Rail Rates on Car Blocks and Unit Trains: Benefits to Railroad > Opportunity to Shipper

Shipping multiple cars at a time provides benefits to the railroad that could translate into savings for you. When the railroad moves groups of cars, whether as blocks or trainloads on the same bill of lading, there are usually economies of scale. Just as there are advantages to shipping greater volumes in railcars, the benefits can be taken to the next level by increasing the number of cars shipped at a time.

With multiple car shipments, the railroad switches the cars as a group rather than individually, lowering costs and improving car turnaround. That translates into reduced per diem costs for shipments in railroad-owned equipment. If private equipment is used, the improved car utilization could lower total lease costs when fewer cars are required.

The railroads’ cost savings from increased shipment size is conservatively estimated at 5% – 25%. The impact of fewer days in transit, improved car turnaround and less switching en route depend on the number of cars in the shipment and the specifics of the route. If the railroad is benefiting from operational efficiencies, are you sharing in those benefits?

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