Curious about shipping costs when an item is interchanged between two railroads

This is a great topic. Will be interested to hear what the answer is, as it may benefit me should I ever purchase a private railcar.

It depends on the terms of sale who pays the one freight bill.  Could be the shipper, the consignee or a third party.  The railroad receiving the funds then sends other line haul and any switching roads their portion of the total freight bill.  John in Lansing, ILL

Rail shipments move subject to either tariff or contract rates.  Tariff rates typically are created by an individual railroad and may be either single or joint line in nature.  Many shippers, my employer included, use negotiated contract rates to move our shipments.  These contracts, like tariff rates, may be either single or joint line.  For ease of this explanation, I’ll restrict this to contract rates.

Contracts ordinarily are negotiated with the origin railroad, whether it be a short line or Class 1.  A joint line or through rate contract that involves two or more railroads will include one railroad acting as the settlement carrier.  This is the railroad that invoices and collects the freight and then settles up with the other railroads in the route according to the respective divisions or revenue requirements each established when the contract was first negotiated.  In a joint line  contract, the shipper only knows the total freight to be paid; they do not know what each individual railroad in the route is earning.

Shippers also use Rule 11 contracts whereby a separate rate/contract  is negotiated with each carrier involved in the route.  Each carrier invoices for their portion of the move and keeps the revenue they collect.

Whether a shipment moves subject to a joint line or Rule 11 agreement, a waybill must be prepared and submitted to the origin carrier.  The origin carrier will then transmit the waybill data to the other railroads involved in the route.  Waybills used to be prepared by the origin railroad using info derived from the shipper prepared bill of lading.  These days; railroads practically insist the shipper or a third party retained by the shipper create and transmit an electronic  waybill to the origin railroad.

Generally speaking; waybilling will identify the shipper and consignee; the car reporting marks and number; the route the shipment will follow; the product name or description and weight along with any hazmat information (when applicable) and whether the shipment is prepaid or collect.  Waybills may also carry a reference to either the contract or tariff number governing the shipment.

Curt

Thanks, Curt, that was a really great explanation. I would be very surprised if especially on class 1's they don't have an entirely computerized waybill system, these days I do know the rail systems use a very heavily automated system to make up trains and route goods to the right destination (Conrail invested a lot of time and money into this), so it would make sense that the shipper or shipping agent would send a waybill electronically then their systems would decide what cars it would be shipped in, what train that car would be part of and so forth using routing algorithms. 

Thanks again for the explanation, very nicely written. 

juniata guy posted:

Whether a shipment moves subject to a joint line or Rule 11 agreement, a waybill must be prepared and submitted to the origin carrier.  The origin carrier will then transmit the waybill data to the other railroads involved in the route.  Waybills used to be prepared by the origin railroad using info derived from the shipper prepared bill of lading.  These days; railroads practically insist the shipper or a third party retained by the shipper create and transmit an electronic  waybill to the origin railroad.

Is it a big process just to ship a car load of something? How much time is involved to have an empty car delivered? Once a car is set at a loading dock, does the shipper have a set number of days to load the car? This really is an interesting topic.

Sam:

Everything we ship moves in privately owned or leased railcars so we don't have to request empty cars from the railroad.  When one of our empties comes back from a customer, so long as a plant can physically accept the car, the railroad just sets it into that site on the next scheduled switch.  If a private car is held on private tracks, the railroad cannot charge demurrage.  This applies whether a car is sitting inside one of our plants or inside a customer's plant.  The railroad may charge demurrage on private cars if they are held on railroad property outside either one of our sites or a customer site.  Who receives this invoice depends on where the car is.  For example, if the railroad has to hold one of our loaded shipments outside a customer's plant site, the customer will be charged the demurrage.  For loaded or residue empty hazmat cars; just about all railroads now impose a demurrage premium above their normal demurrage rates.

It is not unusual, particularly in the chemical industry; for car owners and lessees to impose some sort of demurrage program on loaded cars held inside customer sites beyond an agreed upon period of time.  This kind of demurrage is strictly between the shipper and receiver and does not involve the railroad.

In a "previous life"; I dealt almost exclusively with railroad owned equipment and in those instances the shipper places a car order with his serving railroad specifying the car type and number of cars required on a particular date. In the good old days, this was handled either with a phone call to the local agent or a fax; these days car orders are almost always required to be submitted electronically to the serving railroad's website. 

Free time for loading and unloading railroad owned equipment varies by railroad but, generally will be either 24 or 48 hours.  When this free time begins varies from railroad to railroad too but, the most common application when I used to deal with railroad equipment had free time starting on the first 7AM following actual placement of the car. 

In terms of actually shipping a loaded car; there really isn't that much to it anymore.  As I noted in my original post; its all electronic now.  In our case, when a plant site completes an order, the car reporting marks, number and weight are entered into SAP as part of what we call a "post goods entry".  When a plant shipping person submits this info to SAP, it automatically triggers an electronic message to the third party that performs our electronic rail waybilling who then converts that info into an electronic waybill and transmits it to the appropriate railroad.  In real time (and assuming SAP isn't down), this all occurs within a matter of a less than a minute.

Curt

Juniata Guy provides a wealth of information here, some I was aware of, many things I was not.  So I'll just add this.

Having worked for companies who used rail shipping extensively, due to some of the complexities we typically used a shipping broker experienced with this type of move.  These guys handle the whole shipment and we get a single bill.  Especially helpful when material is transported via sea to port, offloaded port to rail, then rail to truck to our facility.  Of course then you get into import/export compliance, importer of record and so on.

Unless you are a very large company, it's cheaper and easier to allow a broker to manage for you.  Even then, being under the umbrella of a fortune 500 company now, we still use brokerage for a lot of this. 

 Only thing I could ad that Curt hasn't mentioned is the charge for moving a car around in a plant.

 The conductor in charge of a car in a customers facility may incur  an additional charge if the item is moved after placing the car in one track,then upon customers request,move the car to a different track.

 This can be charged directly from the conductors R.I.T. devise or after contacting CYO .

John Armstrong had a book called "The Railroad, What It Is, What It Does" that explains this.

The copy I have shows a last printing in 1994, 3rd edition.

It was a bit dry for me, I get bored easily but there's a wealth of information  in the book.  here may be other books or an online site that has more up to date data.