There are several types of special rates. Choose any five and define

Answer 1

Another pricing system is based on mileage. The rate is based on the total miles the shipment travels and weight may not even be a factor in the charges. In some cases, the rate is based on actual miles traveled while in other cases the rate is based on the 'shortest' practical distance between the origin and destination.

LTL rates reflect the fact the LTL shipments require several handlings while in transit. Each one of these handlings requires dock personnel, material handling equipment, terminal investment and additional management effort. This is reflected in the cost and the rate. Some LTL shipments can move as a truckload at a lower price since there is no intermediate handling.

Multiple car rates are one method by which a railroad can offer discounts from the single car rate. The cost of moving several cars in a single shipment is proportionally less than the cost of moving each car individually.

Incentive rate is a term applied to a rate which is designed to induce the shipper to load existing movements and equipment for fully. By inducing the shipper to load each vehicle more fully, fewer vehicles are needed and there are fewer moves over time, reducing the carrier's cost.

Unit train rates are another type of incentive rate where the railroad transports an entire train load of one commodity such as coal or grain. In some cases, the shipper may even provide the rail cars, further reducing the carrier's cost.

Per car or per truckload rates reflect the use by the shipper of the entire vehicle and generally apply from the origin to the destination without regard to commodity or weight.

Any quantity rates do not provide a discount for larger shipments. These rates are normally used with light weight and bulky commodities.

Density rates are based on the weight per cubic foot of the shipment and are sued for light and bulky products that use space disproportionably to the weight. This is done to avoid loss of income to the carrier when a light or bulky commodity does not generate sufficient revenue based on weight to offset the carrier's cost.

Local rates apply between two points both of which are served by one carrier.

Joint rates apply to a shipment which requires two or more carriers to serve both the origin and the destination.

Proportional rates are a method by which a carrier with an indirect route can compete for business against a carrier with a more direct route. These rates normally only apply to points beyond the carrier's own line.

Differential rates normally apply to a carrier's route that faces a disadvantage because of longer transit time. These were primarily used by railroads which did not have the shortest route or by water carriers in an effort to offset the slower transit time with lower cost.

Per mile rates are based on the actual miles traveled or, in some cases, the "practical" mileage between the origin and destination. If the carrier uses practical mileage, they will allow them to choose a faster route which could involve the Interstate highways system where speeds are higher but the distance is longer than provided by the most direct route. The shipper only pays for the mileage over the shortest available route.

Terminal to terminal rates normally do not include pick up at the shipper and delivery to the consignee. These rates are most often found in connection with air freight. They may also be sued in intermodal shipments where the shipper and consignee have their own tractors and can pick and deliver the trailers themselves.

Blanket or group rates apply to a range of points or a geographic region. This allows producers in that area to be on an equal competitive footing as it relates to freight rates.

Contract rates have become the most widespread type of rates being used, particularly after the 1980 partial deregulation of the motor and rail carriers. Rates governed by contracts are not affected by the carrier's tariffs unless the contract so indicates. Contracts may require that an agreed volume must be shipped during the life of the contract in order to qualify for the lower rates.

Duties of the carrier may be specified and these could include any number of non-transportation related requirements. In some cases, the contract will require the carrier to provide special equipment.

Certain rail contracts specify that the shipper must ship an agreed number of cars during a time period or pay the railroad as though they did. This is frequently used on lines that have marginal income to act as an incentive to have the railroad not abandon the line.

Some lower rates are offered in the carrier can defer delivery by one, two or three days. This allows the carrier some flexibility in equipment scheduling while providing the shippers with a cost savings and a predicable service. This type of ratemaking is most often used by the airfreight companies.

Corporate volume rates may contain a discount or other incentive which is based on all the business done by the corporation and is subsidiaries with a given carrier. This recognizes the fact that many large corporation conduct business through a variety of firms but control rests with the parent firm.

Many carriers provide shippers with discounts which are deducted from the transportation charges or from the rate itself. These discounts are normally reflected as a percent to be deducted from the base rate. These discounts may be subject certain restrictions.

Loading and unloading allowances are granted to shippers by LTL carriers when these companies perform the work which would normally be done by the carrier's personnel.

Aggregate tender rates are given as an incentive for the shipper to tender two or more shipments to the same carrier at the same time. The reduction in the rate offered by the carrier reflects the reduced cost the carrier enjoys when picking multiple shipments at the same location.

Freight All Kinds (FAK) rates are also called all commodity rates. The rate applies to all commodities that the customer ships and is very useful for firms that ship a wide variety of goods.

Released rates reflect the fact the shipper has agreed to accept a lower than actual value for their product in the event of loss or damage. Since the carrier is not liable for the full value of the products they can offer a lower rate to the shipper, reducing the shipper's cost.

Empty haul rates are usually for transporting the shipper's empty equipment to the point of next loading.

Two or Three way rates are those rates which apply for either round trip or a triangular move where the carrier is assured of few if any empty miles between loaded moves.

Spot market rates are something new since deregulation. Carriers are now permitted to make "on the spot" rates to adjust for excess capacity or fill idle equipment. Since service cannot be 'stored', it is in the carrier's best interest to sell the unused capacity at a discount.

Menu pricing also reflects the changes under deregulation. Carriers have "unbundled" their pricing and this allows customers to pick and choose which services they wish.