Are the railroads telling you they want Through Rates converted to Rule 11? If so, that’s a good thing.
A Through Rate is one rate that covers all railroads in a multi-railroad shipment. For example, moving from the west coast to the east, you’d pay one rate to the origin carrier, who is then responsible for paying any other railroad(s) in the movement. You’re probably comfortable with these types of rates since they do not create much of an administrative burden.
Rule 11 rates, on the other hand, involve the independent negotiating and billing with each railroad in a joint movement. The shipper works directly with each carrier in setting up, billing, and paying that railroad’s portion. Sound like more work? Perhaps, but the benefits can far outweigh the costs.
The major benefit of Rule 11 is that all rail rates are transparent, which can increase the leverage that a shipper has. Take, for example, a movement from Houston, TX to Philadelphia, PA originating on the UP. If you negotiate a Through Rate with the UP to move via the New Orleans interchange to the NS, you don’t know how much the UP vs. the NS is receiving. Who’s providing a reasonable rate and who may be putting you at a competitive disadvantage? What if your facility is captive to the UP, but the receiver is open to the NS and the CSX? Is the UP taking more than its fair share? How do you know that you are you being afforded the best opportunity to leverage one destination carrier against the other?
Rule 11 rates can provide:
- Rate visibility
- Increased options
- Negotiation leverage
- Rail spend reductions
RSI Logistics is here to help shippers understand railroad pricing and reduce their rail spend. Rule 11 rates may open the opportunity for savings that you didn’t know were possible. Contact us to find out how our analysis software, coupled with our expertise in rail rate negotiations, can help you achieve substantial benefits.