What Is Your Bill?

There’s no question that the cost of EDI service has come down over the years. The availability of inexpensive Internet connections, DIY connections, direct transfer, and the shifting landscape of EDI service providers have combined to reduce the overall costs of transferring order transactions between trading partners. But has transfer pricing bottomed out yet?

Of course you can’t really know if the price you’re paying for VAN service is ‘good’ if you don’t have anything to compare your price to. Comparisons are tough to come by because your trading partners and competitors aren’t always interested in sharing their internal costs. And EDI service providers aren’t particularly anxious to share the details of their billing practices other than the most basic information. So the best action you can reasonably take is to simply review your bill.

When was the last time you actually looked at the details of your EDI supplier’s invoice? For most companies, that time was immediately after their last service incident: that time when something went wrong with your connection, translation, service request, map update, etc. It typically follows a question like, “Just how much are we really paying for this lousy service?” And on reviewing the invoice you may have been surprised to find a few things you didn’t anticipate. Here’s one that can bump your bill substantially.

One of the most common billing methods is by the Kc (kilo-character), a measure of the number of characters transferred during the month. It’s an easy way to measure usage and a simple way for EDI service providers to offer competing pricing. In the arena of digital cameras that shorthand measure is the ‘megapixels’ of the camera’s sensor. For cameras, the higher the megapixel count the better – or at least that’s the assumption. In truth there are many other factors that come into play and affect the actual quality of the images your camera produces.

Another corollary is the cell phone industry’s historical pricing of ‘talk minutes.’ You paid for a monthly number of minutes of talk time over the cell phone carrier’s network. So if you had a monthly quota of 500 minutes for which you paid $50 you could expect a standard bill that covered your talk time, connection fees and taxes. And so your bill was never actually $50 but something more than that, and the detail was buried in the various lines of taxes and surcharges. But the real killer was when you ran over your monthly 500 minute quota and were charged something absurd like 25 cents per minute, making your bill double or triple. Of course those days are mostly in the past as cell carriers now concentrate on data bandwidth rather than talk time.


Head End Profits On the Great Northern Railway

We have written a lot about the head end equipment on railroads

Now we found some great facts and figures on the importance of head end equipment on the Great Northern Railway.

The Great Northern Railway, running from St. Paul, Minnesota to Seattle, Washington, more than 1,700 miles, was the creation of the 19th century railroad tycoon James J. Hill and was developed from the St. Paul and Pacific Railroad. The Great Northern’s route was the northernmost transcontinental railroad route in the United States. Now it is just a part of te Burlington Warren Northern Buffet Sante Fe.

Before RPO service was discontinued on the Great Northern in April 1971 and the GN still ran the fast mail between St. Paul, MN and Seattle, WA, a large mail contract on two daily streamlined passenger trains to the west coast, The Empire Builder and Western Star Trains carrying a significant number of passengers still in that day.

The ICC report for 1967 shows some revealing figures that shows that when the mail contract was terminated in 1971, it took a significant chunk out of passenger service revenue to cripple passenger service and led to the railroad abandoning its passenger service and the era of AMTRAK passenger service was born.

In 1967, revenue assigned to passenger services was $9,555,536; mail revenues $8,823,292; express revenues $1,220,767; as well as a number of other incidental revenue streams totaling $19,789,427 in 1967 dollars.

One can easily see, to take $8,823,292 mail revenue out of passenger service revenue of $19,789,427 would severely cripple passenger service if taken away as a revenue stream.

Meanwhile the revenue for freight operations was $235,705,044 compared to passenger operation revenues of $19 million, representing 11 times the revenue of passenger service…and then pull off the mail contract out of passenger revenue and freight revenue becomes 21 times greater than passenger service.

Stuart Holmquist did an excellent job in describing the Railway Mail Services on the Great Northern Railroad in a GN Historical Society Reference Sheet # 177 of June 1991.  Holmquist does an excellent job in showing changes in compensation when parcel post was introduced in 1913. He states that 1914 and 1916 were peak years for both passenger traffic and mail traffic. GN had 44 RPO routes at its peak in 1930. Railroads were compensated for equipment provided by the rail mile traveled and size of RPO (60 foot, 30 foot, or 15 foot space). Rate of pay was figured on a round trip. In 1916-18 the 60 foot RPO reimbursement was 27 cents per mile, 39 cents in 1928, and 61 cents in 1954. For storage mail, on a 60 foot mail storage car, in the same time periods, were 28 cents, 40.5 cents, and 72.6 cents respectively.

interesting stuff, how the RMS subsidized railroad passenger service in America.