How much does it cost to ship via rail

[304live]

Ive googled this quite a few times but I just cant find any rough idea how much it costs to ship car loads via rail of any type.

I would guess that loads vary in price for all kinds of different reasons... type, distance, days it takes to unload, hazmat status, etc.

But are we talking 100's of dollars to ship something or 1000's of dollars? I wouldn't even have an idea what to guess... Can anybody help me out?

 

[edblysard]

Try looking for a tariff rate instead of the word cost or price, you will find lots of neat info....

[304live]

THANK YOU!

ive found more in 2 seconds than i did in a substantial amount of time spent on earlier searches... lol

 

 

[Railway Man]

304live

Ive googled this quite a few times but I just cant find any rough idea how much it costs to ship car loads via rail of any type.

I would guess that loads vary in price for all kinds of different reasons... type, distance, days it takes to unload, hazmat status, etc.

But are we talking 100's of dollars to ship something or 1000's of dollars? I wouldn't even have an idea what to guess... Can anybody help me out?

Be cautious looking at tariff rates -- they're the "walk-up" rate like you would pay if you ran up to the airline counter and said "Get me on the next flight, price no object!"  Almost no shipper pays a walk-up rate, but gains substantial discounts through volume committements, providing their own equipment, and so forth.

The average rate per ton-mile (one ton of freight moved one mile) is just above 3 cents at the present time on U.S. Class 1 railroads.  For the full year 2009, the average rate was 3.011 cents.  Bulk commodities are well below that average, at about 2 cents per ton-mile, and high-value, high-service intermodal freight well above that average, at about 5 cents per ton-mile (or even more in some cases).  The average length of haul (2009) was 918 miles, and the average tons per carload was 64.2 tons.  Thus, the average carload of freight cost the shipper $1,774.55.

RWM

[AgentKid]

I'm glad you posted that information. I had always noticed a lack of that type of data here, and I assumed it was done so the various RR's could protect their competitive advantage. An informal agreement, if you will, between Kalmbach and the companies that if we don't talk about rates, they won't object to some of our other topics. Derailments and their causes, for example. Thank you RWM.

Bruce

 

[Railway Man]

I'm quoting direct from AAR public documents so I'm safe!

RWM

[edblysard]

Listen to this guy...I can promise you he knows of what he speaks.

The tariff you see in print is like a window sticker price on a new car")

On my railroad the tariffs are negotiable...volume makes a big difference.

Although Shell Deer Park and Lubrizol are literally directly across our tracks from each other, Shell get a big discount because they have a in house switcher crew with their own locomotive and ship 3 to 4 times the volume of cars.

On the other hand, Geo Bio Science gets one or two cars a week and pay top dollar for them.

What you should look at is the type of work, switching, spotting, inter and intra-plant movement, captured service and bulk long haul service, lots of other charges most people never think about.

Railway Man

304live:

Ive googled this quite a few times but I just cant find any rough idea how much it costs to ship car loads via rail of any type.

I would guess that loads vary in price for all kinds of different reasons... type, distance, days it takes to unload, hazmat status, etc.

But are we talking 100's of dollars to ship something or 1000's of dollars? I wouldn't even have an idea what to guess... Can anybody help me out?

 

Be cautious looking at tariff rates -- they're the "walk-up" rate like you would pay if you ran up to the airline counter and said "Get me on the next flight, price no object!"  Almost no shipper pays a walk-up rate, but gains substantial discounts through volume committements, providing their own equipment, and so forth.

The average rate per ton-mile (one ton of freight moved one mile) is just above 3 cents at the present time on U.S. Class 1 railroads.  For the full year 2009, the average rate was 3.011 cents.  Bulk commodities are well below that average, at about 2 cents per ton-mile, and high-value, high-service intermodal freight well above that average, at about 5 cents per ton-mile (or even more in some cases).  The average length of haul (2009) was 918 miles, and the average tons per carload was 64.2 tons.  Thus, the average carload of freight cost the shipper $1,774.55.

RWM

[PNWRMNM]

RWM could also get the same type of info from the carrier's R1 reports to the STB.  BNSF provides access to theirs on their website.  I suspect that others do too, but I have had no reason to look for them.

Mac

[MP173]

Most carrier's annual reports will break down major commodities handled by carload, tonnage, and revenue and by revenue/carload.  That gives a great idea of costs involved.

A few years ago there seemed to be a movement toward tariff rates, perhaps from the tone of the conversation here that movement is halted and is now contract or negotiated rates.

BTW, I had a thread last week on Clearing Yard and talked to a person at BRC.  They do charge the deliverying carrier $152 for humping and classifying each car.

Ed's comments on the accessorial charges (switching, intra plant, etc) is something that is usually outlined in most terminal carrier's tariffs. 

ed

[Deggesty]

Be cautious looking at tariff rates -- they're the "walk-up" rate like you would pay if you ran up to the airline counter and said "Get me on the next flight, price no object!"  Almost no shipper pays a walk-up rate, but gains substantial discounts through volume committements, providing their own equipment, and so forth.

RWM

[/quote]And, if you get any kind of discount, make certain that there is a contract that states the discount, or else both you and the carrier can be in a world of trouble. I never worked in Traffic, but I did work closely with our Traffic department.

[BNSF@NARS]

I Have No Clue About The Coin Per Mile But With A Short Line Railroad This Would Be There Rate:

Around $150.00 For Carload Switch Service

Around $750 For Train Connection With A Railroad Such As Union Pacific Or Canadian National And More.

A Railroad Such As Canadian National Railroad Would Rate You For Switch Movement And Road Train Movement:

Switch Movement Would Be Around $150.00

Road Train Movement Such As From The Mid West To The West Coast Would Be Around $1,000.00

When A Customer Has A Private Railroad Which Would Mean A Railroad And Train Crew Owned From The Business The Connection Railroad Such As Canadian National Would Not Rate You For Switch Movement Which That Is The Reason Some Businesses Would Start A Private Railroad To Save Revenue.

 

[txhighballer]

Ok,let me make sure I get this straight..if you are a handling carrier (short line) you get 150.00 per car,or is that a number the short line and teh connecting road have to negotiate? What id the short line is 150 miles long?

[Railway Man]

Length of the short line is irrelevant.  What matters is what the traffic will bear.  If the traffic will only bear $150 per car, and the short line's cost to handle the car is $500, then the opportunity will fail in the marketing analysis and no one will bother to even write a contract because it isn't going to happen.  

The railroad world is full of examples of 150-mile short lines whose per-car handling cost exceeded what the traffic would pay, and thus were abandoned.  Conversely, there are short lines that can command more than $1,000 per car for shipments moving a matter of a few thousand feet to a Class 1 connection, because of the high value of the shipment and the high cost of trucking that type of freight (e.g., chemicals) to a transload.  Similarly there are plenty of short lines whose tracks run right by a shipper who hasn't used the short line in more than a decade (e.g., sawmills), because the cost of trucking that freight 50 miles to a transload on the Class 1 is less than what the short line has to charge to haul the car to the Class 1.

Handling carrier charges are contractually determined.  They are typically negotiated individually for each short line by each of its Class 1 connections, by commodity, by type of equipment, by who owns the equipment, by volume commitment, by customer.  For example, a short line that has 2 propane receivers at station A receiving in shipper-provided tankcars from the same origin, four grain shippers one each at stations A, B, C, and D shipping in single-car 100-ton covered hoppers provided by the Class 1, and a lumber receiver at station C receiving in 78' centerbeams provided by the Class 1 plus its own 78' centerbeams, would typically have one charge for the propane (the customers "look" identical); each of the four grain shippers might have either their own individual charge or a common charge; and the lumberyard would have two different charges depending upon whether the lumber arrived in its own cars or the Class 1's cars.  If one of the grain elevators wanted to start shipping 26-car blocks in 286K cars, that would be yet a different charge.  And so forth.

The process of negotiating a handling line charge goes like this:

1. A customer wants to ship between a station located on the short line, and another station located either on the Class 1 or one of its connections.  Let's assume this will be carrier-supplied equipment and has only one origin-destination pair.  Let's assume it's dimensional lumber, construction grade, sun dried, moving on 78-foot centerbeams.
2. The marketing person at the short line and his or her counterpart at the Class 1 determine what kind of volume is likely.  The Class 1 marketing person or short line liaison talk to their equipment managers who determine what kind of equipment is needed, where the equipment might come from, what it might cost, and what kind of equipment utilization this implies.  Both marketing people talk to their respective operating managers to determine what kind of operating requirements the service might have -- what train it might move on, how much switching is involved, where the cars will be blocked or classified or set out, or whatever.  This boils down to a cost of service at each railroad.  They probably don't disclose this to each other, but the Class 1 will have a very good idea what the short line needs to get -- it's not hard to figure out if you have experience.
3. The pricing people at the Class 1 look at what they're charging for similar commodities moving in similar O-D pairs in similar equipment in similar service.  They will also look closely at the "economic rent" of the proposed shipper compared to existing shippers to see how much transportation cost all the shippers can absorb until either they're priced out of the market, or their costs rise to the point that they cease reinvesting in their business. This process boils down to a maximum price that the proposed shipment can "bear" and still move.
4. The Class 1 marketing person compares the price that can be charged to the cost of providing the service.  If the price exceeds cost plus the desired profit target, he/she calls the short line and makes them an offer on the handling line charge -- the offer will probably be sufficient to make the short line whole on the cost of providing the service if the Class 1 marketing person knows what they're doing (there's no point in spending time negotiating on something that will never happen), but the profit margin that is offered might be very thin because the commodity being discussed is not unusual.  The short line and the Class 1 negotiate the profit margin.  The Class 1 wants to keep the short line in business, but it doesn't want to give the money away for nothing, either.

Back to your question about a 150-mile short line.  If that short line is originating or terminating traffic that can't be readily substituted from a different source at the same cost delivered to the customer, or its shippers have a tremendous cost advantage over their competitors located on the Class 1, then that 150 mile length is a strength because it makes "trucking around the short line" very expensive.  But if the short line is originating or terminating traffic that is easily substituted from other locations, or its producers have no special advantage over producers elsewhere, that 150-mile length is a deficit because it runs up costs and returns no value.  In other words, the length of the short line does figure into the handling charge, but not in a linear fashion.  Sometimes it increases it and other times it means there's no handling charge to be earned at all.

RWM

[Falcon48]

BNSF@NARS

I Have No Clue About The Coin Per Mile But With A Short Line Railroad This Would Be There Rate:

Around $150.00 For Carload Switch Service

Around $750 For Train Connection With A Railroad Such As Union Pacific Or Canadian National And More.

A Railroad Such As Canadian National Railroad Would Rate You For Switch Movement And Road Train Movement:

Switch Movement Would Be Around $150.00

Road Train Movement Such As From The Mid West To The West Coast Would Be Around $1,000.00

When A Customer Has A Private Railroad Which Would Mean A Railroad And Train Crew Owned From The Business The Connection Railroad Such As Canadian National Would Not Rate You For Switch Movement Which That Is The Reason Some Businesses Would Start A Private Railroad To Save Revenue.

 

  Many short line railroads have arrangements with their line haul connections where the short line gets compensated by its connections and doesn't separately bill the shipper for its part of the move.  These are often called "handling carrier" arrangements, basically a form of haulage.  In these deals, the connecting line haul carrier treats the short line stations as its own stations, and the short line will be invisible in the rates and in the bills to the customer.  The short line's compensation comes not for the shipper, but from the line haul carreir, which pays the short line an agreed charge for each car it handles.   That charge would be in a private agreement between the line haul carrier and the short line, and would not be shown in any public price documents (i.e.,"tariffs")

[Ulrich]

304live

Ive googled this quite a few times but I just cant find any rough idea how much it costs to ship car loads via rail of any type.

I would guess that loads vary in price for all kinds of different reasons... type, distance, days it takes to unload, hazmat status, etc.

But are we talking 100's of dollars to ship something or 1000's of dollars? I wouldn't even have an idea what to guess... Can anybody help me out?

 

As is so often the case...the answer is...it depends. I can ship a skid of screws from Toronto to Vancouver, BC for $175.00 by rail..and that rate is with a pool car company in the middle that has volume rates with the railroad. On the other extreme...rates are $10, 000 + for some carload moves. I recently paid $8000.00 for a  gondola from Niles OH to Calgary, AB...and that is what I consider to be a  a good rate. Same rates for truck service would have been $21,000.00 .

Rates vary widely, even for similar commodities in similar lanes. Rates are determined by numerous factors including market conditions, the commodity you're shipping, the volumes you're shipping, and of course your creditworthiness as a shipper. And sometimes the rate you get is the "please take your business elsewhere" rate...when the transportation supplier simply doesn't want the business. Personally I don't quote those...I prefer to tell perspective clients that I would rather not deal with it...these are usually one shot deals where there's alot of work involved and the client's creditworthiness is not that great.

The best way to negotiate competitve pricing is to make your shipping  as simple as possible for the carrier. In the case of the railroad...make sure you understand the railroad's procedures and shipping timelines and their documentation needs. If you're shipping containers, try to ship ramp to ramp by taking care of the drayage yourself. Further savings are possible if you supply the container/trailer, you ship off peak times,  and you pay your bills promptly. In short... even as a low volume shipper you make your business worthwhile for the railroad to handle. No one wants a mess or alot of risk to deal with, so a simple transaction that involves prompt payment will almost always result in competitive prices that everyone involved can live with.

 

 

[304live]

thank you for all the great replies...

this has been a very informative thread