Posts

US Rail Station Captivity Map

Making Your Moves More Important to Railroads

The Rail Station Captivity Map

A basic rule to follow in getting more attention to your issues from railroads:

If you have the ear of people that are important to your railroads, then you make your moves more important to railroads.

Politicians have a big influence on railroads and can have a very positive impact on shipper’s rail negotiations. Politicians are also easy to access as they want to talk to shippers for self-serving reasons. Obtaining political support for your position in rail negotiations costs very little to pursue and can yield a positive return. The Rail Station Captivity Map was developed by Escalation Consultants to support discussions with politicians on railroad issues.

The Rail Station Captivity Map shows that 78.4% of all rail stations in the United States are captive to one Class I Railroad.

Figure A is color coded to show the percentage of all rail stations by state, that are captive to a single Class I railroad. Rail stations are captive if they don’t have either direct or indirect access, through a short line, to more than one Class I Railroad.

Making your movements more important to your railroads, USA

 

The number of states in each captivity range are shown below.

Breakdown of Rail Station Captivity in the US

# of States
% of Stations Captive to One Major Railroad
10 90% – 100%
18 80% – 89%
13 70% – 79%
5 60% – 69%
3 50% – 59%
0 25% – 49%
0 1% – 24%
Note: Hawaii is not included.

Railroads are always concerned about politicians, as they can have a significant impact on how railroads are allowed to operate. Unfortunately for railroad customers, it is frequently difficult to get the attention of politicians on rail rate issues. This is because the problems shippers experience with railroads are complex and not easy to explain.

It is easier to get a politician’s attention with an easy-to-understand picture, highlighting the importance of rail to specific areas they represent. Figure B shows this as it contains the rail station captivity by County for the state of Minnesota. Rail Station Captivity Maps are available, by county and Congressional District, for all states in the United States.

Making your movements more important to your railroads MN.

Escalation Consultants is making state maps available for rail shippers. Simply contact Escalation Consultants to request the Rail Station Captivity Map for your states of interest.  

The State Rail Station Captivity Maps are effective at getting the attention you need to help resolve problems. When shippers want to make movements more important to railroads, getting the attention of Congressmen and Senators is a good way of accomplishing this. Please note: all politicians do not have the same amount of sway over railroads. In addition, there is a right way and a wrong way to deal with politicians. This needs to be understood, and allowed for, in your discussions with politicians.

Rail Station Captivity Maps, for a specific area, are an excellent way of showing railroads and politicians why production will not increase, and capital investment will not be made at an existing location that is captive to one Class I railroad. Captivity maps illustrate areas that will have difficulty in achieving economic development from companies that rely on rail freight.

Shippers need to be able to show that railroads’ monopoly power over captive movements at a facility creates problems for both politicians and railroads.

Rail Station Captivity Maps are proof of the expression: “A picture is worth a thousand words.” Shippers are encouraged to use these maps to increase their leverage in rail negotiations.

 

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.”

Rail Cost Control

close up view of railroad tracks at dusk

Decrease Your Rail Rates by Increasing Your Pricing Options

Rail shippers all agree that it is better to have multiple rate options for a movement instead of just one.

The easiest way to increase your rate options is to have railroads provide Rule 11 rates through multiple gateways. 

The following bar chart provides an example of the potential reduction in rail expenses a shipper can obtain from using a Multiple Rail Gateway Request for Proposal (RFP) on Rule 11 moves.  Each bar represents the percent change from existing rates using a Multiple Gateway RFP and a RFP based on existing rail routes for captive and competitive moves.

 

 

The bars reflect an analysis of actual results from bid evaluations. The chart shows a reduction occurs in both captive and competitive rail expenses when Multiple Gateway RFP’s are used, but rate decreases are much larger on competitive movements.

Results normally vary based upon a shipper’s volume of captive and competitive traffic. However, having three rate options instead of one creates downward pressure on rates for both captive and competitive moves that simply doesn’t exist without this functionality.

The problem with Multiple Gateway RFP’s is: they have been very difficult to create and evaluate.

Fortunately, that has changed! Multiple Gateway RFP’s are being used by more shippers as improved technology now makes it easier to create and evaluate them.

In the past, to create a Multiple Gateway RFP you needed to know the following for each movement:

  • The railroads serving your origin
  • The railroads serving your destination
  • The major gateways where the origin and destination railroads interchange traffic to the destination area

The flow chart below is for the creation of a Multiple Gateway RFP for an NS move. This move is originating in Knoxville, TN and terminating on either the UP or BNSF railroads in Los Angeles, CA.

 

Multiple Gateway Railroad RFP

 

The flow chart shows that the shipper’s RFP’s for NS, UP and BNSF must include a request for nine (9) rates from the three railroads for this one movement:

  • NS RFP needs four (4) rates from Knoxville, TN to major gateways with UP and BNSF
  • BNSF RFP needs three (3) rates from the gateways on BNSF to the Los Angeles destination
  • UP RFP needs two (2) rates from the gateways on UP to the Los Angeles destination

If a shipper has hundreds of moves, in the past, the RFP could take months to assemble for all railroads.

The bid evaluation was also more complex. This slowed down the bid evaluation process at a time when contracts were ending and time was critical.

Significant cost reductions normally result from a Multiple Gateway RFP, but this process was always significantly more time consuming. This has changed!

The Rail Cost Control (RCC) program represents a significant improvement in technology that makes it easy to create and evaluate Multiple Gateway RFP’s. To do this, shipper’s moves are loaded into the program’s Database Management System. Then, the program’s Cost Optimizer automatically generates Multiple Gateway RFP’s for all movements on each railroad through commonly used gateways. The RCC creates the RFP so it automatically reads railroad responses to the RFP.

The Rail Cost Optimizer then automatically:

  • Evaluates all railroad’s responses and determines your least cost routing option and awards traffic to that option;
  • Creates win/win optimizing opportunities that decrease your cost, while increasing railroads profits; and,
  • Creates cost effective counter proposals for your railroads.

The Rail Cost Control program is an Escalation Consultants product that represents a significant improvement in technology. The RCC has a material impact on a shipper’s rail expenses.

 

Rail Cost Control (“RCC”) is a program developed by Escalation Consultants 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.

Rail Rate Checker Banner