MILK CARTAGE 3 



relative net prices and secondly on whether or not a dealer's nearest, most fa- 

 vorably situated competitor cares to take on additional patrons. 



A rate structure based on "cost of performing the service" invites confusion. 

 Cost records undoubtedly may be useful as a guide in establishing rates. Diffi- 

 culties in all probability would ensue should cost records be given a more direct 

 usage. Possible dangers are suggested in an attempt to define "cost of perform- 

 ing service." Is average cost meant and if average, which one? Is that cost 

 meant which is incurred by the most efficient carrier? Should the cost of per- 

 forming the service be determined for each route and separate rates established? 

 To use this method would result in a situation no better than the present. 



Cost cannot be ignored. It must be considered, however, from the viewpoint 

 of the industry. Competition among carriers to provide the service should be 

 a satisfactory indication of the adequacy of the rate level in meeting costs on the 

 basis of the volume moved. 



A number of physical factors could have a bearing on the rate which shippers 

 should pay for transportation service. Among them are: (1) distance from market, 

 (2) size of shipment, (3) percentage of Class II in shipment, (4) quality of product, 

 (5) location of farm, (6) regularity of shipment. Each of these factors has a 

 definite effect on the efficiency of operating the transportation service. No rate 

 structure yet e.xists which takes all of them or even the majority of them into 

 consideration. Nor is there reason to believe that a rate structure giving due 

 weight to each of these factors would be sufficiently satisfactory to warrant its 

 application. The use of these factors, jointly or in part, imposes the necessity 

 for making an arbitrary decision. For example: shall "distance" be distance 

 from the market "as the crow flies," over the most direct road, or over the route 

 taken by some trucker? It should be evident that the application of a mileage 

 scale to distance as measured along a given route places a premium on one end 

 of the route. Furthermore, once the truck gets into "pick-up" territory, load 

 volume may increase at a more rapid rate than route mileage, in which event the 

 cartage rate per mile should perhaps be on a decreasing scale. Obviously, minute 

 adjustments of this type would involve tremendous detail and are unnecessary. 



The requirements of sound rate structure can be met by giving due observance 

 to its objectives, which were established as: 



1. Maintenance of service 



2. Equity to all within the industry 



3. Simplicity 



Maintenance of service can be assured by*a flexible rate structure permitting 

 adjustments in the level of rates. Equity can be assured within reasonable 

 limits by the application of uniform rates for equivalent service. Simplicity can 

 be achieved by using a little common sense in applying the different factors which 

 might have a bearing on the rate paid. 



SUPPLY CHARACTERISTICS OF THE SECTION 



The cartage service operated in the Southwick, Agawam, Suffield, Granby 

 section is influenced by the nature of the supply and of the outlets. 



In the towns of this section, 736 farms reported cows and heifers milked in 

 1934, according to the 1935 U. S. Census. This figure is reasonably accurate 

 for 1935. At some time or other in 1935, 133 of these farms sold milk at whole- 

 sale in the Springfield marketing area. Obviously variations occurred during the 

 year: producers coming into the market for the first time, producers dropping 

 out of the market, producers changing from wholesale to retail selling, and 



