Explain While transportation rates increase as distance increases, the increase is not directly proportional to distance. This relationship of rates to distance is known as the tapering rate principle. As Figure 118.3 shows, the rate increases as distance increases, but not linearly. The rate structure tapers because carriers spread terminal costs (cargo handling, clerical, and billing) over a greater mileage base. These terminal costs do not vary with distance; as the shipment's movement distance increases, the terminal cost per mile decreases. The intercept point above zero in Figure 118.3 corresponds to the fixed terminal cost. Figure 113.3 Example of the Tapering Rate Principe Rate Distance Sur Adapted from Charee and Arthur Hadley, yaitution Astory of Economics and Relation to the State New York NY GR Matramand Sons, 1912, Chapter