freight rate
This cost of transporting goods reflects a number of factors besides basic transport costs, such as the nature of the commodity. Non-breakable, non-perishable items, like coal, are carried most cheaply as they can be carried in bulk on open wagons. The more careful the handling required, the more expensive is the freight rate. Sophisticated manufactured goods can bear high freight rates because of their greater value. Raw materials are carried for less so that they can be moved over greater distances.
Distance is an important factor. Many freight rates are tapered; that is, the rate per tonne-mile or tonne-kilometre drops as the distance increases, but this change in rates is expressed in a series of distance ‘bands’ so that, on a graph, the relationship between cost over unit distance and distance would appear as a series of downward steps rather than a smooth diagonal line.
Competition between alternative modes of transport can also cut freight rates. Thus, because of competition with the New York State Barge Canal, rail freight rates from Chicago to New York are less than from Chicago to Philadelphia, even though the latter journey is slightly shorter.
