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Best practices in rail rate and service negotiations begin with planning and analyzing your situation, what it is and what it can be. actual negotiations will flow logically if you are properly prepared.
to understand your situation as it pertains to the rail situation and then attempt to understand the railroads situation as it pertains to your business. Always keep in mind that your end goal should result in the best rail rate and service package combination available.
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Existing Pricing
Take a look at current pricing for your commodity. In many cases rail transported commodities will be governed
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WasteAdvantage Magazine
April 2012
by publicly available tariff pricing for a particular Standard Transportation Commodity Code (STCC). These prices are generally available on Class I railroad Web sites. In many cases youll need to sign up for the railroads Web site. After you find your STCC, youll want to take a look at all tariffs in place that govern your commodity. What youre looking to do is to obtain an understanding of differential pricing in specific corridors for the number of cars, junction routing to support Rule 11 or through route decisions and geographic differences to determine capacity in a particular corridor or geographic area (e.g., Northeast U.S. versus Southwest U.S.). You can than reconfigure this information to train size and rate per ton mile information that will give you comparative information to your situation. You should also be sure to understand any accessorial charges, such as demurrage, use of railroad supplied or private equipment, private car storage, track space requirements, etc. that will impact your business. These are all key pricing points that will impact your ability to obtain favorable rail rates and service.
receiving facilities as well. Its important to be armed with as much information as possible before entering into actual negotiations. If you are working with a Greenfield site or are acquiring a new facility (origin or destination) its a good practice to ask your railroad sales representative to provide you with the railroad service planning department analysis as it pertains to your situation.
Service Requirements
Dont assume the service requirements you have in mind and the service that will be provided by the railroad will match up. If you expect to be negotiating rates and service for an existing facility, talk with your local serving railroad train operations personnel to best understand the service parameters the railroad will provide. They often can provide you with enough meaningful information so that you can understand the entire train handling process from origin to destination without engaging in negotiations. This approach also applies to any of your
2012 Waste Advantage Magazine, All Rights Reserved. Reprinted from Waste Advantage Magazine. Contents cannot be reprinted without permission from the publisher.
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