Would your position on a proposed rate increase of 3% for a rail move be different if that rate had already increased by 40% in prior time periods?
Many shippers answer this question with a resounding YES! The reason – Your railroad knows how its rates have changed. If your past rate problems are not addressed in current rate negotiations this either indicates that:
- You have forgotten about the large rate increases of the past; or,
- Large rate increases are not causing you a problem.
Either situation can be detrimental to a shipper’s rates, as silence does not send the proper message to a railroad.
If rates increased 20% over two bid cycles, it doesn’t matter whether the 2021 or 2019 rate increases caused the problem. The 20% rate increase is the problem!
Past performance can be a powerful source of leverage for obtaining lower rates from railroads. Unfortunately, it’s difficult to keep track of the impact past rate increases have had on current rates and volumes for specific moves. This is especially true when you have employee turnover as you lose the knowledge of people previously involved with your moves.
Large rail rate increases make an effective Database Management System (DMS) an essential tool for shippers. This is the reason for the DMS in the Rail Cost Control Program (RCC). The DMS automatically identifies and quantifies past rate problems and establishes an effective source of leverage for shippers. The RCC makes rail negotiations more productive and helps better control the cost of rail freight.
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.”