Tuesday, May 31, 2016

Waybills, Part 50: in-transit shipments—prototype

The subject of waybills for shipping goods “in transit” is complex, so I will try to offer a simplified summary. The basic idea here is that many products may undergo processing, modification, or storage at an intermediate point on the way to their final destination, and a fair tariff should reflect that. The reason this is of concern is that freight rates were typically markedly higher for short movements (if you compute on a per-mile basis), compared to longer movements. This was justified by the ICC on the basis that there were economies on longer trips, But the point of transit waybills was to eliminate the (rate) disadvantage of stopping at an intermediate point, thus turning a long trip into two short ones, whatever the reason for the stopover. Instead of paying for two short moves, the shipper could receive a reduced through rate.
      The waybill process for this kind of shipment, under transit privileges, could be as follows (there were several possible ways to arrive at the same final result). Let’s imagine that the initial shipment is wheat, which is going to be made into flour. The wheat would move to a mill at the normal rate for that cargo as wheat, but when the load went onward as flour, the billing would be as though the flour had moved at the through rate for the entire distance, and then the amount paid for the first, shorter shipment would be deducted. The rate for flour is a little higher than that for wheat, but the important part is that the cost of a through rate for either one is significantly lower than the cost of two short-haul rates.
     Arrangement like this, and many others, are thoroughly described in the fine operations resource, The Station Agent’s Blue Book, by O.B. Kirkpatrick (Kirkpatrick Publishing, Chicago, 1928). It was shown and discussed at some length in a previous post (you can read my description at this link: http://modelingthesp.blogspot.com/2012/04/waybills-18-resources-update.html ). I have taken the illustration below from that book. Here is a statement of the key pair of provisions, as excerpted from a prototype railroad document, shown in the book just cited, page 123:
“(1) Shipments will be waybilled from initial point to storage point at full tariff rates.
“(2) Shipments will be forwarded from the storage point to final destination at the remainder of the through rate from point of origin.”
This is a compact description of what I said in more words, in the preceding paragraph.
      I will give a numerical example, taken from Figure 32 in Kirkpatrick’s book. Here, two different  carloads of wheat were shipped from two different towns in Illinois, to a mill in St. Louis, to be milled into flour, and then sent onward to a company in New Orleans for sale. The rates, on wheat vs. flour, were different, but the more important difference was between short-haul and long-haul rates. Note that there was also a small “transit” charge, of one and a half cents (per hundredweight). The total through rate is calculated, 46 and a half cents, then the wheat rate is subtracted (26 cents) to get the net rate for the shipment of 34,000 pounds of flour. (You can click to enlarge.)


If we want to model such paperwork, the critical difference in this waybill is the inclusion of the lower part, the Inbound Reference, which gives the points of origin and dates, waybill numbers (for the notional AB&C Railway), commodity name, and weight applied. The latter item is the amount of wheat from that shipment, contained in the final flour shipment. Finally, the inbound rate is shown, which is subtracted from the through rate.
     As modelers, most of us won’t want to try and create all those data on model waybills, and I will take up creation of transit waybills for modeling in a following post. For now, let me stay with the prototype, and identify the breadth of commodities that could be moved under transit privileges. The processing or storage steps were permitted to extend for up to a year.
     The obvious ones are agricultural products which undergo processing, as in the wheat-to-flour example used above. Grains may also be cleaned, bleached, shelled, graded, sacked, etc. Barley may be made into malt; oats into animal feed; corn into corn meal; and so on. Some products, such as cottonseed and nuts, may be processed into oils. Even hay and straw may be inspected, graded, baled, compressed, or stored. Cotton also may be cleaned and compressed into bales. All these qualify under transit privileges.
     Forest products are another transit category. Logs may be milled into lumber or shingles, and lumber itself may be re-sawn, milled, kiln dried, stored, and so on. Lumber may also be creosoted or otherwise treated with preservatives, for ties or construction use. Other materials qualify too. Steel shapes may be machined, straightened, welded, assembled into components, painted, or stored, and castings or forgings may be machined. Stone such as marble or granite may be cut or dressed.
     Livestock may be grazed, fed or fattened in transit, even for spring vs. fall movements. And practically any product may be packaged or stored in transit.
     These categories serve to show how varied might be the use of transit privileges. With the time span of transit privileges extending for up to a year, it can be well imagined how extensive were the record-keeping requirements for all this, not only for the combination of multiple carloads into a single shipment, as in the wheat illustration shown above, but also for the combining of different products, for example formulation of paint, for which the various components could have arrived under different inbound tariff rates. Luckily as modelers, we don’t have any reason to model any of that bookkeeping detail, but can simply streamline the waybill information. I’ll discuss that aspect in the post which follows in this series.
Tony Thompson

2 comments:

  1. In the case of cottonseed, you get cottonseed oil, hulls and meal as the products. All three traditionally shipped by rail. Which one would qualify for the transit rate?

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  2. I believe all three would qualify, as long as the cottonseed is shipped by rail to the processing point. The key for transit privileges is to compensate for two short rail journeys, and treat them as one long journey. But if the cotton from the field is cleaned and the cottonseed processed at the same site, then there would be no transit privilege, even though an agricultural product has been processed.
    Tony Thompson

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