Make your negotiations more productive

Making Rail Negotiations More Productive

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A Message from Escalation Consultants’ President & Founder, Jay Roman:

Rail negotiations are frequently unproductive because the shipper and railroad work against their own best interest. This leads to frustration, especially for the shipper, as railroads frequently have monopoly or duopoly power over shippers’ traffic.

A good rule for shippers to follow in order to accomplish more in rail negotiations is to make negotiations more educational and much, much less confrontational.

As an example, banging on the table or getting mad in negotiations is unproductive as it can be a sign of weakness. If you could do anything other than get mad you would already be doing it and there would be no need to get mad. It is simply a sign that you believe you have no options, and this is the wrong signal to send to a railroad.

To reduce rail expenses, shippers need to educate railroads on how both parties can accomplish more by working together than against each other’s best interest. It does not matter if you have $10 million or $500 million in rail spend. A shipper will accomplish more with railroads if it is able to articulate a path forward that will be better for both parties than the status quo. This process is not always easy, but it is very effective.

Making rail negotiations educational is very successful as a shipper is being proactive in helping establish a rate structure that creates value for both parties. However, this process is more time consuming for a shipper than just sending out a Request for Proposal (RFP) to railroads. As a result, this process is not used by a large number of shippers. The results of a speech I gave at a rail shipper’s association meeting several years back demonstrates the position of some shippers and railroads on this negotiation process.

My speech was titled: Ten Things You Need to Show a Railroad to Get Better Rates. Two questions asked about what was covered in the presentation were informative:

  • A railroad person asked, “HOW CAN WE GET MORE SHIPPERS TO DO THIS”.

    • The railroad could not guarantee that it would agree to everything that the shipper wanted. However, the shipper had a much better chance of getting agreement if the railroad knew:
      • Rates the shipper needed,
      • Why the shipper needed them, and
      • Impact this would have on the railroads business.
  • Another question (“statement”) came from a shipper. The shipper’s position was, “THIS COULD TAKE A LOT OF TIME”.

    • The transportation department has a tight budget and the shipper felt it could be difficult to find the time and resources to implement this process.

In my experience, millions of dollars in savings are obtained by the shipper and millions of dollars in additional profit are obtained by the railroad through proactive, educational rail negotiations. Some of the best options for accomplishing these types of results are something every rail shipper needs to explore.

I urge shippers to attend Escalation Consultants’ Rail Negotiation Seminar in Tampa, Florida on March 8 – 9, 2023. The focus of the seminar is on how to make your rail negotiations more productive. Click the image below for information on the seminar, as well as some of the hundreds of recommendations the Rail Negotiation Seminar has received from shippers. We look forward to seeing you in Tampa.

Register before January 31st for special early bird pricing!

Sincerely, 

Jay Roman 

President of Escalation Consultants, Inc.

(o) 301-977-7459

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