Service quality is an integral aspect of the freight transportation process. Variations in service quality have a direct effect on shipper resource consumption, which in turn affects both the demand and supply aspects of freight transportation. In this paper, the cost(supply) aspects of freight service quality are examined. Emphasis is on the implications for carriers and transportation analysis, with the primary goal of providing some concrete understanding of theseissues. This goal is achieved by using a hypothetical railroad example to explore and illustrate a freight service quality model. The example is based on an engineering model of railroad operations that captures the essence of run-through train operations. The example also serves a secondary goal of fostering general understanding of railroad service quality. After the freight service quality and railroad operating models are reviewed, a more detailed discussion of service quality economics, focused on the interaction between carrier operating variables, service quality variables, and carrier and shippercost, is presented. In particular, the implications of three conclusions are examined: (a) the most economically efficient service quality level is obtained by minimizing the full cost of transportation - the sum of carrier costs and service sensitive shipper costs; (b) this service quality level is also profit-maximizing for the carrier; and (c) transportation cost analysis should be based on the full cost of transportation instead of carrier costs alone. The negative consequences of disregarding these conclusions are illustrated with the railroad example.
Samenvatting