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Revenue on rail shipments - interlined

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  • Member since
    May 2004
  • From: Valparaiso, In
  • 5,696 posts
Revenue on rail shipments - interlined
Posted by MP173 on Sunday, November 28, 2021 10:09 AM

Quick question...

Are "thru" rates still in effect on interline railroad shipments?
Example - carload of grain from Iowa (CP) to Houston, Tx (BNSF) over Kansas City.  Does the rate apply from point of origin to destination, or are there two rates - Iowa to Kansas City(CP) and Kansas City to Houston( BNSF)?  

It is my understanding that the thru rates have disappeared and replaced by contract rates (non published) by individual railroads.  Hence the party paying the freight would receive 2 bills - Iowa to KC from CP and KC to Houston (BNSF).

Would this also apply on intermodal movements?  If so, i can see why BNSF and UP stretched out to North Baltimore via haulage on CSX.

 

Ed

  • Member since
    December 2007
  • 1,265 posts
Posted by Falcon48 on Wednesday, December 1, 2021 11:16 AM

MP173

Quick question...

Are "thru" rates still in effect on interline railroad shipments?
Example - carload of grain from Iowa (CP) to Houston, Tx (BNSF) over Kansas City.  Does the rate apply from point of origin to destination, or are there two rates - Iowa to Kansas City(CP) and Kansas City to Houston( BNSF)?  

It is my understanding that the thru rates have disappeared and replaced by contract rates (non published) by individual railroads.  Hence the party paying the freight would receive 2 bills - Iowa to KC from CP and KC to Houston (BNSF).

Would this also apply on intermodal movements?  If so, i can see why BNSF and UP stretched out to North Baltimore via haulage on CSX.

 

Ed

 

I've been retired from the industry awhile.  But my understanding is that interline "through" rates (including "through" contract rates) are very much still used.  But they aren't as dominant as they once were.  For a variety of commercial reasons, some shippers and railroads prefer segmented rates (often called "Rule 11" rates), where each railroad in an interline route makes its own deal with the shipper for its part of the route.

  • Member since
    May 2004
  • From: Valparaiso, In
  • 5,696 posts
Posted by MP173 on Wednesday, December 1, 2021 2:00 PM

Thanks Falcon for the reply.

I was unsure whether anti-trust concerns would keep such through rates from being negotiated or not.

Never heard the term "Rule 11" before.

 

Again, thanks,

 

ed

  • Member since
    December 2007
  • 1,265 posts
Posted by Falcon48 on Thursday, December 2, 2021 8:54 PM

MP173

Thanks Falcon for the reply.

I was unsure whether anti-trust concerns would keep such through rates from being negotiated or not.

Never heard the term "Rule 11" before.

 

Again, thanks,

 

ed

 

  Antitrust is not a concern for connecting railroads agreeing on an interline rate (as long as any agreement is limited to the interline rate).  But antitrust is definitely a concern for establishing interline rates through "rate bureaus" (essentially regulated cartels) since the Staggers and 4R Acts, which is the reason they aren't made this way anymore.

For further information about interline rates and "Rule 11" rates, see an earlier thread (2018) on this forum entitled "How Is the Line Haul Rate for Interchange Set". 

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