Edit post

Edit your reply below.

Post Body
Enter your post below.
The final type of switching to discuss is what was known to NS as junction switching. This occurs when a railroad other than one involved in the linehaul move of a car serves the customer for another line haul road. For instance, a customer located on NS at Chicago desires to ship a car to Florida to a destination on CSXT. Naturally, NS would prefer to handle the car as far as it could, say to Jacksonville before interchanging it to CSXT. But maybe the customer doesn't want to do that. Maybe the customer believes that the rate is better or the transit time is quicker if CSXT handles the car the whole way. In that case, NS would pull the car and switch it to CSXT at Chicago and not participate in the line haul revenue. Instead, it would receive an amount from CSXT. CSXT would originate the waybill and pay NS an established switching charge which is settled monthly. Cars switched to customers for CSXT by NS would be compared to cars switched to customers for NS by CSXT and an appropriate net settlement determined. If the customer is located within identified switching limits of each road, they would be eligible. Those who are not, the railroad on whose line the customer is located would receive a line haul portion of the revenue. Customer within switching limits are generally defined as those inside the yard limits as marked by a sign and established in tariffs. Junction switching works on a basis of equal reciprocity, in other words, anything within reasonable geographic parity. In the last few years, this has become less common. Switching limits have been redefined or customers are listed as not open to switching. In situations where the customer has a choice of which road to use, i.e. origin and destination are on the same two roads, but prefers to use the road which does not serve his siding, the tactic has been to increase the switching charge to a ridiculously high amount. Since, ultimately the customer pays the charge, either in a pass through charge or a higher line haul rate, it becomes cheaper for him to choose the railroad without switching. I'm sure this is confusing, so lets look at an example. The customer in Chicago located on NS would like to ship a car to Jacksonville, Florida on CSXT. NS would place a high junction switch charge at the Chicago end so that CSXT would either/lose money on the move or have to pass the cost on to the customer. Meanwhile NS says, I can ship your car all the way to Jacksonville and you can avoid the cost of switching being added into your rate. This will affect customer routing decisions. Of course, customers can be brand loyal and say, "I don't care, I'm still shipping via CSXT", but that's very rare, especially if service in comparable. That leaves the ball in the court of the various marketing departments...who can out sell who and who has the best deal to offer, rate wide, time wise, etc. In closing out, what must seem like an endless discussion, there is also absorbed switching. That is junction switching where no charges are passed along to the customer. The line haul carrier just absorbs the cost, considering it included in the line haul rate. Switching done by terminal railroads is another subject. These railroads generally do not operate at a profit but are owned by the line carriers in the area, a local municipality or a group of on-line shippers. While there may some exceptions, terminal railroads do not share in the line haul revenue. They have miscellaneous charges as well, such as demurrage, intraplant switching, etc. the same as we've covered previously. Other types of miscellaneous revenue would be demurrage, detention, storage, weighing, diversions and reconsignments just to name a few. We've discussed a lot of things but have barely touched the subject. In some of the posts here and in other subjects, line haul revenue as well as car hire have been mentioned. These are entirely different matters. Line haul revenue what its name implies, what it costs the shippers to move a car as defined by tariff, contract, multiple car rates, unit train rates, annual volumn rates, etc. Car hire is a different matter all together. It's the cost of having someone else's equipment on your line. It's called Per Diem. The railroad pronounce it as if it were Per Dye-um. But, again, then that's another subject. I hope that these dialogs have helped you understand the vast complexities involved with railroads and their relationships with each other. As before, if you have questions or comments, fire away. I'll try to answer them. (Whew) Everyone have a safe day...gdc
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag