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Economic Impact of Shipment Choices

Economic Impact of Shipment Choices

Changes in freight data reflect the basic economic realities that carriers and shippers face every day in the freight marketplace. As the value per ton of a shipment rises, the cost of having a valuable cargo tied up in transit increases, so shippers are likely to shift more of their shipments to faster, more expensive modes like truck and air. For example, in 2002 the average value per ton of air shipments was $75,000, up from $55,000 per ton in 1993; truck shipments averaged $725 per ton, up from $640; while rail shipments averaged $205 per ton, an increase from $176 in 1993.

Value per Ton

Also, as the value per ton rises, shippers are more likely to transport goods in smaller, more frequent shipments. For example, shipments weighing less than 50,000 pounds (average payload of a typical truck) grew twice as fast (28 percent), measured by weight, than those weighing more than 50,000 pounds (13 percent) between 1993 and 2002, reflecting growth in smaller sized just-in-time deliveries.

Length of Haul

As the length of haul (miles per ton traveled) increases, causing the line-haul transportation cost to become a larger portion of the total, shippers are more likely to shift to lower cost modes like rail and water (though in some cases, where delivery time is critical, they may shift from truck to air). For example, in 2002, a ton of truck shipments (both local and intercity) traveled on average 158 miles, up from 128 in 1993. By comparison, a ton of rail shipments traveled 662 miles in 2002, rising from 610 miles in 1993. During the same period, a ton of air shipments traveled 1,420 miles in 2002, an increase from 1,270 in 1993. Length of haul is an economic indicator of the cost of transportation relative to the cost of the goods being transported. As the cost of transportation falls, shippers tend to ship over a longer distance. Secondly, length of haul is an indicator of the contribution that transportation makes to the economy. Because the efficiency of our economy is influenced by the geographic spread of both domestic and international markets, a growing length of haul indicates a growing extent of the market. So a growing length of haul suggests that transportation is getting cheaper and reflects business reorganization of production and distribution activities over larger and more efficient markets.

See also: Transportation Services Index