The purpose of this study was to determine whether any carload freight presently handled by one of the companies under study could, under merged operation, be successfully solicited for a longer haul producing greater net revenue, and to estimate the net increase in income from such longer hauls.
For example, traffic now originating at Chicago and routed via Buffalo-DL&W to New York City may be handled by any one of several carriers into Buffalo. After merger it is believed that a portion of this traffic could be secured for a longer haul via the merged line direct from Chicago to New York City. The same potential exists with respect to westbound traffic. Possibilities for longer hauls exist on other lines of the merged company but the most important would be use of the longer haul from and to points west of Buffalo, and use of the Maybrook gateway instead of Port Morris for New England traffic.
A complete analysis of interline carload freight was developed in the Waybill Analysis described in Appendix A showing by commodity the cars, tons, origin, destination, routing and revenue. The traffic departments of each road first determined the traffic susceptible to solicitation for a longer haul and indicated the routing which might be used. They then estimated the proportion of the susceptible traffic which might ultimately be secured by solicitation for a longer haul on the lines of the merged company. The accounting departments then calculated the additional freight revenue which would accrue to the merged company for the longer haul, the additional gross ton miles which would be handled in order to earn this revenue, and the increase in per them costs and private line car miles. The estimated additional cost of handling the traffic for the longer haul was based on the freight train out-of-pocket cost per 1,000 GTM shown in Appendix C applied to the additional gross ton miles which would be handled. Allowance for the handling of related empty cars was made in all cases.
In making this study the classes of traffic allocated to each of the roads for analysis were as follows:
(a) Each road analyzed its own interline terminated business.
(b) Each road analyzed its own overhead traffic.
(c) Each road analyzed its own interline forwarded traffic except when it terminated on or moved overhead via the other road.
After merger, Erie traffic now interchanged with the CNJ at Plains Junction, as well as DL&W traffic now interchanged at Taylor, would be handled by the merged company in the same manner as the present DL&W those in there change. Erie's divisions via Plains Junction are slightly better than those the DL&W via Taylor, and it is believed the merged company's divisions on interchange with the CNJ might be slightly reduced, amount being shown in Study XIII.
Several meetings were held with traffic department officials concerning this study and we have thoroughly reviewed their methods and conclusions. It is believed that the reasoning followed by the traffic departments in making the estimates of traffic which could be secured for longer haul is sound. Summary of the cars involved, estimated cost of handling the additional traffic and net increase in earnings of 59,747 is shown on Schedule A. Freight car per them and mileage costs have been taken into account in Study VII-F, Freight Car Pools.
Schedule A
Possibility of Soliciting Carload Freight for Longer Hauls
Summary of Cars, Revenue and Net Income Which Could be Secured
the Merged Company
Erie DL&W Total
1. Number of interline cars included
in Waybill Analysis and analyzed
in Study V 53,712 57,182 110,894
2. Cars with potential longer haul:
Number 79 24,546 24,625
Per cent of total cars analyze - 42.93% 22.21%
Annualized (A) 847 256,015 256,862
3. Estimated annual number of cars
that could be secured for a
longer haul for the merged company:
Interline forwarded 268 20,568 20,836
Interline received 579 15,541 16,120
Interline intermediate - 25,855 25,855
Total 847 61,964 62,811
Per cent of cars with potential
longer haul 100.00% 24.20% 24-45%
4. Estimated additional revenue for
longer hauls:
Interline forwarded 86,936 $2,107,997 $2,194,933
Interline received 98,306 2,536,347 2,634,653
Interline intermediate --- 2,303,285 2,303,285
Total $185,242 $6,947,629 67,132,871
Less allowances for corrections,
adjustments, etc.
Per cent 3.955% 3.855% 3.858%
Amount 7,326 $ 267,831 $ 275,157
5. Estimated additional net freight
revenue $177,916 $6,679,798 $6,857,714
6. Additional gross ton miles on
lines of the merged company
required to handle the traffic
for the longer haul including
an allowance for the movement
Of empty cars (000's). 8,979 1,436,252 1,445,231
7. Estimated additional freight train
out-of-pocket cost of handling $ 9,378 $1,388,589 11,397,967
8. Estimated increase in earnings $5,459,747
(A) Annualized by multiplying by the
following factors: Erie - 10.72
DL&W - 10.43
