RR pricing: why isn't a box just a box - Trains Magazine
I was at a meeting at Northwestern University's Sandhouse Gang a week or two ago. During a very interesting discussion about the Indiana Railroad and railroad pricing, this comment was made:
"Railroading is one of the most interesting businesses out there, because you have to understand everyone else's business to understand pricing. In trucking, a box is just a box, they don't care if it has diamonds or wood chips in it. But, in railroading, the value of the cargo affects pricing."
I have always wondered why this is the case? One would think that the price/effort to haul 40 tons of diamonds from point A to point B would be the same as hauling 40 tons of woodchips from point A to point B. Moreover, as I would think railroads haul a lot more woodchips than diamonds, a pricing structure that rewards high-dollar commodity drayage and punishes low-value commodity drayage would hurt railroads more than it would help?
Why is railroading different than trucking in this regard? Is it because there is more competition in trucking? Is there a disadvantage and/or an advantage to treating pricing this way?
I don't get it.
Gabe