Why Motor Carriers Generate More Revenue than Trains
Trucks and trains have historically competed for intercity freight movement in the US. While trains traditionally moved much of the intercity freights, trucks have overtaken them in recent years. The share of intercity rail freight had dropped to 35% by 1978, and today, trucks dominate the long-haul freight movement by 80% (Chapman et al., 2017). These market dynamics translate into more revenue for trains over trucks. One of the reasons for the increased revenue for trucks is the increase in overseas shipments. These shipments include agricultural products, minerals, and furniture that land in California and must be moved to inland ports (Chapman et al., 2017). Since these are high-value products, business people pay truckers highly to move them, resulting in high revenue for truckers. Hire our assignment writing services in case your assignment is devastating you.
Another source of the imbalance stems from a lack of capacity on the part of railroads. On the one hand, ordering and getting a freight car takes a long time (between 12-18 months). However, one may enter a store and acquire a truck immediately, driving truck rates upwards. Besides, trucks provide more visibility for shippers who may wish to monitor cargo movement. However, this is not possible when rail transport is used (Chapman et al., 2017). Finally, the element of speed also comes in, whereby those moving perishable goods are willing to use rail transport for the products to reach their final destination.
Difference between Total Cost of Ownership and Lowest Purchase Price
According to Lizot et al. (2021), the total cost of ownership refers to the financial estimates of acquiring and maintaining a product or system. These costs include the direct and indirect costs of acquiring the system, and it go beyond the initial cost and implementation cost since they cater to the total cost of maintaining the system throughout its lifetime. On the other hand, the lowest purchase price refers to the initial cost of acquiring an item.
References
Chapman, S. N., Arnold, T., Gatewood, A. K., & Clive, L. M. (2017). Introduction to Materials Management. Pearson.
Lizot, M., Trojan, F., & Afonso, P. (2021). Combining Total Cost of Ownership and Multi-Criteria Decision Analysis to Improve Cost Management in Family Farming. Agriculture, 11(2), 139. https://doi.org/10.3390/
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Question 
Please use one or more of the following questions to guide your participation in the forum. You can also contribute with your own perspective on the topic:
1. Railroads have the largest percentage of intercity freight ton-miles, but motor carriers (trucking) have the largest revenue. How do you explain this relationship? What is the difference between the Lowest Purchase Price (LPP) and the Total Cost of Ownership (TCO)
Why Motor Carriers Generate More Revenue than Trains
2. The five basic modes of transportation have been available for well over 50 years. Is this the way it will always be, or can you identify a sixth mode that may become economically feasible in the foreseeable future?
3. Share any experience you might have on transportation, public transportation, freight, delivery, transportation operations, etc..
4. How are you planning to use your new transportation management knowledge to push your career forward?
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