSP/TUSU
and RP ratios for these carriers, however. It was found
that the carrier groupings either had good ratings for

profitability or for usefulness, but rarely did both ratings

120

have good relationships. The next section will seek addi-
tional information to help explain the relationships by
grouping the carriers according to the factOr they used

to evaluate services.

Factors Used in Evaluating Services

The factors relied on to evaluate services could
be expected to affect the average ratings of profitability
and usefulness by motor carriers. If ratings of profit-
ability were perceived too low, the carrier could be misled
into discontinuing services that otherwise would make a
contribution to net revenues. If ratings of usefulness
were too low, carriers might erroneously assume that no
need exists for the services and, therefore, discontinue
them or not offer them to customers. On the other hand,
if usefulness ratings were too high, carriers could commit
men or equipment to services for which limited or no useful-
ness exists among customers. This section will identify
those factors that had the best relationships between.
MCSP/TUSU and MCSU/TUSU ratios and RP ratios.

A comparison of RP ratios with MCSP/TUSU and MCSU/
TUSU ratios by factors used in evaluating services is

contained in Table 44.

Factor a'.--The motor carriers using Factor "a"

 

were relying primarily on judgments rather than specific
cost studies or other methods. For the carriers listing

this as the most important method of evaluation, the

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122

average MCSP/TUSU ratio was .891 and was the highest of
all carrier groupings based on evaluation factors. The
average MCSU/TUSU ratio was the lowest for any grouping at
1.160. The average RP ratio was reasonably close to the
industry average at .946. A coefficient of .190 was found
for the relationship of MCSP/TUSU and RP ratios and only
.003 for MCSU/TUSU and RP ratios. In the first instance
only a very slight relationship existed and none existed
in the latter case. Factor "a" then was not very helpful
in disclosing relationships between the ratios.

Factor "b".—-The seventeen carriers using Factor "b",

 

breakeven factors for customers, shipments, vehicles,
routes, loads, and terminals, had an average MCSP/TUSU

ratio of .818. This average was the lowest of the groupings
according to factors of evaluation. The average MCSU/TUSU
ratio was 1.244 and was the highest for grouping of carriers.
The average RP ratio of .986 was also higher than any other
average RP ratio. The carriers using Factor "b" had some
relationship between MCSP/TUSU ratios and their RP ratios

as shown by the coefficient of .428. The coefficient for
MCSU/TUSU ratios and RP ratios was smaller at -.230 but
nevertheless demonstrated an association of lower MCSU/TUSU
ratios with higher RP ratios. While the average MCSU/TUSU
ratio was high, within the group, the lower ratios were

found with carriers having higher RP ratios and vice versa.

 

For this group of carriers, both the ratings of services'

123

profitability and usefulness, when linked to transport
users' ratings of the same services, tended to be associated
with each carrier's actual profitability better than any
other grouping of carriers.

Factor "c".--The eight carriers using Factor "c",
forecasts of revenues, tonnage, ton-miles, had an average
MCSP/TUSU ratio of .832 and an average MCSU/TUSU ratio of
1.237. Ratios of RP's varied from .443 to 1.224, while the
average was .820. Significant differences in correlation
coefficients, however, were found for this group of carriers.
The coefficient for MCSP/TUSU ratios and RP ratios was
-.309. The negative coefficient disclosed an association
of the higher MCSP/TUSU ratios with lower RP ratios, while
the lower MCSP/TUSU ratios were found with the carriers
having higher RP ratios. This was just the opposite of
the carriers using Factor "b" for evaluation. The coeffi-
cient for MCSU/TUSU ratios and RP ratios was .656, indicating
a strong positive relationship between the ratios. It would
be interpreted, however, to show a relationship between the
higher MCSU/TUSU ratios and higher RP ratios, and the lower
MCSU/TUSU ratios would be found with the lower motor
carrier RP ratios. The group of carriers using Factor "c"
had estimates of service profitability and usefulness
which ran counter to the other groupings of carriers.

Factors "d", "e", "f".--The carriers indicating a

reliance on Factors "d", "e", and "ff, which included

124

periodic or continuing cost studies or other methods, had
an average MCSP/TUSU ratio of .832 and an average MCSU/TUSU
ratio of 1.225. The coefficient for MCSP/TUSU ratios and
RP ratios was only .058, with virtuallyno relationship
present. The coefficient for MCSU/TUSU ratios and RP
ratios, on the other hand, was -.310. This coefficient
showed the strongest relationship among all groups for
lower MCSU/TUSU and higher RP ratios.

In summary, the two groups of motor carriers that
used Factor "b“ and Factor "c" had correlation coefficients
indicating some relationship between their ratings and
their actual profitability. The relationships as reflected
in the coefficients, however, were opposites. The carriers
using Factor "b" had higher MCSP/TUSU ratios associated
with higher RP ratios while lower MCSU/TUSU ratios were
found with higher RP ratios. Factor "c" carriers, on the
other hand, had the lower MCSP/TUSU ratios related to higher
RP ratios and the higher MCSU/TUSU ratios associated with
higher RP ratios. Intuitively, the coefficients for
Factor "b" carriers seemed to reflect the proper relation-
ship. The next section will group the carriers by the
title of person completing the questionnaire and should
yield additional insights into the relationships between

ratings and actual carrier profitability.

125

Title of Executive Completing Questionnaire

The grouping of motor carriers by title of executive
completing the questionnaire was suggested by the fact thatv
only 43.6 per cent were completed by presidents to whom the
original questionnaire was addressed while the remaining
56.4 per cent were completed by individuals with a wide
variety of functional responsibilities within carrier
organizations. This grouping of carriers was also based
on the belief that the job an executive performed may
have had an effect on how the services were evaluated.

For example a financial officer or traffic manager could

be expected to have a better understanding of the net
revenue contribution of each service while marketing or .
sales executives whoprobably had closer contacts with
customers, would be able to estimate each service's useful-
ness better. The comparison of MCSP/TUSU ratios, MCSU/TUSU
ratios, and RP ratios is shown in Table 45.

The thirty-four responses by presidents of motor
carriers represented a group of carriers that had an
average RP ratio of .888. Specific RP ratios within the
group ranged from a low of -.018 to a high of 2.282.

Thirty-two of the thirty-four carriers evaluated
MCSP and had an average MCSP/TUSU ratio of .805. Their
average MCSU/TUSU ratio was 1.197 which was almost exactly
the same as for all surveyed carriers. Correlation coeffi-

cients were .244 and -.164 for MCSP/TUSU and RP ratios and

 

126

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127

MCSU/TUSU and RP ratios respectively. Both indicated only
slight relationships present between the ratios.

A total of fifteen responses were received from
executives with titles of treasurer, vice-president of
finance, or controller. The carriers involved had an average
MCSP/TUSU of .886 and an average MCSU/TUSU ratio of 1.237.
The average RP ratio was very close to the industry average
at .989. The correlation coefficient for MCSP/TUSU and RP
ratios was .200, only slightly below the coefficient found
for the responses of presidents. On the other hand, the
coefficient for MCSU/TUSU and RP ratios was a positive
.294, evidencing a slight relationship between higher MCSU/
TUSU ratios and higher RP ratios.

Only four responses were received from executives
with titles of general manager or operations manager.
Admittedly just four carriers in this group limit their
comparability with other groups, but they will be included
in order to hold to a consistent pattern of analysis. The
average MCSP/TUSU ratio was .818, and the average MCSU/TUSU
ratio was 1.223. RP ratios were lower for this group
resulting in an average of only .758. The coefficient of
MCSP/TUSU and RP ratios was .346 while the coefficient for
MCSU/TUSU and RP ratios was positive but only .034. Some
relationship was present between the first two sets of
ratios but virtually none existed for the second.

Ten motor carrier questionnaires were completed

by carriers' traffic managers. Since these men were

128

familiar with setting rates on services, their evaluations
of profitability could be expected to come fairly close to
transport users' ratings of usefulness. In fact, the
average MCSP/TUSU ratio was the highest of any group of
carriers regardless of the method of grouping used in this
analysis. The average ratio was .911. The average MCSU/
TUSU ratio at 1.166 was slightly below the average for all
surveyed carriers. This group of carriers was more profit-
able than the industry with an average RP ratio of 1.118.
The correlation coefficient for MCSP/TUSU and RP ratios
was .200 and for MCSU/TUSU to RP ratios was -.044. Only
the MCSP/TUSU to RP ratios appeared correlated.

Seven questionnaires were completed by executives
with titles of sales managers or directors of marketing.
In theory these men should probably have the best perception
of each service's usefulness to transport users. The
average MCSP/TUSU ratio was .869, or right at the average
for all surveyed carriers. On the other hand, the average
MCSU/TUSU ratio was only 1.093. This average represented
the lowest ratio of MCSU/TUSU of all groups of motor
carriers and was very close to the average ratings of
transport users. This group also possessed the strongest
relationship between MCSU/TUSU and RP ratios; the coefficient
for the two sets of ratios was -.658. Within this group
of carriers the lower MCSU/TUSU ratios were consistently

associated with higher RP ratios. The coefficient for

129

MCSP/TUSU and RP ratios was negative and only -.157.
Marketing and sales executives were indeed good estimators
of usefulness of services but relatively poor estimators
of each service's profitability.

The last grouping was necessary because some of
the responses were by individuals who did not fit into
any of the other categories. For example several were
completed by more than one executive, another was from the
research department. One carrier in this group did not
evaluate either profitability or usefulness of services
and another only evaluated usefulness. The average MCSP/
TUSU ratio was high at .900 and the MCSU/TUSU ratio was
only slightly above the overall average at 1.206. The
average RP ratio, on the other hand, was very low at .754.
Both correlation coefficients were positive; MCSP/TUSU to
RP ratios was .415, while MCSU/TUSU to RP ratios equaled
.289. These carriers' responses demonstrated a good relation-
ship with profitability but were weak in the perception of
usefulness.

The analysis of ratings by title of executive
completing the questionnaire revealed that marketing and
sales executives have a good perception of usefulness of
services but a poor idea of each service's profitability
to the carrier. The highest coefficient for MCSU/TUSU and
RP ratios was found in those carriers where marketing or

sales executives responded to the questionnaire. All of

130

the other responses had relatively small but positive
relationships between MCSP/TUSU ratios and RP ratios.

In summary, this chapter has examined the number
of services, the changes in number offered over time, the
effect of no knowledge about services profitability and
usefulness, and the specific ratings of profitability
and usefulness given by motor common carriers and transport
users. Profitability and usefulness ratings relative to

carrier performance were also discussed.

CHAPTER V

CONCLUSIONS

The final chapter will summarize the findings of
the study of motor common carrier services. It will also
present some implications of the findings for the managements
of motor common carriers. In addition, the possibilities of

future study of motor carrier services will be discussed.
General Findings of Study

The Services Mix of Individual Carriers

Responses to the motor common carrier questionnaire
defined a services mix for each carrier. Analysis of the
responses disclosed that each carrier had a services mix
which was unique in composition. Also, the number of
services in each carrier's mix was probably larger than
most carriers and transport users had imagined. The majority
of motor common carriers listed between forty to sixty
services that they offered to transport users. Smaller
short-haul carriers tended to offer fewer services than
the larger long-haul carriers, but the difference in
averages was not statistically significant. Each carrier's
services mix was unique in that it represented a different

set of services. No two carriers had all of the same services.

131

132

On the other hand, there were three services offered by all
responding carriers, and twenty services offered by at
least 90 per cent of the carriers.

Motor carriers were apparently responding to a
complex of factors when selecting services to offer.
Probably the most important factor was the carrier's
operating authority. In addition, each carrier had a
perception of most services' contribution to net revenues,
and also, the services' usefulness to transport users.
Right or wrong, the perceived profitability and usefulness
of services also interacted with the fact that a large
number of competing carriers were offering a specific

service.

Changes in Services Mix

 

The study found that motor common carriers changed
the composition of their services mix during the twelve
years under investigation. Additions to services far out-
numbered the discontinuances, however. Most responding
carriers had more services in 1970 than they did in 1960.
The data indicated that discontinued services were generally
perceived as unprofitable to the carrier although the same
services may have been viewed as useful to transport users
by the carrier. Additions to services mixes had high
profitability ratings as well as high usefulness ratings
by carriers. The services that were added most often

included the coordinated transportation group, i.e.,

133

Service # 7 (air/truck), Service # 8 (rail/truck), Service
# 9 (T.O.F.C.), and Service # 10 (water/truck), and a group
of services requiring special equipment, i.e., Service # 37
(converter-vans), Service # 38 (hi-cube vans), Service # 40
(containers), Service # 41 (bins, cages, racks, etc.),
Service # 42 (tie-down & special stowage devices), and
Service # 43 (double-floors, stabilizers or compartments).
The special equipment group of services seemed related to
the coordinated transportation group of services, and both
seemed to reflect an effort to provide a complete transpor-
tatation service to transport users. This would also
suggest that the carriers may have been responding to
recognition of a growing transport need for improved
service. New services may have been part of a strategy

to obtain additional sources of revenue, to meet other
carrier competition, or to try to improve the carrier's
operating ratio. Evidence was found in the data that the
carriers having the greatest increase in number of services
had trends in operating ratios that were either improving
or worsening, while the carriers that had no changes in

the composition of their services mixes had operating
ratios that remained almost static.

Number of Services Offered and Carrier
Profitability

 

 

The number of services in the services mix, per se,

did not relate statistically to actual profits for the

134

responding motor common carriers as a whole. There were a
number of carriers among the seventy-eight respondents that
offered a limited number of services and had better operating
ratios than other carriers that offered a large number of
services. On the other hand, some carriers with a large
number of services had better operating ratios than those
offering fewer services. When the carriers were grouped

and analyzed by revenue size, the study found that the

small carriers' number of services offered correlated with
their operating ratios. But, the relationship showed lower
operating ratios (hence better profits) were found with
carriers offering fewer services. Only the medium size
motor common carriers were found to have a correlation
between lower operating ratios and higher number of services.
For the small size carriers the low number of services
associated with better operating ratios seemed intuitively
correct because these carriers typically have smaller
operating territories, fewer customers, more limited capital
resources and less specialized management. Apparently the
specific composition of the services mix and/or how well

the motor common carrier performed the services it offered

were more important than the mere number.

Factors of Evaluation

 

The analysis of the responses revealed that Factor

a (judgment) was the most important factor in evaluating

the profitability and usefulness of services. Next in

135

importance were Factor "b" (breakeven factors), Factor "e"
(continuing cost studies), Factor "c" (forecasts), and
Factor "d" (periodic cost studies). Small carriers'
responses were generally completed by company presidents
who relied on judgments or "eye-ball" techniques to
evaluate profitability and usefulness of services offered.
As the size of the carrier increased, the study found that
the responses tended to come from other executives and in
some cases specialists. These carriers utilized the more
complex evaluation tools or techniques, e.g., breakeven
factors, forecasts, and periodic and continuous studies.
When the motor common carriers were grouped
according to revenue size, the small, medium large, and
large carrier groupings were found to have the strongest
relationships between their perceptions of service profit-
ability and the carrier's actual profitability. Ratings
by small carrier presidents based on judgments had the best
correlation coefficient. Apparently, the small carrier
president was familiar enough with the services offered
and the costs associated with them to make a fairly good
estimate of profitability. Responses from medium small and
medium size carriers failed to reflect any correlation
between average ratings of profitability and operating
ratios. In fact, these carriers tended to have higher
profitability ratings associated with higher operating

ratios. The medium large and large carriers' responses

136

were completed by executives other than company presidents
and generally were specialists in particular facets of the
carrier's operations. The factors used to evaluate services
were typically forecasts, breakeven factors, and periodic

or continuous cost studies rather than judgments.

Number Evaluated to Number Offered

 

Motor common carriers did not evaluate all of the
services that they offered. Analysis of the data suggested
that some services on the list of seventy-two may have
been more difficult to rate on a profitability basis than
others. For example, the most often evaluated services
were the line-haul, pickup and delivery, and services
requiring special equipment groups. The services with
the lowest proportion of evaluated to offered were found
among terminal and advisory groups. The former groups
represented motor common carrier activities for which a
specific revenue could be associated with specific costs to
perform them. The latter groups involved services which
typically were non—revenue and required the assessment of
the subjective impact of customer loyalty on carrier net
revenues. Another explanation for not evaluating every
service offered, of course, could be a company policy
prohibiting the disclosure of the information or that the
person who completed the questionnaire simply did not want

to be bothered with rating all of the services.

137

While it was not possible to assign a causal
relationship between a carrier's operating ratio and a
high proportion of services not evaluated (no knowledge
of profitability), the study found that carriers with a
high percentage of evaluated to offered services had
lower operating ratios than those carriers that had a
low percentage of services evaluated. Logically a carrier
that was able to rate the profitability of each service
would seem to be in better position to adjust or control
that service in terms of a profit contribution better than

a carrier that had no rating or evaluation of the service.

Perception of Services' Profitability

The overall average of rating of profitableness
for the seventy-two services was just above the breakeven
point. This fact was not too surprising in view of the
poor industry operating ratios in 1970. Over a fourth of
the individual services received average ratings below the
. breakeven point, while only 12.5 per cent of them received
ratings at the average profitability level or higher. A
limited number of basic services were viewed by the motor
common carriers as making a substantial contribution to
carrier profits and, thereby, subsidizing many of the
others. Line-haul and special equipment services received
the highest average ratings. Terminal services had the

lowest ratings, e.g., the shipment information services

138

consistently received ratings of net loss by the carriers
offering them to transport users.

The study also found that some carriers had a high
proportion of services rated at the net loss level. When
these carriers were compared with those having only a few
net loss rated services in their services mix, the former
tended to have slightly poorer operating ratios. While
some of the unprofitable services were among those that
were discontinued, apparently many carriers continued to
offer services that they perceived as unprofitable to them.
Thus, these carriers had knowledge of the unprofitable
nature of services in their services mixes but were unable
to control or adjust them sufficiently to avoid a drain on

profits.

Perception of Services' Usefulness

One of the most interesting findings of the study
was the fact that motor common carriers considerably
overestimated the usefulness of their services to transport
users. This was determined by comparing the motor carrier
ratings with those received from a separate survey of a
sample of transport users who rated the same types of
services in terms of usefulness to them in the performance
of procurement or distribution activities. None of the
services rated by motor common carriers received an average
rating below the moderately useful level while 18.3 per cent

of transport user rated services received ratings below that

139

level. When the two sets of ratings were compared, it was
found that the line-haul, pickup and delivery, and terminal
services were positively correlated with the higher motor
carrier ratings associated with higher transport user
ratings, and vice versa. However, motor common carriers
not only overestimated the usefulness of advisory services
in Group V, but their ratings were not correlated with the
transport users at all. The only responses by motor
carriers which closely approximated the transport user
ratings of usefulness were those received from the carriers
that had marketing or sales executives complete the question-
naires. All of the other responses had considerably higher
ratings of usefulness.

Implications of the Study For Motor
Carrier Managements

 

 

The findings of the study of motor common carrier
services have definite implications for the managements of
carriers striving to maintain or improve their market
position in a competitive and innovative industry.

The most important result of the study is the fact
that the carriers that responded to the questionnaires have
already started thinking about the profitability and useful-
ness of each service or activity performed. While a follow-up
with respondents was not undertaken, subsequent contacts with
several carriers revealed that they had been stimulated to

perform a self-study of their services. For some carriers'

140

managements this was the first time that a listing of motor
common carrier services was presented. The questionnaire
also forced them to assess the profitability and usefulness
of a number of the carrier's activities that were non-
revenue in nature. Several carriers are in the process

of refining methods of evaluating services and have found
services that can make indirect profit contributions where
none was thought possible before.

From the marketing vieWpoint, the findings of the
study verifies the existence of a package or mix of services
for motor common carriers. The service mix of a motor
common carrier can be compared to the product mix of an
industrial firm. The study also suggests some ways of
evaluating each service that is or should be included in
a Specific carrier's mix in order for that carrier to
attain a degree of market differentiation.

Each motor common carrier is unique in terms of
its operating territory, its management's interest and
competence, and its customers. There probably cannot be
a ready—made or "ideal" services mix that can be applied
to all carriers. There is, however, a common denominator
of essential services for a motor common carrier which
could be viewed as basic to any services mix. In addition,
there are a number of other services that can be offered
at the discretion of each carrier's management in order

to achieve significant differentiation for it within the

141

motor carrier industry. The findings of the study provide
four criteria for defining the essential services. These
criteria are:

l. A majority of motor common carriers offered the
specific service. If most carriers already offer the
service, any carrier not providing it may be at a competitive
disadvantage. The study found that forty-six services were
offered by at least half or more of the motor common carriers
responding to the survey questionnaire.

2. A majority of transport users utilized the
service in the performance of procurement or distribution
activities. At least fifty-six services were used by a
majority of transport users responding to the survey
questionnaire. These services represent an area of potential,
if not actual need, that any carrier not currently offering
the service should seriously consider.

3. The perceived profitability of the service by
motor common carriers was greater than the breakeven level.
This would assure that all services on the essential list
were viewed by the responding survey carriers as making
some contribution to net revenues. The study found that
fifty-two services met this requirement.

4. The perceived usefulness to procurement and
distribution activities by transport users exceeded the
marginal usefulness level. This would mean that each

service on the essential list was above the marginal useful

142

level, and thus needed, by the transport users responding
to the survey. Fifty-eight specific services were found
by the study to meet this criterion.

The essential list of services for motor common
carriers was developed by comparing the lists of services
meeting each criterion, i.e., the forty-six offered by a
majority of motor common carriers; the fifty-six used by
a majority of transport users; the fifty-two rated above
the breakeven profitability level by motor common carriers;
and the fifty-eight rated above the marginally useful level
by transport users. Every service on the essential list
had to appear on all four of the above lists to qualify.
If a service did not appear on all lists, it was then
placed on the discretionary list of services. Thirty
services were found to satisfy all four criteria and are
shown in Table 46. The remaining forty-two services were
considered discretionary and are found in Table 47.

Most of the services composing the essential list
are basic to what a motor common carrier is in business to
do. Somewhat surprising, though, are the five advisory
services on the list. All five are non-revenue services
and are linked to the physical movement of freight only
indirectly. The services can assist the carrier's profit
position by reducing shipper claims and improving the

handling of shipments from the transport user.

TABLE

143

46.--List of Essential Services.

 

Service Number Description of Service

 

Group I. Line-Haul Services

 

 

l Less-than-truckload
2 Truckload
3 Volume
4 Direct or single line
5 Interline
6 Trailer Interchange
7 Air/Truck connections
8 Rail/Truck connections
9 T.O.F.C.
13 Expedited shipments
14 Exclusive use of vehicle
15 Loading/Unloading service
16 Reconsignment/Diversion
l7 Consolidation/Distribution
l8 Stop-offs in transit for partial loading
or unloading
20 Bonded or customs shipments
Group II. Pickup or Delivery Services
24 Scheduled pickup or delivery
25 Intra-Plant split P a D
Group III. Services Requiring Special Equipment
35 Open-top trailers
36 Flat-Bed or low-boy trailers
38 Hi-cube vans
Group IV. Terminal Services

 

47 Export documentation

56 Rate quotations

57 Route selections

60 Advanced notification of arrival to consignee

Groupr. Advisory Services to Customers

 

64 Loss & damage claims prevention programs

65 Advice on packaging materials, packing
methods, & loading techniques

66 Advice on order size or shipment quantities

67 Assistance in shipment documentation

68 Advice on material handling or shipment

preparation techniques

 

144

TABLE 47.-~List of Discretionary Services.

 

 

 

 

 

 

 

Service Number Description of Service
Group I. Line—Haul Services
10 Water/Truck connections
11 Published dispatch schedules
12 Special handling for emergency shipments
19 Other In-transit privileges
21 Small package express
22 Return of empty pallets, bins, racks, cages, etc.
23 Other Line-haul services
Group II. Pickup or Delivery Services
26 P&D at private residences
27 P&D at off-hours
28 P&D at positions not immediately adj. to vehicle
29 Redelivery
30 Other pickup and delivery
Group_III. Services Requiring Special Equipment
31 Refrigerated or humidity controlled trailers
32 Heated or insulated trailers
33 Tank or bulk trailers
34 Hopper or dry bulk trailers
37 Converter-vans
39 Air-ride trailers
40 Containers
41 Bins, cages, racks, or pallets provided by carrier
42 Tie-down & special stowage devices
43 Double-floors, stabilizers or compartments
44 Other special equipment
Grgpp IV. Terminal Services
45 C.O.D. shipments
46 Order/Notify shipments
48 Sorting or segregating shipments
49 Marking or tagging freight
50 Storage or warehousing
51 Packing or crating (including re-packing or
re-crating)
52 Armed guard and/or escort vehicle
53 Furnishing extra driver
54 Furnishing helper labor
55 Direct Advertising on carrier's vehicle
58 Shipment tracing
59 Proof of delivery
61 Pre-arrival confirmation to shipper
62 Over, short, or damage location
Group V. Advisory Services to Customers
63 Distribution cost studies or audits
69 Advice on inventory control systems
70 Warehouse or plant site location studies
71 Advice on shipping or receiving facility design
for plants or warehouses
72 Other advisory services

 

145

A carrier should examine carefully every service on
the essential list. Admittedly, market differentiation on
the basis of services would not be possible in terms of
these services. Offering them, however, would assure the
motor common carrier of maintaining or improving its
competitive position relative to other carriers.

For greatest marketing differential advantage,
motor common carrier managements should focus on the forty-
two services appearing on the list of discretionary services.
A carrier should consider the full range of these services
within the context of its profit objectives, its operating
authority, its customers' needs, the competitive environment
it faces, and the interest and competence of its management.
This should be done independently of what other motor common
carriers may have done and independently of what appears to
be fashionable at the time. The mere number of services
offered should not be the sole factor either.

One responding motor common carrier has already
benefited from a self-study of its operations and services.
The initial self-study was stimulated by an operating ratio
of 100.0 in the year 1970. The operations department
emphasized the necessity of improving the control and
planning of equipment and driver movements within the
carrier's operating system. They sought a computer assisted
information system that kept track of every vehicle and

shipment from the point of pickup to point of delivery.

146

The marketing department saw a spin-off benefit from the
information system which would permit the carrier to offer
several customer services in a way that would differentiate
the carrier from its competitors. In the survey response
these services were perceived as unprofitable; using the
computer assisted information system the services could

be offered in a way that would make them positive contrib-
utors to the carrier's net revenues. Specifically, the
carrier could then provide shipment tracing, proof of
delivery, advance notification of arrival to consignee,
and pre-arrival confirmation to shipper as services which
definitely improved customer loyalty through aiding the
transport user to perform procurement and distribution
activities. Knowledge of the services previously having
unprofitable ratings helped focus attention on the need to
change the way the services were performed. The fact that
this carrier has now reversed a poor operating ratio trend
seems more than coincidence. Several other motor common
carriers are currently experimenting with similar systems.
All of them are without doubt enjoying a degree of marketing
differentiation not heretofore possible.

Another possibility for service differentiation is
found in the performance of several of the essential
advisory services. If the carrier offered Service # 65
(advice on packaging materials, packing methods, and

loading techniques), and Service # 68 (materials handling

147

or shipment preparation techniques), it could readily

extend the special equipment services such as Service # 4O
(containers), Service # 41 (bins, cages, racks, or pallets
provided by carrier), Service # 42 (tie-down & special
stowage devices), or Service # 43 (double-floors, stabilizers
or compartments). The special equipment services would go
hand-in-hand with the essential advisory services.

The findings of the study suggest that motor carrier
managements must improve the communications interface with
their transport user customers. For example, the management
of a carrier must place greater reliance on information
inputs from marketing and sales personnel about the useful-
ness of services. In addition, the carrier must find ways
of inducing transport users to communicate their needs for
services. The improvement of communication may necessitate
the breaking down of traditional antagonisms between the
transport user and the carrier. It also requires an
unprecedented degree of cooperation on all matters from
which both parties may mutually benefit. The best argument
for the transport user cooperation rests on the ultimate
improvements in the cost/service package offered by the
common carrier and available to the transport user. If
the carrier can obtain an accurate perception of user
needs, it can eliminate those services that drain net
profits and replace them with services that are needed

and can contribute to profits. The incentive to the motor

148

common carrier is obvious, i.e., more traffic and improved
profits. The incentive to the transport user may not be
as clear. Nevertheless, the transport user stands to also
profit from a healthy motor common carrier which can offer
a package of services leading to improved transport user
customer service levels. This, in turn, should result in
more sales revenues and better profits for the transport
user, as well. Motor carrier management should stress the
benefits to be gained through c00peration when seeking
information about service needs from transport users.

The process of evaluation of present and potential
services must be done continuously by the management of a
motor common carrier. The study clearly shows that the

decision to offer a new service, or to discontinue an

existing service, must involve a number of executives within

the carrier's management. Executives in sales and marketing

can give insights into usefulness; executives responsible
for finance, operations, and traffic can help assess the

profitability. Each can bring to bear on the decision a

range of experiences and contacts with operating departments

and transport user customers. No doubt this joint decision-

making is standard practice for the larger carriers. The
smaller carriers, however, must seek advice from outside
specialists if competent specialists are not available

within the organization. The costs of consulting advice

149

may be readily recouped from the increased profits, or the
avoidance of losses, resulting from the best decision.

In conclusion, the study found that motor common
carriers definitely have services mixes. It was possible,
also, for a carrier to differentiate itself in its market
by offering a unique services mix. A particular motor
common carrier's services mix may have been developed
through conscious effort necessary to keep it in balance
with the carrier's profit objectives and customer needs.

On the other hand, the study suggests that many carriers
may have services mixes which evolved from a more or less
random process with little or no concern for profits or
needs. A major effort, involving careful self-study of
operations and services, is necessary to improve the
composition of such carriers' services mixes. If a carrier
uses competent management to select and then to control its
services, the carrier should have a good chance to survive
in the highly competitive battle for a share of the total

freight traffic in the United States.

Implications for Future Study

 

The present study was a macro-examination of the
services offered by motor common carriers and was limited
to those doing business in the midwest. An obvious follow—
up study would seem to be that of motor common carriers in
other regions of the United States to verify if the profit-

ability and usefulness ratings were comparable. It would

150

also seem necessary to determine if the services mixes of
motor common carriers in other regions were similar in
composition. While the sample of motor common carriers
used for the present study included a number domiciled in
states outside the midwest, a study based on responses from
the west coast or from the east coast would seem to be
necessary for verification of general applications of the
present study's findings.

An in-depth study of a selected group of motor common
carriers is also suggested from the present findings.
Specifically, the process of evaluating services internally
within the carrier needs to be investigated. Interviews
with key executives involved in the evaluation process
should yield insights into the process and into the relative
importance of each evaluation factor in determining the
profitability and usefulness of services. This investigation
seems most necessary for the evaluation of the non-revenue
and/or non-transportation services in the services mix. The
present findings would provide the basis for selecting the
motor common carriers for further study. Carriers that
could be selected are those that appeared in the groupings
of carriers, i.e., by revenue size, by the factor used in
evaluation, and by the title of executive completing the
questionnaire, where the highest correlation coefficients
were found between the average ratings of~profitability

and the carriers' actual profitability and, also, between

151

the carriers' ratings of profitability and usefulness
related to the transport users' ratings of usefulness. A
preliminary check of possible carriers indicated that there
were six motor common carriers that appeared on each of the
groupings that had the highest correlations. An intensive
micro-study of these carriers would be most beneficial in
understanding the process of evaluation used by them. Such
an investigation would permit the determination of which
factor was best suited for the evaluation of each of the
services that the carrier offers, also. This was something
that the present study did not do. A micro-study of the
motor common carrier's services mix does appear, then, to

be a logical sequel to the present macro-study.

APPENDICES

152

APPENDIX I

MOTOR COMMON CARRIER QUESTIONNAIRE

153

APPENDIX I

MOTOR COMMON CARRIER QUESTIONNAIRE

Carrier:

 

Name of person completing Questionnaire Title:

 

"""1 Please place a check mark (\/) here if you desire a summary of the study's findings. It will
be sent directly to you as soon as possible.

 

 

#

INSTRUCTIONS

Please complete both Part I and Part II of the Questionnaire. In general you are asked to simply
place a check mark (.j) in the appropriate space. The only exception is found in Part 1, Question 4.
There you are asked to rank the methods used by your company in determining the contribution to carrier
Net Revenue by each separate service provided to customers. Please rank only those methods used by
your company.

Part II of the Questionnaire asks three questions about a list of identifiable customer services which
may be provided by motor common carriers. These services are listed in five broad groupings and are
defined as anything a motor common carrier performs for or provides to a customer which is unique or
distinct from all other services. An illustration is the difference between the performance of a
movement of freight for a customer under less-than-truckload service from that involved in a truckload
service.

Question 1 under Partll seeks to determine the approximate date each service was initiated by your
company. If subsequently,the service was discontinued for whatever reason, please indicate the
approximate date of discontinuance. If a service has never been offered, you obviously do not need
to answer Questions 2 & 3 for it.

Question 2 asks for a ranking of the contribution to Net Revenues by each service. This ranking would
be based on the methods used in Part 1, Question 4. The question assumes that every carrier uses some
measure of profitability to evaluate the services it provides. The method used will indicate the extent
that a service adds to the carrier's profits, either directly through revenues generated which are in
excess of the costs incurred, or indirectly through the development of customer satisfaction and loyalty
such that the customer grows to depend on the carrier for the service. The customer will also be using
the more profitable services provided by the carrier. This latter situation would seem to justify

the continued performance of services where the direct revenues do not cover costs.

Question 3 is designed to obtain an estimate by the carrier of the usefulness of each service to its
customers' procurement and distribution requirements.

 

Your prompt attention to this Questionnaire will be appreciated. When completed, please fold it in
half and place it into the enclosed self-addressed and stamped envelope fOr return directly to me.

Thank you.

Charles L. Hilton

Associate Professor

School of Business Administration
Tri-State College

Angola, Indiana 46703

l.
2.
3.

4.

PART I. GENERAL CARRIER INFORMATION

Total number of employees in Company.

Total number of employees engaged in Marketing, Sales or Customer Relations activities.

Proportion of carrier gross revenues budgeted or expended on the total Marketing, Sales or Customer
Relations activities. (Please check (TJ) the percentage which is your best estimate.)

a.

b.

. 4% to 6%

Less than 2%
2% to 4%

6% to 8%

8% to 10%

. More than 10%

 

Methods used by your Company in determining the contribution to carrier Net Revenues of each separate

service provided to customers.

(Please rank each method used by placing the number “l“ in the space

beside the most important, the number “2" by the second best important, "3" by the third, etc.)

. Judgments based upon overall profits and performance factors.

. Establishment of breakeven factors for customers, shipments, vehicles, routes

loads, terminals, Egg.

. Forecasts of revenues, tonnage, ton-miles, etc.

Periodic cost studies of new services.

Continuing cost studies of individual services.

. Other methods of determining the contribution of services to Net Revenues. (Specify)

of Commodity Operating Authority possessed by your Company.
(Chocle

General Commodities

. Perishable products

Liquid or dry bulk products

. Explosives or dangerous articles

. Heavy machinery or equipment

Steel or steel products

. Uncrated new furniture, electronic equipment,

or household goods

. Other specific commodities (Specify)

of Route Operating Authority possessed by your Company.
(Chock J)

Regular route - scheduled service

. Regular route - non-scheduled service

Irregular route - radial service

. Irregular route - non-radial service

_—TRankings)

 

lllli

EVALUATION OF MOTOR COMMON CARRIER SERVICES

PART 11.
Please answer the three questions listed below for each identifiable customer service provided
y your company by checking ( V) the appropriate space opposite each service.
. If subsequently
e

INSTRUCTIONS:
b
What was the approximate date that each service was initiated by your company?
he service was discontinued, please indicate the approximate dat .

QUESTION l.
Hhat is the relative importance of each identifiable service provided in tenns of its contribution

        

QUESTION 3

Contribution to

QUESTION 2.
myour carrier's Net Revenue?
What is your estimate of the relative importance of each identifiable service provided by your

' ?
Customer Needs

 

QUESTION 2

Contribution to
Carrier

Net Revenues

   

QUESTION 3.

     
   

company to procurement and/or distribution needs of its customers
QUESTION 1

Approximate Date
Service Initiated

   
                
 
            
 
 

     
      

      
 

   

IDENTIFIABLE
‘; MOTOR COMMON CARRIER
CUSTOMER SERVICES :3 5 g.
i *’ q: a
9? ST s S
' I a f if
.5" r? s
in.) In W
5 E ,5,”
O O L
f." 't g
:3 45 s:

  
 

GROUP I. LINE-HAUL SERVICES

 

\JQ

\
V

d
U"
-

  

 

18 Stop-offs in transit for partial loading

 

PART II . Cont.-

OUESTION 1 QUESTION 2 QUESTION 3
Approximate Date Contribution to Contribution to
Service Initiated Carrier Customer Needs
Net Revenues
IDENTIFIABLE
MOTOR COMMON CARRIER

CUSTOMER SERVICES

. #

(19)
(20)
(21)
(22)
(23)

22. Return of empty pallets, bins, racks,

GROUP 11. PICKUP OR DELIVERY SERVICES
(24)
(25)
(25)
(27)

5. P & D at not immediately
(28)

(29)
(30)

GROUP III. SERVICES REQUIRING SPECIAL
EQUIPMENT

(3]) l. or humidity controlled

(32)
(33)
(34)
(35)
(36)
(37)
(38)
(39)

 

PART II. Cont.-

  

QUESTION 1
Approximate Date

    
     
  
 

QUESTION 2
Contribution to

      
   
   

   
   
   

  

QUESTION 3

Contribution to
Customer Needs

 

  

 

 

 

 

 

Service Initiated Carrier
Net Revenues
Charity Chockl
IOENTIFIABLE A?
Q
MOTOR COMMON CARRIER _\ :9 5;
(Mo 0 'H
01> 3 0
CUSTOMER SERVICES s: st 2 - -
I? I? '7 '7 "c ‘= ‘r s' 423- £9 £9
mommc~ St o_;~~v.
E? c: “I F‘ I: 1: .3 ‘u w 3' In? :7 R; 1? i?
L 5? J? .S' 5: E? J? A? E? ‘5 3?? £9 45 E’ :3
e~ssees$§ss§aeea
ssssssso‘aessfsssse
) lO. Containers (any size)
11. Bins, cages, racks. or pallets provided
) by carrier
) 12. Tie-down & special stowage devices
‘ 13. Double-floors, stabilizers or
_) compartments
.) 14. Other Special Equipment

 

 

GROUP IV. TERMINAL SERVICES

 

) l. C.O.D. shipments

 

) 2. Order/Notify shipments

 

) 3. Export documentation

 

) 4. Sorting or segregating shipments

 

Marking or tagging freight

'1 s.

 

Storage or warehousing

Packing or crating (including re-packing

) 6.
7.

 

or reecratino)

 

8. Armedpguard and/or escort vehicle
9.

 

Furnishing extra driver

 

lO. Furnishing helper labor

11. Direct advertising on carrier's vehicle

 

)
l
1
l
l
1

 

12. Rate quotations

 

1 13. Route selections

1 l4. Shipment tracing

 

' 15. Proof of delivery

 

16. Advanced notification of arrival to

 

' consignee

 

 

 

 

 

 

 

' 17. Pre-arrival confirmation to shipper

‘—

 

 

 

 

 

 

 

 

 

 

1 18. Over, short, or damage location

 

 

 

 

 

 

 

 

 

 

.g.
PART II. Cont.-
QUESTION 1 QUESTION 2 QUESTION 3
Approximate Date Contribution to Contribution to
Service Initiated Carrier Customer Needs
Net Revenues
chm ,/ cima I/ Cluck V
IDENTIFIABLE o
O
MOTOR COMMON CARRIER :3 5
a I; 0 3':
CUSTOMER SERVICES 2’ E: s? S g .e .1
e é’ a? 81’ s 5’ a" «9., ‘5' '5
53:38: .5555 5’s?
eases: ss‘tksee
is. N N --. u «4 Lu a.» 'B K r. Q,
Q O H 'U in 0 0 =5 0 ‘U '0
blccchmngq-ntu
L 01 v- "~ 0 \l 4: LU E 3 "~ A
# £55$Qs§m<rbz§££
GROUP V. ADVISORY SERVICES TO CUSTOMERS
(63)" 1. Distribution cost studies or audits
(64) 2. Loss & damage claims prevention programs
3. Advice on packaging materials. packing
(65) methods. & loading techniques
(56) 4. Advice on order size or shipment uantitie

 

(67) 5. Assistance in shipment documentation
6. Advice on materials handling or shipment
preparation techniques

(58)
(69) 7. Advice on inventory control systems

(70) 8. Warehouse or plant site location studies
9. Advice on shipping and receiving facility
design for plants or warehouses

(71)
(72) 10. Other advisory services (Specify)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPENDIX II

TRANSPORT USER QUESTIONNAIRE

160

APPENDIX II

TRANSPORT USER QUESTIONNAIRE

 

 

Instructions

Please read the directions for each part of the Questionnaire. In general you are required
to place a check mark (/) in the apprOpriate Space. The only exception is Part 1, Question 6.
In this question you are asked to rank the criteria used in the selection of Motor Common
Carriers for your Company's procurement and distribution needs. Please rank only those
criteria that you use.

 

Your prompt attention to this Questionnaire will be appreciated. When completed, please fold
it in half and place it in the enclosed self-addressed and stamped envelope for return to
me directly.

Thank you.

Charles L. Hilton

Associate Professor

School of Business Administration
Tri-State College

Angola, Indiana 46703

 

TRANSPORT USER QUESTIONNAIRE

 

Company Name of Person Completing:

Please place a check mark (\/) here if you desire a summary of the study's findings. It will be sent
[::::] directly to you as soon as possible .

 

General Instructions
Please supply the information on the company, subsidiary, division, or
plant for which you have traffic or physical distribution responsibilities.
PART I. GENERAL INFORMATION ABOUT THE COMPANY.
1. Size:

(a) Approximate Annual Sales in 1970

s
o
n
R
S

1. Less than $5 million
ii. $5 million but less than $10 million

 

 

iii. $10 million but less than $50 million
iv. $50 million but less than $100 million
v. Over $100 million

(b) Number 5 Location of Establishments (Plants & Harehouses) (Number)
i. Central Region (Ind., Mich., Ohio, & I11.)
ii. Remainder of U.S.
iii. Abroad
(c) Approximate Annual Freight Bill in 1970
1. Less than $100,000
ii. $100,000 but less than $500,000
iii. $500,000 but less than $1,000,000
iv. Over $1,000,000

 

A
n
3'
0
n
r

K

v

 

2. Characteristics of Primary Products: (a) Industrial __ (b) Consumer—_—
3. Geography of Primary Markets:
(a) Central Region, only (Ind., Mich., Ohio, & Ill.)

(Check 4)

 

(b) National

(c) National & International

PART I. Cont.-

4. Modes of Transportation Used for Procurement & Distribution Needs:

 

 

(Chock J 1 (Chub/1
Procurement Distribution
Mode (Inbound Raw (Outbound
Materials & Finished
Supplies) Products)

 

(a) Railroad

 

(b) Motor Carrier
(c) Airline

 

 

(d) Hater Carrier

 

(e) Pipeline

 

 

 

 

NOTE:If your Company does not use Motor Carriers, the Questionnaire is complete. If it does,
please go to Question #5.

5. Types of Motor Carriers used:

 

(Check J )
(a) Common
(b) Contract __
(c) Private _—

NOTE: If your Company does p9£_use Motor Common Carriers, the Questionnaire is complete. If
it does. please go on to Question #6 and to PART II.

6. What criteria does your Company use in the selection of a Motor Common Carrier for its procurement
and distribution needs? Please rank at least five (5) of the following possible criteria using the

number "1“ for the most important, "2" for the second most important, “3" for the third most
important, etc:

(Ranks)

(a) Level of rates

(b) Reputation in transportation industry
(c) Adequacy of equipment 5 terminals

(d) Operating authority

(e) Low freight loss & damage claims ratio
(f) Prompt settlement of claims

(9) Integrity of top management

(h) Competence of Operating management

(1) Financial stability

(,1) Reciprocity

(k) Consistency, reliability & dependability of service

(1) Completeness of "services mix"

|||||||||||||

(m) Other (Please Specify)

PART II.

USEFULNESS 0F MOTOR COMMON CARRIER SERVICES.

NOTE: This part of the Questionnaire is designed to obtain information about each unique or
identifiable service that a Motor Common Carrier may provide for your Company. Please
answer the following question:

“what is the relative usefulness of each service to the effective performance of procurement
and/or distribution activities of your Company?“

IDENTIFIABLE
MOTOR COMMON CARRIER
CUSTOMER SERVICES

(Chock \/ Appropriate Space 1

CONTRIBUTION TO PROCUREMENT
AND OR DISTRIBUTION NEEDS

 

# GROUP I. LINE-HAUL SERVICES

 

(A) ‘-

Less-than-truckload

 

(2)

. Truckload

 

(3)

. Volume

 

Direct or single line

 

(5)

. Interline

 

2
3
(4) 4-
5
6

(5)

Trailer interchange

 

(7) 7.

Air/Truck connections

 

(8)=B.

Rail/Truck connections

 

(9) 9.

T.O.F.C.

 

(io)io.

Hater/Truck connections

 

(11)”.

Published dispatch schedules

 

(12)12.

Special handling for emergency shipments

 

(l3)i3.

Expedited shipments

 

(l4)i4.

Exclusive use of vehicles

 

(15)is.

Loading/Unloading service

 

(15116.

Reconsignment/Diversion

 

(17117.

Consolidation/Distribution service

 

(18)i8.

Stop-offs in transit for partial loading/unloading

 

(19)19.

Other In-transit privileges

 

20.

Import/Export shipments

 

(20)21.

Bonded or Customs shipments

 

(2])22.

Small package express

 

(22) 23.

Return of empty pallets, bins, racks, cages, Egg.

 

(23)24.

Other Line-Haul services (Specify)

 

 

 

 

 

 

 

 

 

PART II. Cont.-

-5-

(Chock ,l Appropriate ”up!

 

CONTRIBUTION TO PROCUREMENT
AND/0R DISTRIBUTION NEEDS

 

IDENTIFIABLE \ 3‘
9? J}
~3’ W 9
MOTOR COMMON CARRIER (PO 9 3 °
. -
CUSTOMER SERVICES VQQ Q9; ‘3 53' S"
6? s. (S' é§' .65
SS ‘89 (S' if ~\

 

GROUP II.

PICKUP OR DELIVERY SERVICES

 

1.

Scheduled pickup or delivery

 

. Intra-plant Split P & D

 

P a D at private residences

 

2
3.
4

P a D at off-hours

 

5.
6.

P s D at positions not immediately adjacent

 

Redelivery

 

7.

Other P a D services (Specify)

 

 

GROUP III.

SERVICES REQUIRING SPECIAL EQUIPMENT

 

l.

Refrigerated or humidity controlled trailers

 

Heated or insulated trailers

 

Tank or bulk liquid trailers

 

Hopper or dry bulk trailers

 

Open-top trailers

 

Flat-bed or low-boy trailers

 

Converter-vans

 

Hi-cube vans

 

OQNOU'IDQN

Air-ride trailers

 

—a
o

Containers (any size)

 

d
d
.

Bins, cages, racks, or pallets provided by carrier

 

.—a
N

. Tie-down & special stowage devices

 

d
to
O

Double-floors, stabilizers or compartments

 

14.

Other special equipment (Specify)

 

 

GROUP IV.

TERMINAL SERVICES

 

. C.O.D. shipments

 

. Order/notify shipments

 

Sorting or segregating shipments

 

Marking or tagging freight

 

. Export documentation

 

 

 

 

 

 

 

PART II. Cont.- iCNOCI \/ Aaflrolrllii ’I'il'

CONTRIBUTION TO PROCUREMENT

D R 01 TRIB
IDENTIFIABLE .\
0 é° K°
MOTOR COMMON CARRIER a go 3,"
CUSTOMER SERVICES «3‘ o“ a '3’ 4'
e5" e“ e8 a" «‘6

 

# GROUP IV. TERMINAL SERVICES Cont.-

(50) 6. Storage or warehousing

 

 

(5]) 7. Packing or crating service

 

(52) 8. Armed guard and/or escort vehicle

 

(53) 9. Furnishing extra driver

 

(54)lO. Furnishing helper labor

 

(55)”. Direct advertising on carrier's vehicle

 

(56) 12. Rate quotations

(57)l3. Route selections
(58)14. Shipment tracing
(59)is. Proof of delivery

 

 

 

 

(60)16. Advanced notification of arrival to consignee

 

(6])17. Pre-arrival confirmation to shipper

 

(62) 18. Over, short, or damage location

 

19. Other terminal services (Specify)

 

 

GROUP V. ADVISORY SERVICES TO CUSTOMERS

 

(53) l. Distribution cost studies or audits

 

(54) 2. Loss a damage claims prevention programs

 

3. Advice on packaging materials, packing methods,

 

(55)
(66) 4. Advice on order size or shipment quantities

 

(67) 5. Assistance in shipment documentation

 

(68) 6. Advice on materials handling or shipment

 

(69) 7. Advice on inventory control systems

 

(70) 8. Harehouse or plant site location studies

 

(7]) 9. Advice on shipping and receiving facility design
for plants or wflhouses

(72) 10. Other advisory services (Specify)

 

 

 

 

 

 

 

 

 

APPENDIX III

LIST OF CARRIERS RESPONDING TO SURVEY

167

Appendix III

List of Carriers ReSponding

to Survey

A S H Truck Line, Inc.
Evansville, Indiana

Eastern Express, Inc.
Terre Haute, Indiana

Renner's Express, Inc.
Indianapolis, Indiana

Mead, W. L., Inc.
Norwalk, Ohio

Reinhardt Transfer Company, Inc.
Portsmouth, Ohio

Overland TranSportation Co.
Akron, Ohio

The National Transit Corporation
Dearborn, Michigan

Tucker Freight Lines, Inc.
South Bend, Indiana

Service Transport Co.
Cleveland, Ohio

C.A.B.Y. Transportation Co.
Cleveland, Ohio

Be-Mac Transport Co., Inc.
St. Louis, Mo.

Admiral-Merchants Motor Freight, Inc.

St. Paul, Minn.

Werner Continental, Inc.
Roseville, Minn.

Hennis Freight Lines, Inc.
Wiston-Salem, N.C.

Transamerican Freight Lines, Inc.
Detroit, Mich.

168

Middle States Motor Freight, Inc.
Cincinnati, Ohio

Spector Freight System, Inc.
Chicago, 111.

Jones Truck Lines, Inc.
Springdale, Ark.

Motor Express, Inc., of Indiana
Indianapolis, Indiana

Belford Trucking Co., Inc.
Miami, Fla.

Rooks Transfer Lines, INC.
Holland, Michigan

Ecklar-Morre Express, Inc.
Lexington, Ky.

Mason Dixon Lines, Inc.
Kingsport, Tenn.

Key Line Freight, Inc.
Grand Rapids, Michigan

Commercial Motor Freight, Inc.
Columbus, Ohio

McLean Trucking Company
Winston-Salem, N.C.

Clairmont Transfer Co.
Escanaba, Michigan

Cooper-Jarett, Inc.
Orange, N.J.

Ryder Truck Lines, Inc.
Jacksonville, Fla.

Interstate Motor Freight System
Grand Rapids, Michigan

169

Terminal Transport Co., Inc.
Atlanta, Ga.

Cook Motor Lines
Akron, Ohio

Tobler, H. J. Transfer, Inc.
Peru, Ill.

Herriott Trucking Co., Inc.
E. Palestine, Ohio

Burlington Truck Lines, Inc.
Balesburg, 111.

H & W Motor Express Co.
Dubuque, Iowa

Shippers Dispatch, Inc.
South Bend, Indiana

Associated Truck Lines, Inc.
Grand Rapids, Michigan

Safeway Truck Lines, Inc.
South Bend, Indiana

Arkansas-Best Freight System, Inc.
Fort Smith, Ark.

Bruce Motor Freight, Inc.
Des Moines, Iowa

Youngblood Truck Lines, Inc.
Fletcher, N.C.

Illinois-California Express (ICX)
Denver, Colo.

Wolverine Express, Inc.
Muskegon, Michigan

Carolina Freight Carriers Corp.
Charryville, N.C.

Lovelace Truck Service, Inc.
Terre Haute, Indiana

Wilson Freight Co.
Cincinnati, Ohio

Eazor Express, Inc.
Pittsburgh, Pa.

Chippewa Motor Freight, Inc.
Eau Clair, Wis.

Jones Motor
Spring City, Pa.

Long Transportation Co.
Detroit, Michigan

Little Audrey's Transportation Co., Inc.
Fremont, Nebr.

Checker Express, Inc.
Milwaukee Wis.

Mid-American Lines, Inc.
Kansas City, Mo.

Mushroom Transportation Co., Inc.
Philadelphia, Pa.

Lightening Express, Inc.
Pittsburgh, Pa.

I M L Freight, IMC.
Salt Lake City, Utah

Churchill Truck Lines, Inc.
Chillicothe, Mo.

Consolidated Freightways. Inc.
Menlo Park, Cal.

I & S McDaniel, Inc.
Vincennes, Indiana

C W Transport, Inc.
Wisconsin Rapids, Wis.

Courier-Newsom Express, Inc.
Columbus, Indiana

Gateway Transportation Co., Inc.
La Crosse, Wis.

Motor Freight Corporation
Terre Haute, Indiana

170

Raymond Motor TranSportation, Inc.
Minneapolis, Minn.

Holland Motor Express, Inc.
Holland, Michigan

Advance Transportation Company
Milwaukee, Wisc.

Suburban Motor Freight, Inc.
Columbus, Ohio

Preston Trucking Company, Inc.
Preston, M.O.

Transport Motor EXpress, Inc.
Fort Wayne, Indiana

Blue Arrow-Douglaw, Inc.
Grand Rapids, Michigan

Rock Island Motor Transit Co.

‘ Des Moines, Iowa

Brady Motorfrate, Inc.
Des Moines, Iowa

Modern Transfer Co., Inc.
Allentown, Pa.

Carstensen Freight Line, Inc.
Clinton, Iowa

Southern Express Co.
Cicero, 111.

Pacific Intermountain Express, Co.
Oakland, Cal.

Bowman Transportation Inc.
Gadsden, Ala.

,APPENDIX IV

LIST OF RESPONDING TRANSPORT USERS

171

Appendix IV

List of Responding Transport Users

American Welding & Mfg. Co.
Warren, Ohio

Fel Pro, Inc.
Div. of Felt Products Mfg. Co.
Skokie, Ill.

Eclipse Fuel Engineering Co.
Rockford, Ill.

Mt. Clemens Metal Products Co.
Mt. Clemens, Mich.

Freedman Artcraft Engineering Corp.

Charlevoix, Mich.

Whiting Corp.
Harvey, Ill.

SCM Corp.
Allied Paper Inc.
Kalamazoo, Mich.

Simplicity Pattern Co., Inc.
Niles, Mich.

Pretty Products Inc.
Coshocton, Ohio

Snyder Molasses Co.
Chicago, Ill.

Robinson-Ransbottom Pottery
Roseville, Ohio

Urbana Mills Co.
Urbana, Ohio

Miracle Adhesives Corp.
New Philadelphia, Ohio

Fleming-Potter Co., Inc.
Peoria, 111.

U. S. Reduction CO.
East Chicago, Ind.

Cohen a Son Co.
Cleveland, Ohio

Great Western Steel Co.
Chicago, Ill.

Youngstown Sheet & Tube Co.
Youngstown, Ohio

Detrex Chemical Industries
Detroit, Mich.

Ex-Cell-O Corp.
Detroit, Mich.

H. Kramer & Co.
Chicago, Ill.

Ric-Wil, Inc.
Breckville, Ohio

Armour and Co.
Chicago, 111.

Warner Corp.
Subs. of Stratton 8 Terstegge Co.
North Manchester, Ind.

A. G. Busch & Co., Inc.
Chicago, Ill.

Service Spring Co.
Indianapolis, Ind.

Diamond Chain CO.
Indianapolis, Ind.

Ohio Steel Tube Div.
COpperweld Steel CO.
Shelby, Ohio

Heller Tool Div.
Wallace & Murray Corp.
Newcomerstown, Ohio

Atlas Industries Inc.
Woodville, Ohio

172

KTS Industries, Inc.
Kalamazoo, Mich.

Railway Supply & Mfg. Co.
Cincinnati, Ohio

O'Brien Corp.
South Bend, Ind.

Lear Siegler, Inc.
Cleveland, Ohio

Howell Co.
St. Charles, 111.

Outboard Marine Corp.
Waukegan, 111.

Western Rubber CO.
Goshen, Ind.

Patterson-Ludlow
Div. of Banner Ind.
East Liverpool, Ohio

Barr Rubber Prod. Inc.
Sandusky, Ohio

Toledo Edison Co.
Toledo, Ohio

Kitchens of Sara Lee
Deerfield, Ill.

Capital Paper Co.
Indianapolis, Ind.

Ingram-Richardson, Inc.
Frankfort, Ind.

MacDonald Stamp Co.
Dayton, Ohio

Unistrut Corp.
Wayne, Mich.

Swedish Crucible Steel Co.

Detroit, Mich.

Wagner Mfg. Co.
Sidney, Ohio

173

Kellogg Co.
Battle Creek, Mich.

Lyon Metal Products Inc.
Aurora, Ill.

Bell & Howell Co.
Chicago, Ill.

Gerber Plumbing Fixtures
Chicago, Ill.

Stewart Bolling & Co., Inc.
Div. of Intercole Automation
Cleveland, Ohio

Republic Steel Corp.
Cleveland, Ohio

Andrews Jergens Co.
Cincinnati, Ohio

Monarch Machine Tool CO.
Sidney, Ohio

Ford Motor Cc.
Dearborn, Mich.

Michigan Limestone Operations
Rogers City, Michigan

Lorain
Div. Koehring Co.
Lorain, Ohio

Interlake Steel Corp.
Chicago, Ill.

Continental Steel Corp.
Kokomo, Ind.

North American Mfg. Co.
Cleveland, Ohio

Weatherhead Co.
Cleveland, Ohio

MiaIi-Carey Co.
Div. Penacon Corp.
Monroe, Butler County, Ohio

Baker Perkins, Inc.
Saginaw, Michigan

TOpco Associates, Inc.
Skokie, Ill.

Crosset Co., Inc.
Cincinnati, Ohio

Anchor Hocking Corp.
Lancaster, Ohio

Copeland Refrigeration Corp.

Sidney, Ohio-

Ajax Mfg. Co
Cleveland, Ohio

Lake Shore, Inc.
Iron Mountain, Mich.

Dayton Malleable Iron Co.
Dayton, Ohio

Allen Industries, Inc.
Southfield, Michigan

General Box Co.
Des Plaines, Ill.

Faultless Rubber CO.
Ashland, Ohio

Emery Industries Inc.
Cincinnati, Ohio

Apex Smelting Co.
Chicago;,Ill.

174

Natmar Inc.
Cincinnati, Ohio

Dracket Co.
Cincinnati, Ohio

Standard Oil Co. (Ohio)
Cleveland, Ohio

Grand Rapids Chair CO.
Grand Rapids, Mich.

Mastic Corp.
South Bend, Ind.

Buckeye Ware, Inc.
Wooster, Ohio

Harris Hub Co.
Harvey, Ill.

Midwest Manufacturing Corp.
Galesburg, 111.

Thomas & Skinner, Inc.
Indianapolis, Ind.

Beveridge Paper Co.
Div. of Scott Paper Co.
Indianapolis, Ind.

Bobbs—Merrill Co., Inc.
Indianapolis, Ind.

Globe-Wernicke Co.
Div. Sheller-Globe Corp.
Toledo, Ohio

APPENDIX V

SURVEY DATA BY MOTOR COMMON CARRIER

175

176

 

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:m=h\=mox annexamuz mmoepaeuma saw—paau—woca cowcceu s: vocowmo xoe=~ as wepuacoao rmoeou Lon-s:

ounco>< om-case masco>< omncos< “oopscom we Loans: curate oaosu>< uo~c0>< Loves-u

 

¢m~¢¢<u zaxzou ache: >m <h¢a >m>¢=m
> x~azmam<

177

 

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33.. 38. 238 3:8 8 we. 8 ad.» .38 8.8 .3 e e e 8
8... .e... .88 6.: 8 aw aw 3.3. 8... 8.8 .3 e a n 8
88.. 83. 388 ~88 3 8. 8 3. 38 8... 8.8 .m a o w 8
8... .e... .e... a... .e .e 8 8.88 88.. 8.8 .3 .. .. n 8
8... 3.... 3.8 238 8. 3 8 8.8. 88. 8.8 .3 a e . 8
8... 8... a... ..... 8 8. 8. 3. R... 8.. w... 8 .3 m e n 3
8... 38. 83. n 838 8 8 8 3. 3.8. .3. . 3. 8 .3 o e m 8
8... .2. 8.... n 3.8 8 8 8 .88 .8: .838 .a .. a a U
3.... 88. 8... n 8.8 8 8 8 m. .8 .2... 8.8 .3 .. u e 3
.3... .8. .88 8.8 8 8 8 8.8.. 88. .e. 8 .a a .. w 8
88.. 38. 838 888 8 8 8 3.38 8.... 3. 8 .3 e o m 8
.88.. 88. 388 838 8 8 8 3.8... .3.. 8. 8 a... a e w 8
38.. .8: 83.8 838 8. 8 8 .88 8.... 8...... .3 m .. e. 3
8.. a... 8.... 8... 8 8 8 8.8. 8.. 8. 8 . .3 a e .. 3
3... 8.... 888 33.. 8 8 8 3.38 3... 3.8 .3 ._ a n 8
.8. 3.... .88 888 .3 8. 8 3.38 8.. . 8.8 .3 m a n 3
83:. 8.. a8... 8.8 8 3 8. o. .8 8... 8.8 .3 a .. . 8
88.. 8.... 3.38 888 8 8 ow 1.8 88. 8.8 .3 a a n w...
8.... .8. 888 3.88 8 8 we .88. 83. 2.8 .3 a . n 3
8... 28. .88 .38 a 8 8 3.8 88. 8.8 .3 a o m. S
2.... 3.. .88 888 .3 8 8 868 8... w 8.. .8 .3 3 a w 8
88.. 3.. 838 ...8 8 8 8 3.3. 38. 8. 8 .3 .. u n 8
88.. 3.8. .3... 838 .8 3 8 8.8 .8. .e. 8 .3 o a m we
3... .8. 3.8 .88 8 8 8 ....3 .8... 8.. 8 .8 . e n 8
32.. 88. 888 888 8 _ 8 w... 388 88.. 8.8 .3 . .. e. 8
28.. .8. .38 888 S 3 8 388. 8... 2.8 .3 a a w 8
8.... 88. 888 838 8 8 8 8.... 8.... 8. 8 .3 . o e 8
s... 3.8. 888 8.8 3 3 w... .88 .8... 8.8 .3 m u n we
8.... E. 8.8 8.... 8 .3 8 8.... 88.. 8.8 .3 . a n .e
8... 8.... 8.”... 8...... 8 8 8 888 888 8.8 .3 . a e 8
38.. .8. o8... 838 8 8 8 8...: :8. 3.8 .3 a a n 8
88.. 8... 838 888 8 8 .8 .88 8... 3.8 .8 a o e 8
8.8... 8.. 88.8 888 3 8 8 888 .8; 8.8 .3 e a n 8
8.... .8. 8.8 .38 3 we 8. 8.88 88. 8.8 .3 a e w 8
2... 38. £88

3.... on... -38. -.8. .3 c8. .82
:38“... 33:83.. 8.8.. 8.5. e8: 38.. one. .38 LXI...
85:. 8:2... 32.38.. 5.33:9... Lorre 3. 3.88 3.... e. 839...... 5.5

89.05 8222 Sutton we Li- 5395 89.05 89.05

 

«35.3 2928 :29. 5 5.3 52.3
7.3.3.. .> x-o-ms

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3.33 .33....

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333333.33 .. .3. .3333.

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ooo.ooo.o—u coca 333— can coo.ooo.mn an 330—3330 p—qnm [3333:

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3.3...33 .=3=-3.ozm .:m
3333
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FNMQID

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3.3.. 3.3.. 33.3.. 33.33. 333.. 3.3.3 3.3.3 .33333 333.33
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...3333. > x.ozm..<

APPENDIX VI

SURVEY DATA BY MOTOR COMMON

CARRIER SERVICE

179

].8()

 

m.~ «mm.~ o.os m—m.~ o.os mac.~ m.—~ N_ m. o— on
m.o~ mm..~ w.om omm.~ o.mm c-.p o.mm ms ms nu mm
m.~m m~—.~ n.m~ mc~.~ m.m~ m¢m.p m.mn om am am aw
m.wo mmv.~ c.nw wmo.m m.o~ Nom.— m.mm me as as “N
p.o¢ m—~.~ _o.oa mum.~ m.¢o Nun.p ~.am as an an mm
—.mm ¢—~.~ m.um cm~.n m.—o a—m.~ _.~m ¢e No mm mw
m.om psm.m o.am oo~.n c.55 ooc.n m.mm an no no .cw
: 88w
.u.= .u.: “.mn— om~.~ o.oop cow._ m.m m c m mu
N.oo .mn.~ ~.~m omo.n m._w m—m.— _.~m Va mm mm -
m.ss owo.n u.pv_ mo~.~ o.oc— _c¢.— ¢.m— ~_ _— N. _N
m.wm mca.~ m.mm m-.m ~.eu —mm.~ m.mu No co am am
~.om o~¢.~ w.¢o mms.~ w.m~ oa~.N «.mc mm ~m mm «—
m.ca ¢oo.n m.mm mmm.n ¢.- omv.~ c.5m mu mu ms up
u.mm ~o¢.~ m.om -~.n m.p~ ~_~.~ _.~m em me No 5.
~.m~ ~m¢.~ m.—w map.m ~.oo mwp.u m.~m Nu N“ ws @—
m.oo men.~ —.nm owm.m c.5m mnm.~ o.pm F“ on as mp
m.pu msm.~ m.am «mm.n ~.~m sno.n ~.om mu ¢s cs ¢—
n.nm o—o.n o.~o ops.n o.ou oa~.~ ~.om mm vs pk m—
n.mm mm¢.n m.~m oeo.m m.~u owo.— m.mw mm mm mm ~—
o.ce mum.— m.vp_ om~.~ ¢.~m wmo.~ m.c~ _N up m— _—
m.w¢ mo~.~ o.wm ooo.m ~.mm ~m~.~ o.v¢ mm KN mu o—
m.ou mom.~ ~.¢m oon.~ ~.nn -o.~ p.m~ Km «v m~ a
m.—o ¢m¢.~ m.pm mmo.m m.om o-.~ m.ow ~¢ oc “N m
n.»@ amm.~ «.mm mvo.m w.mo -~.~ m.po me me Pm n
m.~u mom.~ m.mm mo~.m o.m~ m-.~ ~.mm mu mu ms 9
m.mw «_m.m m.~m mmm.m ~.~m onp.~ o.oop as mu mm m
o.ma mm~.m ~.~o pom.m m.mm ¢¢m.m h.mm Nu Nu “N c
m.m~ mo~.m c.9o amm.m m.¢w ~n~.m ~.mm ON cu cu m
o.Pm. n_o.m m.mm mom.m ~.~m mc~.m o.oo— mm mm mu N
m.~m mmm.m a.¢m umm.m m.mm ¢vc.m o.oo— ms nu us —
H .595
@283 3.83
9:3. 3 353. 3 v.23... 22 $2 283
wanna—~>u «mocpauoaa uaua:.u>m «nonpamoua uuuaapa>u auwp—nau.mosa mcwguwwo -mcm— -pom— no oom—
ucougom omauu>< acougug omnga>< accuse; uansu>< mgovxsao goals:
2. 32:8 .35 9.283 8E3
mcruaa gum: «Loaucagh uuv>som xn mmcvuag sovsunu scant acoULug mgcvuguu $o Loans:

 

wo~>¢mm mm~m¢<u zoxxoo «chat rm <h<a >u>¢=m

~> x~ozu¢m<

1.81L

 

n.nm "ha." ...a ~c¢.n m.c~ aa¢.p _.~m .a co no No
o.~m oom.~ ..ao o_~.m u.mo me... ..am we m. e. _o
u.~m «mo.~ ~.¢m mo~.n m._~ .«o.~ p.n~ 5m on .m on
m.oa __m.n m.am Nam." ..mo mmg.. «.5a es as ms am
m.hm “eh.” «.Om emu.” o.mo oa¢._ ~.ma ms ms es mm
m.o¢ .¢o.~ ..om oe..n ~.mo ~u..~ o..¢ co mm mm “m
¢.¢a ._~.n ".mm mom." ~.mo m.o.~ ~.aa NB KN us on
o... o¢m., a._._ o_~.~ h..o mcm.~ m._~ “— m. m. mm
a... m~o.~ p.mm moo.~ c.5o m-._ o.mm o. o. N. .m
m.w. mpm._ n.5m «oc.~ «.mm on».. o.p. N” NM mm mm
m..n oao._ m.mo. mmm.~ ~._m .m..~ ..m. N_ w. P. Nm
..m¢ an... o.co_ _Nm.~ .._h ooa._ o.¢ N s N .m
o.¢o oom., ¢.m¢ o.~.~ m.m~ oom.~ «.mn an “N m~ om
~.am oo».~ m.~a moo.~ ¢.mo ¢m~._ «.mm oN om ¢~ a.
..mm oeo.~ m._a coo.~ _.o~ ~¢m._ o.om w. m. an we
m._o m...~ ~.om mm_.m o.m~ .o_.~ o.~m _. Pc o¢ s.
~.¢~ mo¢.~ _.mm ~ma.~ P._m om~.. a.¢m .5 as N“ o.
9.0a mp~.~ o.¢m cap.” o.ow mma.. ~.~m ms 0“ RN m.
z .593
c.” one.” o.oo_ «v..n o.oo. mwo.~ m... m m m w.
N..m mnm.. o.oop _.~.n “.mm ctm.~ ~.~m am N. m m.
~.om oom.~ m.nm oo_.m m.om “.m.~ ~.e¢ mm mm oN ~¢
_.o¢ Nam.” 5.0o. mam.~ “.0m m.m.~ m.mm om mN o. _.
_.mm mo¢.~ “.mo_ mmo.m o.oo_ w~¢.~ o.¢m KN m, m o.
h.pm mm_.~ o..w ooo.n ~.mo mmm.~ 5.0, m. m. N, am
m.mo mop.m m.¢m mNm.m o.m~ -m.m “.mm o“ oo om mm
e.gc mam.” o.om _.~.m m.mm cwm.~ m.mm om KN ¢~ “n
n.0e __~.~ n.0m oom.m ..~m N.¢.~ m.,h mm mm mm on
m.p~ m.~.~ _.om m¢m.m m.ow ec~.~ m.~m NR N“ .5 mm
m.~n _¢~.~ ~.o__ “mm.m ~.oo oao.m N.“ o . . «m
~.~. _mm.~ C.Oo. mNo.m o.oo. coo.m ‘.m m . . mm
_.hm ~N~.~ ~.mm emm.n m..w mpo.~ m.mm mm mm _o «m
o.- mum.. “.5m _Nm.m m.nm mm~.~ _.mm mc cc .. Fm
H_~ macaw
‘88; 2:88

mac—uma cu mo:.».¢ 0» mag.».¢ o~m_ moa. ugowon

vou.=..>m mmu=_=~om= uau.=_.,u mmo=_=»om= vu»~a_u>w au.ppa~u..ogg m:.gu$*o -woa. -_om_ so soap
acougoa omago>< acougua ouagos< acuuuoa umuso>< mgovgsau goo-:2
3 8E8 .53. 9:53 33.8

nucvuum Lon: agoamcagh mow>gom an mm:_uu¢ guvgunu Lona: «cause; «Lovgunu yo scans:

 

mu~>¢mm ¢u~¢¢<u zozxou «aka: .m <h<o >u>¢=m
A-.u=ouv ~> x~a2u¢¢<

182

 

¢.m mnm.~ ~.om ooo.¢ m.mm oom.~ m.m m m m Nu
w._o omw.— _.¢~ oo¢.m o.mm mm~.~ o.¢m um KN ow Fu
¢.mm omn._ m.mm mwm.m w.mm pw~.~ m.o~ op mp op cu
~.om coo.— o.oa _p—.m o.om wwm.p m.~— o. m N we
~.en ooo.~ —.o~ oo~.m m.¢m omm.~ c.¢m m¢ cc Ne mm
o.m~ ~mo.~ o.- cap.m o.mm ¢p~.~ —.em cm on me so
m.wo omo.~ m.~s o~—.m o.mm cmm.~ m.~m oe mm um no
m.ow ~u¢.~ o.ow mu~.m o.¢m ~mm.~ —.¢o on me mc mm
m.~m opm.~ o.os -~.m F.mc mmo.~ m.om ~¢ me mm co
~.mo mmo.~ “.mm ofio.m ¢.~N mmc.~ ~.~m mu om om no
> .596
uugomwo umgm$wo cu

mm:.9um 0» mucvuam umuuapm>u mmc.uu¢ cum. mom. ogo$oa

vmuozpo>m «mucpamuma nouaapo>m mums—=moma mo saw—_nouwmosa mcwgowwo -omm— upmo— so oom—
ucuugom om~go>< acmugom oucsu>< sagas-c wmago>< «Luvgguu guess:
we uuF>som guau mcvguwwo uuw>gom

«mavuom Low: agonmcogh ouw>gum ha mmcpuam Lm'ggou Lona: unaugom «La—gguu mo Lanes:

 

mu~>¢mm mu~¢m<u zozzou «owe: >m <h<o >m>¢=m

A-.»=ouv _> xHozu¢m<

BIBLIOGRAPHY

183

BIBLIOGRAPHY

Books and Monographs

 

Carrier Reports: Financial Reports on the Nations Leading
Carriers. ROId Saybrook: Connecticut: Carrier
Reports, Annual issues 1960—1971.

CCH Federal Carriers Cases 1968-1970. Chicago: Commerce
Clearing House, Inc., Vol. 18, 1971.

 

Colton, Richard C. and Edmund S. Ward. Practical Handbook
of Industrial Traffic Management. Washington: The
Traffic Service Corporation, 1965.

 

 

Departments of Research and Transport Economics and Public
Relations. American Trucking Trends 1970-1971.
Washington: American Trucking Associations, Inc.,
1971.

 

Fair, Marvin and Ernest W. Williams, Jr. Economics of
Transportation. Revised Edition, New York: Harper
& BrotHErs Publishers, 1959.

 

 

Friedlaender, Ann F. The Dilemma of Freight Transport
Regulation. Washington: The Brookings Institution,
I969.

 

 

Germane, Gayton E., Nicholas A. Glaskowsky, Jr., and J. L.
Heskett. Highwav Transportation Management. New
York: McGraw-HilI’Book Company, 196?.

 

Kahn, Fritz R. Principles of Motor Carrier Regulation.
Dubuque, Iowa: Wm. C. Brown Company Publishers,
1958.

 

Interstate Commerce Commission Reports--Motor Carriers
Cases. Washington: United States Government
Printing Office, Vol. 114, 1971.

 

Mossman, Frank H. and Newton Morton. Principles of Transpor-
tation. New York: The Ronald Press Company, 1957.

 

184

'1' i lIUfluluul. It‘ll

185

National Highway and Airway Carriers and Routes. Buffalo
Grove, Illinois: National Highway Carriers
Directory, Inc., Spring, 1971.

The Official Directory of Industrial and Commercial Traffic
ExecuEives. Washington: The Traffic Service
Corporation, 26th Edition, 1971.

 

Oi, Walter Y. and Arthur P. Hurter, Jr. Economics of
Private Truck Transportation. Dubuque, Iowa:
Wm. C. Brown Company Publishers, 1965.

 

 

Pegrum, Dudley F. Transportation Economics and Public
Policy. Homewood} Illinois: Richard D. Irwin,
Inc., 1963.

 

Taff, Charles A. Commercial Motor Transportation. Homewood,
Illinois: RiChardiD. Irwin, Inc., 1969.

 

. Management of Physical Distribution and Transpor-
tation. Homewood, Illinois: Richard D. Irwin, Inc.,

I977:—

 

Wilson, G. Lloyd. Transportation and Communications. New
York: Appleton—Century-Crofts, Inc., 1954.

 

 

 

Periodicals
Baker, W. D. "Motor Carrier Management Strategy," Transpor-
tation Journal, Fall 1968, pp. 48-56.
Barrett, Colin. "The Elements of Private Carriage: Part I,"

Transportation and Distribution Management, July,
1970! pp. 45.-SO-

 

. "The Elements of Private Carriage: Part III;
The Managerial Decision," Transportation and
Distribution Management, September, 1970, pp. 21-28.

 

 

 

 

Beier, Frederick J. "Carrier—Shipper Interface," Transpor-
tation and Distribution Management, July, 1970,
pp. j5-380
. "The Role of the Common Carrier in the Channel of
Distribution," Transportation Journal, Winter, 1969,
pp. 12—210

Blanding, Warren. "The Secret of Service: Entrepreneurship

in Trucking, Handling and Shipping: Presidential
Issue, Fall, 1969, pp. 77498.

 

186

Brown, Terry P. "Many Small Truckers Go Out of Business:
Costly Labor Pact and Recession Blamed," The Wall
Street Journal, Wednesday, February 11, 1971, p. 28.

 

Bryant, R. L. "More Freedom of Action," Transportation and
Distribution Management, January, 1972, pp. l7-18.

 

 

Burck, Gilbert. "Transportation's Troubled Abundance,"
Fortune, July, 1971, pp. 59-62, 137-139.

"Common Carrier Capabilities: The View from Xerox,"
Transportation and Distribution Management, March,
1972, pp. 31-35.

Cotham, James C. III. "Measuring the Quality of Transpor-
tation Services,” Transportation Journal, Fall,
1969, pp. 27-32.

 

Douglas, Peter S. "Logistics and Common Carrier MyOpia,"
ICC Practitioners Journal, July-August, 1968,
pp. 720—729.

 

Doyle, John P. "General Doyle Comments on Highway Tech-

 

nology," Handling and Shipping, January, 1971,
p. 55.
Erb, Norman H. "Truckers as Air Forwarders: Economic

Implications for Shippers," Transportation Journal,
Spring, 1970, pp. 51-56.

 

 

Gecowets, George. "Common Carrier Capabilities," Trans-
pprtation and Distribution Management, May, 1968,
pp. 39-49.

Glenn, C. M. "Long Run Industry Trends Hint at Future of
Trucking Industry," Trucking Business, January,
1971, pp. 8-10.

 

Hardesty, C. D., Jr. "The Problem is Economics," Trans-
portation and Distribution Management, June,
1970, p. 42.

Johnson, James C. "An Analysis of the 'Small-Shipments'
Problem with Particular Attention to Its Ramifica-
tions on a Firm's Logistical System," ICC Practi-
tioners Journal, July-August, 1972, pp. 616-666.

 

 

Kloss, Lester K. "Can Private Enterprise Continue to Pro-
vide Common Carriage?, Part I," Handling and
Shipping, October, 1971, pp. 45-48.

 

187

 

Lesser, Lawrence M. "Will Privately Owned Transport
Survive?" Traffic Management, January, 1971,
pp. 33-34.

Lloyd, Stan H. "Food Distribution: A Study in Beef,"
Transportation and Distribution Management,
September, 1962, pp. 21-24.

"New ICC Regulation Vitally Important to All Carriers,"
Trucking Business, May, 1970, p. 42.

 

"New 'Protect' Program Pays Dividends," ATL Dispatcher,
September, 1972, p. 4.

 

Nupp, Byron. "Can Private Enterprise Continue to Provide
Common Carriage?" Handling and Shipping,
November, 1971, pp. 47-50.

 

 

Patton, Edwin P. "Implications of Motor Carrier Growth
and Size," Transportation Journal, Fall, 1970,
pp. 34-52.

Smith, W. K. "Can Private Enterprise Continue to Provide

Common Carriage?" Handling and Shipping, March,
1972, pp. 62-64.

 

"Technology and Highway Transportation," Handling and
Shipping, January, 1971, pp. 52-55.

 

"The Economy: Review and Preview," Transportation and
Distribution Management, January, 1971, pp. 17-21.

 

Todd, Art. "You Heard it Here--on These Pages," Handling
and Shipping, May, 1972, pp. 50-52.

 

"To Eat and Keep Warm," Transportation and Distribution,
March, 1971, pp. 35—40.

 

Wyckoff, Daryl. "Must Success Spoil the Small Motor
Carrier?" Transportation and Distribution
Management, October, 1972, pp. 50-56.

 

      

 

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII

HH||IIH||H|N um um lflllflllmmjlfllfllll

3 1293 030