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RATE FACTORS

RISK (Con.)

The element of risk is involved in the method of packing goods for transportation, hence different rates may be established according to the different methods that an article may be packed. An article that is completely boxed is less susceptible to loss or damage in handling than if it were crated. The greater an article is protected against loss or damage the less is the risk in handling.

Freight shipped at carrier's risk; that is, with the full common-law liability of an insurer, is charged more than freight shipped subject to all of the conditions of the carrier's bill of lading. These conditions practically release the railroad from all liability except that arising from its own negligence. The specific rates published by a railroad are released rates; that is, subject to all the conditions of the railroad's bill of lading. The unreleased rates, or rates not subject to all of the conditions of the bill of lading, are made a certain per cent. higher than the specific, or released rates. In some cases it is cheaper to insure a shipment than pay the difference in freight rates.

Competition between railroads themselves, between railroads and water-lines, between railroads and other vehicles of transportation, and between producing centers or markets, plays an important part in regulating rates.

The products of the different sections of the country must be carried to the commercial centers or markets at rates which will enable them to compete. Rates on

cotton from points in Alabama must enable the producer to sell in the Northern markets on a competitive basis with cotton from points in Georgia. Rates on manufactured goods from Boston must enable the manufacturer to sell in the western market on a competitive basis with manufactured goods from New York or Philadelphia.

If a railroad desires to handle traffic for which it is in competition with other transportation lines it is obliged to do so at competitive rates, unless it has something to offer in the way of better service to justify higher rates.

Meeting competitive rates frequently results in a railroad charging less for longer than for shorter hauls over the same route; but to do this in the case of interstate traffic, special permission must be obtained from the Interstate Commerce Commission under the Fourth Section of the Interstate Commerce Act.

COMPETITION.

BULK AND
WEIGHT.

The charges of the railroads are usually assessed on the basis of weight; therefore the bulk and weight of freight are important elements to be considered in making rates. Articles of large bulk and light weight must pay higher rates than articles of the same bulk and heavy weight, other things being equal. An article is usually rated higher when "set up” than when “knocked down,” because it consumes more space and usually prevents the loading of a car to its full weight-carrying capacity.

The shipper cannot afford to pay for transportation service any more than the value added by that service to the goods shipped. There may be no demand for the goods at the place where they are produced, and to send them to other places (the markets) involves a transportation expense. The value added by the transporta

tion service is measured by what the goods will sell for in the markets of other places, AND MINIMUM and this necessarily fixes the maximum rate which the shipper can afford to pay.

The minimum rate is generally fixed by what the railroad may determine it can handle the traffic for without an actual loss or out of pocket cost. Between these two extremes the rate must be made.

RATES.

FREIGHT CLASSIFICATIONS

FREIGHT CLASSIFICATIONS

NECESSITY
FOR CLASSIFI-
CATION,

It is wholly impracticable for the railroads to publish commodity rates on all of the thousands of different articles or commodities offered for transportation between the thousands of points in the United States. It was, therefore, necessary to divide the articles into a small number of classes, designated by numbers and/or letters, and establish rates for the different classes. In this way the publication of charges for transportation is greatly simplified.

PRINCIPLES

TION.

The principles governing the classification of freight for purposes of applying class rates are practically the same as those which control the making of rates. Articles

having practically the same value, bulk, weight, and other similar characteristics, OF CLASSIFICA- and involving practically the same cost of handling, are usually assigned to the same

class. Under Section 1, Paragraph 6, of the Interstate Commerce Act it is made the duty of all common carriers subject to the provisions of the Act to establish, observe and enforce just and reasonable classifications of property for transportation, and just and reasonable regulations and practices affecting classifications.

A Classification contains the descriptions of the articles, together with the package requirements, the rules and regulations governing their transportation, the classes to which they are assigned, and the carload minimum weights. The freight rates to be applied on the different classes, and any special rules and regulations governing their application, are published in a Class Tariff. The Classification and the Class Tariff are interdependent—the one is useless without the other. The classes to which articles are assigned in a Classification are known as "Classification Ratings." For the Official Classification Territory articles are divided into eight prime classes1, 2, 3, 4, 5, 6, Rule 25 and Rule 26; the Southern Classification Territory has ten classes-1, 2, 3, 4, 5, 6, A, B, C, D, and the Western Classification Territory ten

classes—1, 2, 3, 4, 5, A, B, C, D, E. These are the Classes for which specific rates CONTENTS OF CLASSIFICA- are usually published in Class Tariffs, and are known as First Class, Second Class, TIONS.

Third Class, Fourth Class, Fifth Class, Sixth Class, Rule 25 Class, Rule 26 Class, Class A, Class B, Class C, Class D, and Class E. Each Classification Territory has Classification Ratings higher than First Class, such as one and one-quarter times First Class, one and one-half times First Class, double First Class, and so on up to four times First Class, the rates on the articles rated higher than First Class being obtained by making corresponding increases in the First Class rates. On account of this easy method of calculating the rates on articles classified higher than First Class, the fact that the volume of shipments of such articles is extremely small as compared with the volume of shipments of articles classified First Class and lower, and the desire on the part of both shippers and carriers that tariffs be of the smallest size possible, specific rates are not published in tariffs for articles classified higher than First Class.

In the earlier days of the railroads in the United States nearly every railroad had

its own Classification, but with the development of long-distance traffic and the deOF CLASSIFICA- mands for joint through rates and routes, a greater degree of uniformity in classifi

cations throughout the country became necessary and much progress in that direction has been made.

TIONS,

FREIGHT CLASSIFICATIONS

At the present time there is one major classification, called the Consolidated Classification, which constitutes a consolidation of the three former major Classifications known as the Official, Southern and Western Classifications. The Consolidated Classification contains rules and ratings for the Official, Southern and Western Classification territories, there being almost entire uniformity in the rules, commodity descriptions and minimum carload weights, and uniformity in many rat

ings, particularly in the higher classes. It is filed with the Interstate Commerce OF CLASSIFICA- Commission by F. W. Smith, Agent for lines in Official Classification territory, as

“Official Classification,” by E. H. Dulaney, Agent for lines in Southern Classification territory, as "Southern Classification," and by R. C. Fyfe, Agent for lines in Western Classification territory, as "Western Classification," under their respective I. C. C. numbers, and references in tariffs are to the "Official," "Southern" or "Western" Classification (according to the Classification rules and ratings governing the tariff), thus indicating the ratings and rules contained in the Consolidated Classification that are to apply.

TIONS-Con.

UNIFORM
CLASSIFICATION

A uniform Classification for the entire country, if practicable, would be desirable, as it would obviate the trouble and confusion encountered at the present time in the process of ascertaining and applying freight rates on shipments moving from a point in one territory to a point in another in cases where no joint through rates are published. The difficulties in the way of a uniform Classification seem almost insurmountable, but the railroads and shippers are working on the problem and may succeed in solving it. The Consolidated Classification is a long and valuable step toward a uniform Classification.

An exact definition of the Official, Southern and Western Classification territories is difficult, but, in general terms, the territories are as follows:

OFFICIAL CLASSIFICATION TERRITORY: The United States north of the Ohio and Potomac rivers and east of the Mississippi River, except the Northern Peninsula of Michigan, the States of Wisconsin and Minnesota and that portion of

the State of Illinois lying north or west of a line drawn from Chicago to East St. Louis. CLASSIFICA

SOUTHERN CLASSIFICATION TERRITORY: The United States south of TORIES.

Official Classification territory and east of the Mississippi River.

WESTERN CLASSIFICATION TERRITORY: The Northern Peninsula of Michigan, the States of Wisconsin and Minnesota, that portion of the State of Illinois lying north or west of a line drawn from Chicago to East St. Louis, and all United States territory west of the Mississippi River.

(See Classification territory Maps on back cover.)

TION

TERRI

CAN ADI AN
TERRITORY.

Shipments moving within Canada are governed by the Canadian Classification. The Western, Southern, or Official Classification may govern shipments between points in the United States and points in Canada.

TION COMMIT-
TEES.

The Official, Southern and Western Classificiation rules and ratings published in

the Consolidated Classification are made for the railroads by Committees appcinted CLASSIFICA - by the railroads themselves, known as the Official, Southern and Western Classification

committees, respectively. The offices of the Official Classification Committee are in New York, N. Y.; the Southern Classification Committee, in Atlanta, Ga., and the Western Classification Committee, in Chicago, Ill.

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FREIGHT CLASSIFICATIONS

The transportation and commercial conditions in the different Classification territories of the country vary to such an extent that the different Classification rules and ratings have been considered necessary. A Classification rating for an article

in one section, where that article is largely produced and moves in great quantities, FOR DIFFERENT might be unjust to the railroads in another section where the extent of the movement CLASSIFICA- of that article is small. These conditions likewise arise in different parts of the Official,

Southern and Western Classification territories, and to meet them the railroads publish Exceptions to the Classifications. These publications are called Exception Sheets. There are also several State Classifications which generally govern rates applicable to traffic having origin, destination and entire transportation within a State.

The Classification and Exception Sheet which govern the rates from one point to another are named in the tariffs containing the rates. It is only by referring to the tariff that the Classification or Exception Sheet to use may be determined. The fact that a

shipment is to move between points located within the boundaries of the Official CLASSIFICA-Classification territory does not necessarily mean that the Official Classification

will govern the rates. The Southern Classification may govern a tariff applying between points located within the boundaries of the Official Classification territory, or the Official Classification may govern a tariff applying between points located within the boundaries of the Southern Classification territory, etc. The Classification by which a tariff shall be governed is determined when rates are established.

TION GOVERN-
ING TARIFF.

When both a Classification and an Exception Sheet are referred to in a tariff as governing the rates published therein, the ratings, rules and regulations published

in the Exception Sheet take precedence over any conflicting ratings, rules and regulaAPPLICATION OF EXCEPTION tions contained in the Classification, except as may be otherwise specifically stated. TARIFF RULES. The rules and regulations published in a Tariff take precedence over any conflicting

rules and regulations contained in either the Classification or Exception Sheet by which the tariff is governed, unless otherwise specifically stated.

TION
ING

Joint through rates between points in one Classification territory and points in another are always governed by one Classification. It may be the Classification for the territory of the point of origin, or the point of destination. For instance, the Southern Classification might govern rates from Rochester, N. Y., to Atlanta, Ga., or

the Western Classification might govern rates from Rochester, N. Y., to Dallas, Texas. CLASSIFICA

GOVERN- Rochester is in the Official Classification territory, Atlanta is in the Southern ClassiTERRITORIES. fication territory and Dallas is in the Western Classification territory. In the

case of Joint Combination Rates from points in one classification territory to points in another the separate factors are usually governed by different Classifications.

The Classification governing joint rates from points in one Classification territory to points in another is a matter determined when the rates are established. There is no absolute fixed rule in the case.

BETWEEN

REQUESTS FOR
CHÀNGES.

Requests for changes in the ratings or rules of the Classifications should be made to the respective Classification Committees, or to one or more of the railroads interested in the changes, on Form No. 49 shown on page 533.

RATE TERRITORIES

RATE TERRITORIES.

DEFINITION,

The transportation and commercial conditions in different sections of the United States vary to such an extent that the rates, rules and practices observed by the tranportation lines of one section may not be fair and practicable to the transportation lines and the public of another section. This condition, together with a desire on the part of the transportation lines and the public for uniform rates, rules and practices extending over as large a region as possible, has resulted in the United States being divided into several rate territories, of which the principal ones are decribed below. (See Rate Territory maps on back cover.)

The New England Freight Association Territory comprises all points in the

States of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and ConNEW ENGLAND FREIGHT AS- necticut; also points in the State of New York, east of the Hudson River, located SOCIATION

on the Boston & Albany R. R., Boston & Maine R. R. and New York, New Haven & Hartford R. R., except New Rochelle, N. Y., and points on the New York Division of the N. Y. N. H. & H. R. R., west thereof.

TERRITORY.

The Trunk Line Association Territory comprises territory as follows:
Eastern boundary–New York State line (including Long Island) (except points

in New York State embraced in New England Freight Asso-
ciation Territory) and Atlantic Ocean from New York,
N. Y., to Norfolk, Va.

Northern boundary–New York State line (International boundary), St.

Lawrence River and Lake Ontario.

TRUNK LINE
ASSOCIATION
TERRITORY.

Western boundary-Niagara River through Niagara Falls to Buffalo; thence

via Erie R. R., through Dayton to Salamanca, N. Y.;
P. R. R. through Warren, Pa., to Foxburg, Pa.; B. & 0.
R. R. through Butler to Pittsburgh, Pa.; B. & O. through
Washington, Pa., Wheeling and Parkersburg, W. Va., to

,

Southern boundary-N. & W. Ry., Kenova, W. Va., and east through Roanoke,

Lynchburg and Petersburg to Norfolk, Va., inc.

CENTRAL
FREIGHT ASSO-
CIATION TERRI-
TORY.

The Central Freight Association Territory comprises territory as follows:
Eastern boundary-Buffalo, N. Y., to Salamanca, N. Y., via Erie R. R. through

Dayton; Salamanca, N. Y., via the P. R. R. through Cory-
don, Pa., Kinzua, Pa., Warren, Pa., Irvineton, Pa., Tio-
nesta, Pa., and Oil City, Pa., to Foxburg, Pa.; Foxburg, Pa.,
to Point Pleasant, W. Va., via B. & O. R. R. through
Butler, Pa., Pittsburgh, Pa., Washington, Pa., Wheeling,
W. Va., and Parkersburg, W. Va.; Point Pleasant, W. Va.,
to Gauley, W. Va., via the K. & M. R. R.

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