A mileage allowance is a rate that railroads give to shippers using private railcars. This allowance is based on the distance traveled by the railcar. Mileage allowances help offset the cost of operating and maintaining private railcars.
A Mileage Allowance is often given in the form of a per diem, which is a daily rate.
- For example, if a shipper has a railcar that travels 100 miles in one day, the shipper would receive a per diem of $100.
- The amount of the per diem can vary based on the distance traveled, the type of railcar, and the railroad company.
Mileage allowances are an important part of logistics, as they help to offset the cost of operating private railcars. This allows shippers to keep their costs down, while still providing a reliable transportation option for their goods.