Check the Index You Use to Escalate Multi-Year Rail Contracts

The All-Inclusive Index- Without Fuel (AII-LF) is the primary index used to escalate rail rates in contracts. However, there are two versions of this index that are used to escalate rates and during rapid inflation. One index tends to increase more than the other. The graph shows:

• Since 1Q2021 the AII-LF index Before Error Adjustment has consistently increased more than the AII-LF index After Error Adjustment.
• The cumulative difference over the last eight quarters is 2.2% (17.4%-15.2%).
• The difference over just the last quarter is 1.3% (4Q2022 to 1Q2023)
• Shippers need to verify which version of the AII-LF index is being used to increase their rates.

**This graph was generated using the Rail Cost Control program**

The Rail Negotiation Seminar is the most highly recommended program by rail shippers for rail shippers. The seminar is effective as it provides policies, strategies and negotiation practices that help reduce and better control your rail expenses. In addition, it keeps you current on changes in the marketplace that can impact your rail expenses, such as the changes referenced above in the ALL-LF indexes.

Thousands of rail shippers, from every industry that ships by rail, have attended the seminar over the years. Below are some of the observations they have made:

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