How Rail Cost Control (RCC) Empowers Shippers — Even When They’re Not the Payer of Freight 

In today’s complex rail logistics environment, visibility is power. For many manufacturers and distributors, freight is billed and managed by suppliers, meaning the buyer never directly negotiates with the railroad. However, even when a company isn’t the payer of freight, understanding what rail transportation should cost remains critical to managing delivered prices and maintaining competitiveness. That’s where RCC comes in. 

Uncover Hidden Transportation Costs in Delivered Pricing 

When freight is prepaid, shippers often accept the supplier’s delivered cost at face value. Yet, that price includes rail transportation – an expense that can fluctuate significantly based on carrier contracts, market dynamics, and rate negotiations. Without access to those underlying numbers, it’s impossible to know whether the supplier is passing along a fair transportation charge. 

RCC provides the tools to change that. By entering the origin, destination, commodity details, and other known details of a movement, shippers can use Rail Rate Checker (part of the RCC program) to estimate what the benchmark rail rate should be for that route. This comparison allows the shipper to evaluate whether the supplier’s delivered cost aligns with market averages—or if hidden freight markups are inflating total landed costs. 

Example: If a supplier’s delivered cost is significantly higher than RCC’s benchmark rail rate for the same movement, the discrepancy often indicates that the supplier’s negotiated rail rate is above market, or that margin is being added to the freight portion of the sale. 

Use RCC to Confirm Supplier Competitiveness 

RCC’s Database Management System (DMS) provides a macro-level view of rates and movement economics. This allows shippers to: 

• Reverse-engineer supplier rates using known routes and delivery costs.
  •Validate supplier competitiveness by comparing rates against regional and national market averages. 
  • Strengthen negotiations by knowing whether suppliers’ transportation arrangements are optimized—or leaving money on the table. 

Armed with this information, shippers gain leverage in supplier discussions and procurement decisions. It transforms delivered pricing from a black box into a transparent, data-driven process. 

Track Rate Changes Over Time 

Markets evolve. Rail rates rise and fall based on carrier cost structures, inflation, and network changes. What was a fair rate three years ago may no longer be competitive today. 

RCC’s historical rate tracking capabilities allow users to: 
• Analyze rate trends over time for specific lanes and commodities. 
• Quantify how rates have changed across different carriers, origins, or destinations. 
• Anticipate future shifts and build cost models that reflect true transportation economics. 

By viewing multi-year rate histories, shippers can identify when suppliers’ delivered costs have increased faster than industry benchmarks—a strong signal that freight expenses may not be optimized. 

Turning Delivered Cost into Strategic Insight 

Even when a company isn’t managing rail contracts directly, RCC helps bridge the information gap between delivered cost and true rail market conditions. With this visibility, shippers can: 

• Ensure suppliers are obtaining competitive rail rates
• Improve total cost of goods delivered analysis for sourcing decisions
• Strengthen budget forecasting and cost control across supply chains.
   

In short, Rail Cost Control transforms passive freight recipients into informed supply chain decision-makers. 

Conclusion 

Whether you control freight or buy on a delivered basis, rail costs are a critical part of your total spend. Rail Cost Control empowers shippers to see what’s happening behind the invoice—to identify inefficiencies, confirm competitive pricing, and track long-term rate trends. The result: greater transparency, stronger supplier relationships, and better-informed logistics strategy. 

Why Every Rail Shipper Needs a Formal Position on the UP–NS Merger 

 

As the rail industry braces for potential structural shifts driven by the proposed Union Pacific (UP) and Norfolk Southern (NS) merger, rail shippers face a defining moment. Whether the merger proceeds as proposed or undergoes regulatory revisions, the decisions made today will reshape rate structures, routing options, and competitive access for years to come. 
 
For shippers, neutrality isn’t a strategy — it’s a missed opportunity. Establishing a formal position on the UP–NS merger is essential to protect both short- and long-term transportation interests. 

1. Defining Your Interests Before Others Define Them for You 

In every major railroad consolidation, stakeholders that clearly communicate their needs early tend to shape the outcome in their favor. Railroads and regulators look closely at shipper feedback when assessing market impacts, competition, and network efficiency. 
 
By formally stating your position — whether in support, opposition, or with conditions — your company ensures that its voice is heard in the Surface Transportation Board’s (STB) review process. Silence can be interpreted as acceptance, and that leaves your transportation costs and access at the mercy of others’ priorities. 

2. Anticipating How the Merger Could Affect Your Network 

The UP–NS merger could influence more than rate structures. It may reshape interchange points, alter routing options, and redefine how traffic flows across regions. For shippers with multiple facilities or diverse commodity portfolios, even subtle shifts in routing control can lead to significant changes in cost and service reliability.  

Developing a formal position forces a proactive analysis: 
– How could network consolidation impact your lanes and service options? 
– Would your access to competing carriers be limited or enhanced? 
– Could rate or service commitments already negotiated become less competitive post-merger? 

3. Strengthening Your Negotiating Leverage 

Railroads are closely watching how shippers respond. A well-documented position gives your organization a clear and credible foundation for future negotiations, with carriers. This can also affect what is included in the final merger agreement, if approved by the STB. 
 
Taking a stand communicates preparedness and sophistication that you’ve assessed how the merger could influence your network and that you’re ready to advocate for terms that maintain or improve your competitive access. 

4. Building Alignment Across Stakeholders 

Establishing a formal stance isn’t only about submitting comments to the STB; it’s also about aligning your internal stakeholders — from logistics and procurement to legal and executive leadership. 
 
A defined position ensures that everyone within your organization is speaking consistently and strategically when the merger becomes a discussion point with rail partners or industry groups. 

5. Protecting Future Options 

Even if the merger is approved, its implementation will unfold over the years. Railroads often use transition periods to make operational adjustments that can affect pricing and service. Shippers with a clear, documented stance are better positioned to request concessions, monitor compliance, and hold carriers accountable to merger conditions that protect competition. 

The Bottom Line 

The UP–NS merger will likely be one of the most consequential developments in rail logistics this decade. Shippers that take the time to analyze its implications and establish a formal position — supported by data and a clear understanding of how the merger affects their network — will be better prepared to adapt, negotiate, and thrive in the new landscape. 
 
In mergers of this scale, those who speak early have the ability and opportunity to strategically shape the outcome. Those who remain silent are left to navigate the consequences of inaction. 

Take the Next Step 

Understanding how the UP–NS merger could reshape your competitive access is critical — especially if your lanes or facilities may face increased captivity. Escalation Consultants can help you evaluate how the merger will impact your specific commodities, rates, and routing options. 

Click to schedule a review of your network and develop a strategy to protect your position before the market shifts. 

When negotiating rail freight rates, shippers often feel they’re at a disadvantage due to the complexity and lack of competition in the rail industry.

 

However, one powerful, yet often overlooked, source of leverage comes from an unlikely place: Securities and Exchange Commission (SEC) filings. These public documents—required by law for publicly traded companies—offer a wealth of financial and operational data that rail shippers can use to their advantage during negotiations. 

Transparency into Railroad Financials 

SEC filings, such as 10-Ks and 10-Qs, offer detailed insights into a railroad’s revenue, profit margins, and cost structures. Railroads must disclose information on volumes, revenue, pricing trends, operating ratios, freight expenses, and numerous other details that can be used to determine opportunities for negotiating better rates or service commitments. 

Specific Examples for Reducing Cost 

Once you know how a railroads SEC data has changed over time it opens up new sources of negotiation leverage with railroads. A few examples of how SEC data is used in strategic planning for rail negotiations are: 

1. How a railroads’ costs have changed over time.  

This can put a lid on your rate increases and may also offer an opportunity for discussions about rate decreases. 

2. The level of a railroads’ profit. 

You can then decide whether the railroad’s profit from moving your products is greater than your profit from producing products.  

3. The overall average percent increase in a railroads rate. 

It is always important to Know if your rates are increasing more than the average for your railroad. 

4. The change in railroads’ fuel cost 

This allows you to check the accuracy of a railroads fuel surcharge program. (Change in fuel cost versus fuel surcharge revenue). 

Benchmarking and Competitive Positioning 

If a shipper sees that a railroad has had rising profit margins, while service levels have remained static or declined, it may signal that there’s room to push back on rate increases. Similarly, if a railroad is heavily investing in a specific corridor or terminal, it could suggest greater willingness to negotiate to fill capacity in that area. 

Shippers can also use SEC data to benchmark rail carriers against one another. This is particularly useful when a shipper is served by more than one Class I railroad or has the option to interchange traffic. Knowing which railroad has the lower operating ratio or which one is investing more aggressively in infrastructure can be a persuasive tool in negotiations. Railroads competing for business respond not only to volume, but to informed shippers who understand their business economics. 

In addition, SEC filings sometimes reveal strategic priorities—such as growing intermodal, agricultural, or energy sectors—which can help shippers align their messaging with the railroad’s goals and potentially secure better terms. 

Conclusion: Rail Shippers Need the Rail Cost Control (RCC) Program 

While SEC filings are a valuable resource, they are just one piece of the puzzle. To fully leverage them in rail negotiations, shippers need context, interpretation, and tools to compare rates and costs across movements. That’s where the Rail Cost Control (RCC) program becomes essential. RCC combines SEC data with proprietary rate benchmarks, the Public Use Waybill Sample, and network modeling tools to give shippers a complete picture of their rail spend and negotiating position. It transforms raw data into actionable insights—empowering shippers to push for fairer rates, defend against unjustified increases, and strategically manage their rail costs.  

In today’s complex freight landscape, informed shippers win—and RCC ensures they are informed. 

 

Railroads do not mind shippers saying they have high rates. What does have an impact is showing that a railroad’s rates are putting you at a competitive disadvantage in your markets.

What this means is, in order for a shipper to have reasonable rates, it needs to know something about its competitors’ rates.

Fortunately, obtaining information on competitors’ rail rates is easier than many shippers realize. Railroads are required to submit a large amount of data on their moves to the Surface Transportation Board (STB). This data contains costs, rates, volumes, and profit, which helps shippers become more knowledgeable about the rates they compete against in their markets.

Two primary methods are used for benchmarking a shipper’s rates against competitors:

1) Public Use Carload Waybill Statistics (Waybill)

The Waybill is a large database, containing information on over one million annual rail movements with detail down to the five-digit STCC. The Waybill provides valuable intelligence on rates and carloads:

1. For specific origin and destination pairs, as well as,

2. For all origins that serve specific destination markets.

The following scatter graph provides an example of the rate information available for a specific origin/destination pair. The graph contains Waybill rate information for moves between the Houston, TX and St. Louis market areas for Plastic Materials, STCC 28211.

The graph organizes rates by mileage range and our hypothetical shipper’s rate of $6,000 is shown by the purple diamond for this 850-mile move.

The average of all Waybill rates is $4,424 which is shown by the red line.

The blue line shown at $5,400 represents the rate, which is 1 Standard Deviation above average. All moves above $5,400 are therefore in the top 15% of all Houston Plastic rates into this market.

The green line shown at $3,450 represents the rate which is 1 Standard Deviation below average. All moves below $3,450 are in the bottom 15% of all Houston rates into this market.

Some Intelligence Learned from the Graph

1. There is a wide range of rates for Plastic rail movements between Houston, TX and St. Louis

2. Rates going shorter distances are priced similar to longer distance moves and, in many cases, are higher than longer distance rates.

3. The range of rates varies by more than $4,000.

4. The average rate is $4,424

5. The shipper’s rate of $6,000 is:

   1. One of the highest rates from Houston into the St. Louis market area

   2. In the top 15% of all rates between Houston and the St. Louis market area.

2) Cost and Profit Benchmark Rates

Cost and profit Benchmarking provides the rate that gives the railroad the average profit received from all movements of your commodity on the whole rail system. No shipper wants to have above average rates, which makes this an important benchmark to understand. This benchmark rate is calculated using data railroads submit to the STB and is determined separately for captive and competitive moves as they have different levels of rail profit.

To demonstrate, Table 1 below contains:

1. The railroads long term variable cost and Revenue to Variable Cost Ratio (RVC) for the Houston to St. Louis plastic movement

2. The average Captive, Competitive and Overall Average RVC for all Plastic movements on the whole railroad system (Benchmark RVCs).

3. Based on the Benchmark RVCs and the specific details for this movement, the table contains rates that would provide the railroad with the average profit being made from all plastic movements. These rate benchmarks are different for Captive and Competitive movements as they have different levels of profit (Benchmark Rates).

Table 1 Railroad Variable Cost for Move – $2,008
		Cost and Profit Benchmark Rates
	Movement RVC/Rate	Captive	Average	Competitive
RVC Ratio	298.8%	275.9%	200.9%	122.8%
Per Car Rail Rates	$6,000	$5,541	$4,034	$2,467

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Summary of Waybill and Rail Profit Rate Benchmark Analysis

Table 2 shows the cost and profit benchmark rates that would provide the railroad with no more and no less profit than what railroads make from all plastic movements versus the Waybill market rates and the shipper’s rate:

Table 2: Summary Table for Rate Benchmark Analysis
	Cost/Profit Benchmark Rates	Waybill Market Rates
Captive moves (little or no competition)	$5,541	$5,400 (1 STD Above Avg)
Competitive Moves (Direct competition)	$2,467	$3,450 (1 STD Below Avg)
Average of all moves (Partial competition)	$4,034	$4,424 (Average Rate)
Rate for Shipper’s Movement	$6,000

All benchmark rates are lower than the shipper’s $6,000 rate and the highest benchmark rate is $459 less than the shipper’s rate ($6,000 – $5,541). However, most rates the shipper is competing against are in the $4,000 range. In addition, many movements with Direct competition have much lower rates in the two and three thousand dollar ranges.

To get reasonable rates you first need to know what reasonable rates are.

Railroads thrive on a lack of rate transparency which means it is up to the shipper to provide that transparency. Rate benchmarking provides ammunition that helps protect rail shippers from excessive rates from railroads that hold monopoly power over their traffic.

Railroads react differently to you saying you have high rates than they do to you showing that their rates are putting you at a competitive disadvantage in markets. If you can show railroads where their rates are putting you at a competitive disadvantage you will have much better success in rail negotiations. In addition, if you can show that high rates are causing both you and your railroad to lose volume in markets, you can accomplish a lot with your railroads. This all starts with rate benchmarking.  For information on benchmarking your rates against all competitor origins that serve your destination markets click here to read the “Benchmark to Reduce Rail Expenses” blog article.

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The types of rate benchmarks described above are automatically calculated for individual moves or on a macro basis in the Rail Cost Control program (RCC). Click on the link to learn more about the RCC.

The process for determining and negotiating more competitive rates for rail movements is an important part of Escalation Consultants Rail Negotiation Seminar. This seminar changes how shippers negotiate rates with railroads. The next Rail Negotiation Seminar is in Tampa, FL. on March 19^th and 20^th. Click the link below for more information.  

Rail Cost Control (“RCC”) is a program developed by Escalation Consultants, Inc. to help shippers reduce rail expenses by managing costs and empowering negotiations. For more information about RCC and other related articles, visit the RCC Blog.”

Many rail shippers believe that if they are captive to a railroad at a location, they have little leverage to negotiate better rates.

The graph below shows why this isn’t a good way to look at your rail traffic. The graph contains rail rates for Iron or Steel Products (STCC 33123) going into the captive rail market of Nashville, TN.

The question to answer with this graph is:

Why Are Rates So Different at a Destination Market Like Nashville, TN that Is Completely Captive To CSXT?

The graph shows that some rates are below $4,000, while other rates going the same distance, are above $9,000. The question is: If Nashville is a captive market, then why aren’t all rail rates above $9,000?

There are many reasons why rates for specific movements vary, but the big picture answer is very simple, Effective Strategic Planning. Shippers that make railroads look at their traffic differently get better rates from their railroads.

Strategic Planning causes captive moves to have different rate levels. Significant downward pressure on rail rates can be generated when the following issues are addressed by shippers in strategic planning.

Eight Ways to Get Better Rail Rates at Captive Locations:

1. Railroads need to compete for your business when you have multiple plants that produce the same product.

   • Even when a location is captive to a railroad, a shipper can use geographic competition to obtain lower rates from railroads.

2. Large shippers that bundle all their rail traffic in an RFP can get better rates at captive locations.

   • In order for a railroad to get more of a shipper’s competitive traffic it must reduce its rates on captive traffic. More traffic is always better than less traffic in rail rate negotiations. RFP’s that take advantage of a shipper’s entire book of potential business increase negotiation leverage.

3. Forward storage of products at captive locations.

   • To avoid bottle necks at captive destinations, explore forward storage options at sites with rail competition, then truck to captive locations. You don’t have to bypass railroads at captive locations forever. Railroads get the message.

4. Take freight costs out of the system with commodity swaps or buy/sell agreements

   • Commodity swaps or buy/sell agreements work best when you have a competitor serve your customer when its facility is closer to your customer and you serve a competitor’s customer that is closer to your plant. The higher your rail expenses, the greater the cost savings are for you and your competitor from this type of agreement. Commodity swaps or buy/sell agreements are normally a short-term action as a railroad gets the message pretty quickly that you have competitive options.

5. High rates create the economic incentive to invest capital to increase your logistics options.

   • The railroad needs to make it uneconomical for a shipper to take traffic off its system. If your rates are too high, then other logistic and capital investment options become more attractive. A railroad must provide rates that discourage a shipper from investing capital to increase its competitive options. Otherwise, a railroads high rate structure could become a big problem for the railroad.

6. Railroads need to compete against trucking on short and mid distance moves.

   • Large rail rate increases allow trucks to compete with rail for longer distance moves. The cost of trucking needs to become the ceiling price for short and mid distance rail moves.

7. Political pressure!

   • One of the best and easiest sources of leverage to create is political pressure. Politicians want to talk to you as your company is a great source for tax revenue, political contributions, and you employ many voters. Politicians can be a great benefit because if you have the ear of someone that is important to the railroad, then you become more important to the railroad. There is a right way and a wrong way to address politicians, and all politicians are not equal, which should be considered in your strategic planning.

8. Foreign Imports: 

• • It doesn’t matter if a railroad’s moves are captive, if imports are reducing your domestic production. The shipper and railroads have the same goal with imports – STOP THE BLEEDING. (Additional information on this topic will be contained in an upcoming Blog Article.)

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Rail Negotiation Seminar

If you are interested in ways to effectively reduce the rates for your captive rail movements, you should attend Escalation Consultants Rail Negotiation Seminar. For the last forty years, Escalation Consultants, Inc. has conducted the most highly recommended Rail Negotiation Seminar for shippers. The Rail Negotiation seminar changes how shippers negotiate with their railroads. The next seminar is on March 19^th and 20^th in Tampa, FL. Click the following link for more information:

Rail Cost Control Program (RCC)

Escalation Consultants’ Rail Cost Control program and consulting services are used extensively by shippers to help reduce the rate structure for their movements by managing costs and empowering negotiations. For more information about RCC and other related articles on effective methods to reduce rail freight expenses, visit the RCC Blog.