How Short Line Railroads Can Provide Value-Added Insights to Customers

Strengthening relationships with shippers along your short line railroad often means increasing railcar volume, improving word-of-mouth-marketing, and encouraging customers to use other rail services you provide. How can you provide value-added insights to customers on your short line? Let’s take a look at strategies that you can use to gain value-added insights and share these with customers.

How Short Line Railroads Can Provide Value-Added Insights to Customers

Insight Into Class 1 Rates

Deciphering rail rates can be a challenge, especially for shippers who are not familiar with pricing systems or how to find or use rail rate benchmarks. Contract rail rates, which are not public like tariff rates, have also become more common. This can make rail rates seem like a black box. It can be difficult for your customers to know if their rail rates are competitive. Showing how your customers’ rail rates compare to benchmarks of their competitors can help to show if their rates are fair, or indicate where negotiations may help them save money.

Carrier Costs Margins

Benchmarking rail rates involves understanding both the rail costs and profitability goals. With Rail Impact’s proprietary cost model, you and your shippers can also gain more insight into contract rail rates and more accurately benchmark your shippers’ rates.


Increase Profitability Short Line Railroads Guide

See how data can improve negotiations, operations and future planning for short line railroads with our free guide ›


Commodity Rates

Different commodities ship at different rates. In addition to understanding Class 1 rail rates, visibility across the market landscape for a particular commodity can help to further explain shippers’ rail rates. Shippers working with different commodities are likely to have different rail rates. If these shippers compare their rates, it may result in some confusion.

When you meet with your customers, take a closer look at the commodities that they ship. In addition, take a look at competitors who ship the same commodities on similar routes. Use benchmarks to compare rates and you may be able to see where shipping rates are out of line for a particular commodity or a particular shipper.

Rail Rate Benchmarking

Cost Analysis

With an understanding of rail rates, some shippers may find that their rates are higher than expected. In some cases, Class 1 railroads may be overcharging. In other cases, expenses may be driving up costs.

Cost analysis tools can help shippers and short lines railroads dig deeper into the costs behind each move. This includes fuel surcharges as well as operating costs, maintenance costs, and costs incurred due to inefficiencies, such as demurrage. With this information, short line railroads and shippers can see areas to improve operations and reduce costs incurred through inefficiencies.

Route Planning

The route that shippers use to deliver their goods might not be the most efficient or cost-effective route. Being able to see alternative routes and alternative options not only helps to reduce costs, but it can also help in negotiating for better rates. If shippers have access to other Class 1 railroads while still reaching their final destination, this can help them leverage competition between Class 1’s and obtain better rates. Bringing route planning information along with rate benchmarks can help guide negotiations and encourage better rates.

Terminal Directories

Knowing where terminals exist along a route can help make route planning much easier. Access to a terminal directory which shows the equipment available at each terminal, serving carriers, access to transloading and more. This information not only simplifies route planning, but can also show alternative routes that are available via transloading services.

Sharing information with customers can help you and them make stronger negotiations with Class 1 railroads, plan more efficient routes, manage more effective operations, and more. By working with customers to reduce expenses and negotiate better rail rates, you can increase rail volume, revenues, and more.


Increase Profitability Short Line Railroads Guide

See how data can improve negotiations, operations and future planning for short line railroads with our free guide ›