As sustainability and environmental responsibility continue to take center stage in global business practices, industries around the world are adapting to regulatory changes and carbon pricing initiatives. In a recent announcement, the Canadian National (CN) revealed amendments to the carbon charges as part of their carbon surcharge program, a move that will impact anyone utilizing rail as part of their supply chain.

As a company that relies heavily on fuel for its operations, the cost of carbon emissions has long been a key consideration for the CN. For years, the railroad has implemented a carbon surcharge to cover the costs associated with carbon emissions and fuel consumption. The latest changes reflect evolving federal and provincial regulations as well as the company’s ongoing commitment to sustainability.

Table of Contents

• The Program and Carbon Charges
  • What is it?
  • Amendments to the Program
• What do These Changes Mean?
  1. Cost Adjustments
  2. Increased Focus on Sustainability
  3. Improved Customer Service

The Program and Carbon Charges

What is the CN’s Carbon Surcharge Program and Carbon Charges?

Before examining the changes, it is important to understand the purpose of the CN’s carbon surcharge program. The program was introduced as part of Canada’s broader efforts to reduce greenhouse gas emissions through carbon pricing. The surcharge is applied to freight rates to account for the carbon emissions associated with the fuel use that powers CN’s locomotives.

The surcharge is a carbon charge that serves as a mechanism for passing on the costs of carbon emissions to customers, helping offset the carbon tax imposed on the CN by the government of Canada. The tax ensures that the CN can continue to operate efficiently while complying with Canada’s climate policies.

Amendments to the Program

The CN has made several key amendments to its carbon surcharge program, largely in response to changes in Canada’s federal carbon pricing system and the company’s broader goals to align with sustainability practices.

Here’s what we know about the amendments:

1. Updated Surcharge Structure:
   • The company has adjusted its carbon surcharge structure, reflecting changes in the carbon pricing framework. This might include alterations in how the surcharge is calculated, how often it is updated, and which specific fuel types and emissions are being factored in.
2. Impact of Provincial Carbon Pricing:
   • While Canada’s federal carbon tax system is being phased out, provinces like British Columbia, Quebec, and Alberta continue to maintain their own carbon pricing systems. The CN’s amendments to the surcharge will likely account for these provincial differences, meaning the surcharge could vary depending on the location of shipments. This will allow the CN to remain compliant with provincial regulations while maintaining a fair and transparent pricing model for its customers.
3. Environmental Sustainability Focus:
   • In addition to addressing regulatory changes, CN’s revised carbon surcharge program reflects its commitment to sustainability. The company has outlined plans to continue investing in greener technologies. These amendments are designed to balance environmental objectives with the financial realities of running a large-scale transportation network.
4. Transparency and Communication:
   • One of the key elements of the changes is the improved transparency in the calculation process for the carbon charges. The CN has promised to provide more detailed and timely information about how the surcharge is applied, allowing you to better understand the costs associated with their shipments.

What do the Carbon Charge Changes Mean for CN Customers?

For customers of CN, the amendments to the carbon surcharge program may bring both challenges and opportunities:

1 Cost Adjustments:

Depending on the specific adjustments made to the carbon surcharge, customers may see changes in the cost of shipping goods by rail. These changes will reflect the fluctuating carbon pricing mechanisms at the federal and provincial levels, so customers should expect some variability in transportation costs.

• The BC carbon surcharge includes the provincial government’s carbon surcharge tax and the BC government’s Low Carbon Fuel Standard (BC LCFS). The carbon surcharge tax component will be set to $0.00 per mile or per unit, while the BC LCFS will remain unchanged per the tariffs issued effective April 1st, 2025. In the immediate term, you will continue to see Carbon Surcharge on your bill for the BC LCFS.
• The Quebec carbon surcharge remains unchanged as per the tariffs issued effective April 1st, 2025.
• The carbon surcharge for all other provinces (Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, and Nova Scotia) will be set to $0.00 per mile or per unit.

2 Increased Focus on Sustainability:

If your organization is committed to reducing your carbon footprint, these changes make it simpler to embrace cleaner technologies. Many businesses are now integrating sustainability goals into their overall business strategies, and working with a transportation partner that shares those values can be a competitive advantage.

3 Improved Customer Service:

With the increased transparency in the surcharge process, you will have better access to the data you need to assess and manage their logistics costs. This should improve overall customer satisfaction, making it easier for you to plan and manage your freight expenses.

The amendments to CN Railway’s carbon surcharge program and their carbon charges represent a significant shift in how the company is addressing carbon emissions and sustainability in the face of evolving regulatory environments. By revising its surcharge structure, the CN is not only complying with the latest government policies but also reinforcing its commitment to greener and more efficient operations.

The post How CN Railway’s New Carbon Charges Could Impact Rail Shippers appeared first on RSI Logistics.

In this blog we will explore the 2025 funds requested for the FRA and how they will be used to support rail infrastructure.

In this article we’ll cover:

• The Federal Railroad Administration
  • The Consolidated Rail Infrastructure and Safety Improvements Program
  • Climate and Sustainability Program
• BNSF Rail Infrastructure
• Norfolk Southern Rail Infrastructure

The Federal Railroad Administration

The FRA is responsible for ensuring the safe, reliable, and efficient movement of people and goods along the rail networks. Unlike the Surface Transportation Board (STB), who regulates the economic aspects of freight rail (including mergers, rates, and disputes), the FRA focuses on rail safety and development. The FRA also administers a broad portfolio of grants aimed at improving the safety and condition of rail infrastructure while improving performance of operations.

In 2025 $3.20 billion has been requested for the FRA, including $2.50 billion for Amtrak grants, $350.00 million for discretionary rail grants, $293.97 million for the Safety and Operations account, and $52.00 million for the Research and Development account. This allocation aims to support various areas within the organization and builds on the investments initially made possible by the Infrastructure Investment and Jobs Act (IIJA).

The Consolidated Rail Infrastructure and Safety Improvements Program

The rail shipping industry has successfully pursued improvements in safety and over the course of decades of focused implementation has shown a drastic reduction in accidents. However, incidents such as the freight derailment in East Palestine, Ohio, serve as a reminder that the rail industry is not yet accident free. Safety can always continue to be a focus, no matter how much rail infrastructure has improved.

2025 funds addressed to the FRA include providing assistance to states, railroads, local communities, and rail infrastructure stakeholders. This includes $250 million requested for the Consolidated Rail Infrastructure and Safety Improvements (CRISI) program, which will fund grade crossing improvements, trespass prevention initiatives, and other projects to improve railroad safety.

The CRISI program will also play an important role in investing in rail infrastructure that strengthens the supply chains of American shippers. The United States’ rail transportation network is critical to the health of the economy, shipping around 1.5 billion tons of raw materials and finished goods in an average year. American businesses’ ability to compete in an increasingly competitive global marketplace depends on the investments into state and local governments, short line railroads, and other contributors to the American rail network.

Funding requested for the CRISI program will also prioritize addressing the critical safety and quality of life concerns that rail transportation can impose on communities of color and low-income neighborhoods. These communities have historically been marred by decades of failed land-use policies and under-investment. Personnel resources, programming funding, and policy proposals will all work to build a more equitable rail transportation system and workforce. As part of their 2025 measures, the FRA proposes to reduce statutory cost-sharing requirements for underserved and historically disadvantaged communities under their competitive grant programs.

Climate and Sustainability Program

The FRA has developed a multi-faceted Climate and Sustainability Program centered on three primary focus areas:

1. Reducing Emissions.
2. Building Resilient Rail Infrastructure.
3. Fostering a Sustainable Rail Network.

For 2025 and beyond, the FRA will focus on initiatives to progress each of these focus areas.

This includes funding grant programs that will help divert freight from more carbon-intensive transportation modes to rail, developing engineering standards to inform resilient infrastructure investments that can withstand the impacts of severe weather, and analyzing the environmental impacts of major investments being advanced through IIJA.

BNSF Rail Infrastructure

The BNSF railway has announced its $3.8 billion capital investment plan for 2025, aiming to maintain a safe and reliable network while meeting customer needs.
The largest component of the plan, amounting to $2.84 billion, is allocated for maintenance activities, focusing on track upkeep, signal system maintenance, and infrastructure enhancements for their network. This includes replacing and upgrading rail, track infrastructure, and rolling stock. The plan will cover 11,400 miles of track surfacing and undercutting work, as well as the replacement of 2.5 million rail ties and 410 miles of rail.

In addition, $535 million of the plan is designated for expansion and efficiency projects, adding to the over $2.6 billion invested in expansion projects over the past five years. Major facility projects include a multi-year intermodal facility expansion at BNSF’s Cicero Intermodal Facility in Chicago, property acquisitions for the Barstow International Gateway project in California and constructing approximately 20 miles of third main line track near Needles, California.

Norfolk Southern Rail Infrastructure

The NS has completed $1 billion worth of infrastructure improvements in 2024. The projects were completed throughout Norfolk Southern’s 22-state network, focusing on safety infrastructure, track, bridges, and structures.

The company completed an array of projects, including 5 Digital Train Inspection portals, 313 grade crossing protection warning systems, 130 hot box/bearing detectors, 17 acoustic bearing detectors, 29 hot wheel detectors, 140 public improvement projects, 558 track miles of rail replaced, 2.1 million cross ties installed, 4,202 miles of track surfaced, 30,480 bridge ties replaced, 553 panel turnouts installed, 43 bridges replaced, 78 bridges structurally rehabilitated, 104 culverts installed, 23 signal cut-ins completed, 180 switch machines replaced, 869 CTC to ITCMS cut-ins completed, 3 classification yard speed controllers replaced, and 3 moveable bridge PLC system upgrades.

The 2025 budget request for the Federal Railroad Administration (FRA) highlights significant federal investments aimed at enhancing the U.S. rail infrastructure, focusing on safety, sustainability, and community support. Additionally, major rail companies like BNSF and Norfolk Southern are also investing heavily in infrastructure.

Ready to streamline your rail logistics operations? Discover how our cutting-edge Rail Logistics Transportation Management System (TMS), Rail Command^®, can revolutionize the way you manage your rail shipments. Enhance efficiency, reduce costs, and gain unprecedented visibility into your supply chain. Take the first step towards optimizing your rail logistics – Explore Rail Command today!

The post Rail Infrastructure Investments in 2025 and Beyond appeared first on RSI Logistics.

In this blog we’ll explore the current trends shaping the rail shipping supply chain, from sustainability and eco-friendliness to the digitalization of supply chains, the integration of telematics/GPS, advancements in intermodal tracking, automated data visualization, predictive ETAs, effective capacity management, and an increased focus on customer service. We will also look at how a Rail Transportation Management System (Rail TMS) provides solutions for each of the trends we will cover.

Each of these trends reflects the broader shifts in the industry, highlighting the crucial role of a Rail TMS in addressing these challenges and opportunities.

Table of Contents

• What is a Rail TMS?
• Current Rail Trends When Shipping Freight
  • Sustainability and Environmental Impact
  • Comprehensive Supply Chain Digitization
  • Intermodal Visibility
  • Automated Rail Data Visualization
  • Predictive Estimated Time of Arrival
  • Capacity Management
  • Customer Service
  • Agile and Resilient Supply Chains

What is a Rail TMS?

A Rail TMS, such as Rail Command^® from RSI Logistics, is an advanced, comprehensive transportation management tool specifically designed to streamline and optimize every aspect of your rail shipping process.

Unlike simple digitization methods such as manual spreadsheet tracking, a Rail TMS integrates rail shipping functions and processes to provide a unified platform for more effective and intelligent management of rail logistics. These systems facilitate improved planning, execution, monitoring, and optimization of rail freight movements, encompassing everything from rates and schedules to demurrage charges and equipment lease tracking. By leveraging a solution like Rail Command, you can achieve greater efficiency, visibility, and control over your rail transportation operations.

Current Rail Trends When Shipping Freight

The trends we will explore are those the rail experts at RSI Logistics consider defining for the rail freight industry. We will also look at how a Rail TMS like Rail Command provides solutions to all these trends.

First, we will break down the push for sustainability and environmental impact. After that we will cover the rail trends of supply chain digitalization, including telematics and GPS, as well as automated data visualizations and predictive ETAs. We will also look at intermodal integration and capacity management. And finally, we will touch on the growing importance of customer service and providing visibility for your clients.

Sustainability and Environmental Impact

Sustainability and eco-friendliness have increasingly become more important for any business whose supply chain involves freight.
Freight trucking, one of the most common modes of freight transport, is an outsized contributor to emissions. On the other hand, rail shipping is a much more environmentally friendly method. Regardless, even if your supply chain is primarily rail shipping, there is still an opportunity to streamline your freight transportation.

This is where a Rail TMS can provide a solution. Systems like Rail Command provide methods of automated visibility for both inbound and outbound shipments. For instance, with inbound, you can answer questions such as do I have cars to load? or do I have raw materials for manufacturing? The answers provided by Rail Command can help your supply chain be leaner and mitigate the need to order additional cars just in case. This eases the burden on the network and the resulting emissions.

Comprehensive Supply Chain Digitization

Digitization has been a trend for some time; yet as the rail industry continues to pursue digitizing various aspects of rail shipping, a new trend is also becoming notable – making that digital data comprehensive and all-inclusive.

Traditional data management methods involve taking the digitized data from your rail supply chain and manually combining it using methods like disconnected spreadsheets. With a comprehensive system like Rail Command, your digitized rail supply chain is:

• Accurate and Accessible: A Rail TMS enhances accuracy through the digitization of all aspects of your rail shipping network and makes it accessible from anywhere.
• Integrated: A unified system promotes visibility and integration of your digitized data.
• Analytical: The comprehensive aspect of Rail Command reduces the need for manual input of digitized supply chain movements, eliminating human errors and freeing up resources for strategic planning.

Intermodal Visibility Rail Trends

Intermodal, a shipping method that uses a combination of trucks and trains to move freight, is not a new trend and has been a mainstay of the North American rail network for decades. However, what is a growing trend is the power of reporting and capturing data for both modes in one comprehensive system. The alternative, and the usual method until recently, was to separately monitor two different networks and manually compare the visibility.

However, now systems like Rail Command can track the truck and rail portion of your intermodal moves within Rail Command. This allows for reporting and capturing data capabilities in a comparable way to Rail Command’s railcar services.

Automated Rail Data Visualization

Building off the comprehensive digitization trend we just examined, automated data visualization represents the next stage of the data trend. As more data points are received and aggregated into a Rail TMS, the next stage is to find insights from that data. However, studying raw data, even if it is in one place, is difficult through only manual analysis methods.

With systems like Rail Command, data visualization is automated and insightful. For instance, Rail Command includes a home command center that highlights key performance indicators such as railcars shipped, active cars status, and most recent service logs. Beyond that, every aspect of your rail supply chain has automated data visualizations – saving you time and money on finding the insights needed to manage and optimize your supply chain.

Predictive Estimated Time of Arrival (ETA)

Much like the trend of automated data visualization is building off comprehensive supply chain digitization, predictive ETAs are building off visibility and location tracking. As the rail trends of visibility and location begin to evolve and introduce Global Positioning Systems (GPS) alongside traditional Car Location Messages (CLM), the next stage is to provide a measure of predictability to that visibility.

Systems like Rail Command take the data of a shipment route and generate an ETA. From there, the ETA can fluctuate through transit as delays and challenges occur. Doing this manually would be difficult, even if all the data were in one comprehensive system, but with the automation and data models of a Rail TMS, it is all a click away.

Capacity Management

A rail trend that is central to streamlining supply chains is capacity management. As profit maximization and supply chain optimization become more important, effective utilization of capacity is becoming a prevailing trend within the rail industry.

A comprehensive Rail TMS serves as a solution to the detailed intricacies of rail capacity management. A Rail TMS leverages data to optimize order management, monitors what equipment needs to be sent to shop when, integrate with corporate systems, and more. Furthermore, by eliminating manual tracking, guesswork is also eliminated, which means that when decision makers go to view their operations within the Rail TMS, they can understand how capacity is being utilized.

Customer Service Rail Trends

In today’s competitive marketplace, the emphasis on customer service within the rail industry is more pronounced than ever. Customers are increasingly gravitating towards companies that offer not just competitive pricing, but also superior customer service. In response to this trend, leveraging technology like Rail Command becomes crucial to meeting and exceeding customer expectations.

To improve visibility and make it inclusive for your supply chain, a Rail TMS enables you to identify and address potential disruptions before they escalate. This means that any challenges in the transportation process can be managed more efficiently, minimizing the impact on your customers. You are also able to keep your customers informed about the status of their shipments in real time. Whether it is a delay or early arrival, customers appreciate being in the know, which fosters trust and loyalty.

Agile and Resilient Supply Chains

Regardless of which mode of transportation(s) your supply chain utilizes, a trend that has been front and center for years is that of companies adopting an agile supply chain and a resilient supply chain. The impact of the pandemic in 2020 highlighted how valuable agility and resiliency are. In situations where sudden shifts in the industry can drastically impact your ongoing rail shipping, it is important that you are able to adjust correspondingly and that your freight transportation can adapt while being resilient enough to keep vital shipments arriving and departing.

To improve the rail trends of agility and resiliency, companies are investing in technology that enhances visibility in their supply chains to minimize disruptions.

We put this point last because all the previous rail trends we have covered are vital to making a rail supply chain agile and resilient. Visibility of assets, shipments, and data helps you be agile. Environmental consciousness, capacity management, and customer service help you to be resilient.

With a Rail TMS like Rail Command, your rail supply chain is prepared not just to be resilient and agile but prepared for all rail trends, current and future.

The rail industry is evolving and rail trends that just a handful of years ago were far off in the future are either here and available or working on being implemented by railroads and shippers alike. Tools like GPS and telematics are being utilized throughout supply chains and data visualizations are automated and developed via data models to provide valuable insights. Supply chains are becoming leaner and eco-friendly, and customers are demanding higher service marks.

With a Rail TMS, you are equipped to collect and study your data, be environmentally friendly, monitor, track, and manage your shipments, tailor experiences to the unique needs of your customers, and more. By embracing technology like Rail Command, your company can gain a competitive edge through improved operational efficiencies, enhanced communications, and data-driven decision-making.

Explore how Rail Command can revolutionize your rail freight supply chain. Contact us today for a demo and experience the power of a Rail TMS designed by rail shipping experts for rail shipping experts.

The post Be Prepared for Rail Trends with a Rail TMS appeared first on RSI Logistics.

In this blog we’ll look at how data is built into the foundation of a Rail TMS, some ways you can overcome common challenges with the data in the system, and an example of an RSI Logistics client who found success with their data through Rail Command. In whatever way rail plays a part in your supply chain, understanding how data and a Rail TMS can transform your operations is part of finding efficiency and operations.

The Role of Rail Freight Data in a Rail TMS

Shipping freight by rail generates an immense volume and variety of rail freight data. Entire fleets worth of equipment generates records from lease expiration dates to maintenance records. Building a pattern for a shipment involves shipping parties, commodities, routing, and more; all of which is data that is vital to your records. Rail rates generate information on tariffs, rates, contracts, expirations, and beyond.

These are just a few examples of how data is generated throughout the process of shipping rail, and there are many similar examples. Harnessing this data and being able to utilize it is vital; without using the data as a foundation for decision making, optimization, or results verification, the burden falls on manual methods. These methods can be dangerous, as they are much more prone to mistakes, errors, and incorrect judgements.

This is where a Rail TMS comes in.

Imagine overseeing the renewals of numerous equipment leases. Traditionally, this could involve manually building and updating a calendar – an inefficient and possibly error-prone process.

However, by using a Rail TMS like Rail Command, all that information is automatically collected and a renewal calendar is generated based on your specific equipment’s renewal and expiration dates. This method not only saves you time but also reduces the risk of making an error that could prove costly. With accurate, real-time information at your fingertips, you’re better equipped to make informed decisions.

Core Functions of Rail Freight Data in a Rail TMS

A Rail TMS optimizes your logistics from the ground up and provides friendly, comprehensive data insights throughout each step. Though there are many phases, stages, and functions of rail logistics within a Rail TMS, for our purposes in this blog we’ll roughly separate them into four phases: Planning, Execution, Monitoring, and Optimization.

Planning Phase

This initial stage is where the process of setting up a rail shipment, or planning logistics for your supply chain, takes place. This phase involves vast amounts of data and details related to rail rates, shipment patterns, equipment details, maintenance schedules, and much more.

What sets a Rail TMS apart from other methods of managing rail logistics is its ability to connect all these data points within a single system. This ensures planning without manual oversight and reducing manual input of data.

Since there is so much data involved in planning your rail supply chain, having it be automated and within one system, rather than scattered across various other systems, saves you a significant amount of time and money.

Execution Phase

Execution refers to the process of carrying out the rail shipping transportation plans you developed in the previous phase. Most of this revolves around shipment execution but can also overlap with the management of your active railcars and shipments, as well as the following phase, monitoring.

Much like planning, a Rail TMS utilizes your data by uploading and storing all planned details, which can then be utilized in some reporting and saved as a digital record of shipments. This automated documentation is essential for record keeping purposes and helps in the optimization phase, where you can use these records to improve costs and reduce charges.

Monitoring Phase

With sophisticated tools like Car Location Messages (CLM) and Global Positioning Systems (GPS), a Rail TMS offers monitoring capabilities in one system. However, monitoring goes beyond just visibility into shipments; it can also include Estimated Time of Arrivals, exception logs, diversion requests, and more.

Solutions like Rail Command offer visibility into all of these aspects and more. Furthermore, this information is then made available for analysis through automated methods. For instance, Rail Command features a summary of data visualizations for bad orders (a railcar deemed unsafe to continue moving due to mechanical issues), including history of year-over-year, bad orders by reason and railroad, location and sighting destination, and more.

Optimization Phase

Perhaps the most powerful feature of a Rail TMS is its ability to empower optimization of your operations through your rail freight data. It compiles your data from the above three phases and beyond into user-friendly formats, offering deep dives into everything from dwell to fleet turns, shipment volume to on-time performance, and much more as well. These data visualizations support your strategic decision-making, uncovering opportunities to save both time and money.

In managing large data sets, a Rail TMS shines by not merely handling but actively parsing and utilizing data for effective rail supply chain management. This capability ensures rail professionals at all levels can make informed decisions based on comprehensive analysis and insights.

Overcoming Common Rail Challenges with Rail Freight Data and a Rail TMS

Rail shipping, while efficient, comes with its set of challenges that can disrupt your supply chain and inflate operational costs, such as rail rate management, problematic railcars, and demurrage management. Leveraging a Rail TMS equipped with the right data sets, like Rail Command, can be a game-changer in not just overcoming these challenges, but finding ways to optimize effectively. The four phases we just examined don’t always take place in the order we examined them; for instance, optimization can occur throughout any stage of rail logistics. Using a tool like Rail Command you can improve many aspects of your operations.

Below are three examples of challenges that can be overcome with a Rail TMS and rail freight data.

Rail Rate Management

Managing rail rates manually can be a challenging and potentially error-prone process. Traditionally, tracking contracts, tariffs, and fuel charges involves a substantial amount of paperwork and manual data entry. This method not only consumes valuable time but also increases the risk of costly mistakes. Missed updates on tariff changes or expiring rates can lead to unexpected fees and operational inefficiencies.

However, a Rail TMS like Rail Command overcomes the challenge of rail rate management by automating most of these processes. Our solution notifies you of pending rate expirations, ensuring that you’re always ahead of changes and can act promptly to renegotiate or adjust plans. Additionally, with automatic updates for tariff changes and fuel surcharges, your team no longer needs to manually input this information. Plus, an integrated automated Fuel Surcharge (FSC) calculator adjusts rates based on current patterns, providing accurate and timely data that helps in making informed financial decisions.

Problematic Railcars

Staying up to date with the precise location and status of your shipments is crucial. Traditionally, this would mean manually checking each individual railroad’s website for your railcars, a tedious process that can significantly delay access to vital information. This manual method not only strains resources but can also result in missed opportunities to proactively address issues, potentially impacting your customer relationships due to slow responses and delayed shipments.

Solving this challenge with rail freight data in a Rail TMS is comprehensive and proactive. A Rail TMS like Rail Command offers automated exception reporting of railcar tracking data, continuous updates through visibility feeds, and the capability to track diversions as they happen. These features dramatically change how you monitor and manage your shipments. Instead of sifting through multiple platforms to gather data, a Rail TMS provides a unified view, making it much easier to identify and troubleshoot jeopardized shipments swiftly.

Demurrage Management

One of the persistent issues you may face in rail logistics is the looming threat of demurrage charges. This penalty, resulting from railcars being detained beyond a specified period of time for loading and unloading, can quickly escalate and hurt your bottom line. Manually tracking the “free time” of each railcar requires constant work and can be fraught with errors, as the task involves painstakingly following each car’s movements and calculating the potential charges, a process that is not only time-consuming but also leaves room for human error.

Fortunately, with a Rail TMS like Rail Command, you can automate the calculation of demurrage charges. Should a railcar exceed its allotted free time, the system can automatically generate invoice-ready reports. Furthermore, you can input your own demurrage rules into the system and visualize the data via demurrage data visualizations.

Case Study: Rail Freight Data Management with a Rail TMS

As we’ve seen, traditional methods of managing rail freight data often rely on manual efforts, which often lead to inefficiencies, particularly a loss of time. As we’ve also examined, a major aspect of a Rail TMS is taking all that data and putting it into one comprehensive system where it can speak to itself as well as be automated to save on time and potential errors.

The Challenge of Our Client

A client of RSI Logistics was encountering this very challenge with manual data entry and management. Their existing system was based on these manual processes and led to time-consuming processes and potential inconsistencies due to human error. Furthermore, their data didn’t talk to each other, making finding insights a manual and unreliable process. They spent hours a week just managing the data and studying it.

This client needed to improve their data management and efficiency, as well as overcome past unsuccessful attempts to develop a reliable system.

The Solution We Provided

Rail Command, our Rail TMS, solved the client’s challenge. By plugging their rail shipping logistics and rail freight data into Rail Command, they were able to bring their data together into one system that made everything comprehensive. The dashboards in Rail Command enabled smooth data integration across multiple systems and provided valuable data visualizations.

By incorporating real-time updates, manual entry was eliminated, and the interactive customization features allowed clients to adjust the interface to their specific needs. Furthermore, one-click automated reporting capabilities ensured accurate reports.

Rail Freight Data Takeaways

Using a Rail TMS to manage rail freight data significantly streamlines data management and drives operational efficiency. This enables you to make confident, data-driven decisions.

1. Streamlined Data Management: This dashboard excels in refining data management processes and a user-friendly interface that results in direct operational efficiencies.
2. Improved Data Accuracy: By automating data entry and reporting, the margin for error shrinks considerably.
3. Cost Efficiency: Tailoring the solution to meet specific needs directly from the get-go avoids the additional costs and time associated with re-developing or tweaking ill-fitting solutions.

Shifting from manual data processes to a Rail TMS solution’s automated, comprehensive approach to data means embracing efficiency, accuracy, and a competitive edge in rail logistics. The transformation is significant: easier data management, clearer insights, and more confident decision-making.

For you, the dedicated rail professionals, the move to a data-driven approach is a crucial step in mastering your operations and leading the industry forward. As rail shipping experts guiding fellow experts, we recognize the power of these tools not only streamline your workflow but also pioneer new industry standards.

Together, as we harness the potential of cutting-edge Rail TMS features, we’re not just keeping up with the times—we’re driving the future of rail logistics.

The post How Rail Freight Data is Used in a Rail TMS appeared first on RSI Logistics.

Whether you’re a rail shipper looking for areas of new business, a government official tracking industry trends, or a student studying the economics of rail freight, Rail Info offers the tools you need to stay informed and effective. Moving forward, we’ll explore the data sets available within Rail Info.

If you’re new to our services, we invite you to explore the benefits of Rail Info with a no-obligation, one-month trial. Sign up and empower your rail-related endeavors today.

Table of Contents

• Benefits of Rail Industry and Railroad Data
• Rail Industry Resources
  • Resources for Optimizing Rates
    • Fuel Surcharge Trends
    • Tariff Change History
    • Railroad Cost Indexes
    • Tariff Expiration Calendar
  • Resources for Understanding Rail Performance
    • Delay Report
    • Velocity
    • Volume Reports
  • Resources for Determining Options
    • Serving Carrier Reciprocal Switch (SCRS)
    • Short Line Railroad Directory
    • Storage Directory
    • Transloading Terminal Directory
  • Resources for Measuring Economic Activity
    • Fuel History
    • Railroad Revenue
    • Operating Ratio
    • Volume
    • Fuel Surcharge Percent of Fuel Expense

Benefits of Rail Industry and Railroad Data

Exploring the rail industry data and analytics available in Rail Info can give you a better understanding of the market, help you plan your logistics more effectively, and find opportunities to save money.

• By leveraging insights from data such as rail rates, fuel costs, or the performance metrics of railroads, you can manage shipping expenses more effectively and optimize your supply chain’s strategies.
• Access to detailed analytics on rail shipping costs and performance against the industry can help you adapt to market trends, improve operational and business models, and manage price volatility risks.
• Understanding the geographical reach and capabilities of rail service providers allows for better market positioning. In addition, having detailed information on facilities and services helps in planning and executing logistics operations more efficiently.
• Visibility into major railroads’ performance metrics and benchmarking against industry standards offers insights into a railroad’s operational efficiency and financial stability.
• Establishing connections with railroads and service providers fosters favorable agreements and collaboration on logistical challenges.

Rail Industry and Railroad Data Resources

Resources for Optimizing Rates

Rail Info provides tools that translate data on rail rate analytics. These can be used to provide insights into fundamental aspects of rail shipping costs. From there you can also look for areas of optimization and possibilities for negotiation with the carriers.

Tariff Expiration Calendar

Even though the railroads can adjust their tariffs with little notice, use this resource to give you an idea on when the railroads are expected to review their tariffs and make updates.

Fuel Surcharge Trends

Get an idea of how industry wide fuel prices are trending as well as a historical view on mileage based and percentage-based fuel surcharges.

Tariff Change History

Using a sample size of public railroad tariffs, you can track rate changes and can view them from a historical, current, and tariff distribution perspective. Using this data can provide some insight into how your rates are performing against a benchmark.

Railroad Cost Indexes

The Rail Cost Adjustment Factor (RCAF) is an index formulated to represent changes in railroad costs incurred by the nation’s largest railroads and is a useful data point for understanding if rate increases by the rail carriers are reasonable. The RCAF measures the rate of inflation in railroad inputs and is comprised of seven component indexes: labor, fuel, materials and supplies, equipment rents, interest, depreciation, and other expenses.

Resources for Understanding Railroad Data Performance

Railroad Performance has dashboards that cover indicators of the Class I railroad’s performance. The largest rail carriers in North America are these Class Is, and they dominate the rail freight market. Using their reportable metrics, you can see the overall health of the rail network, find trends, and monitor performance.

Delay Report

Use the delay report to see how traffic is moving through classification yards. Insights here can help anticipate where your transit delays could happen. Use the report and filter the delay reports by railroad, trains, and railcars held to find where your traffic is being impacted.

Velocity

Velocity is the speed of a train from origination to destination, including the amount of time a train dwells in a yard for a crew change, pick-up or set off of traffic. Try comparing the delay report to the velocity report. When velocity is up, dwell should be up as well.

Volume Reports

This report gives you a view of the total number of cars operational by Class I railroads and includes a historical view. Identify and monitor trends and determine how carriers are performing.

Curious to see how your volume compares to the industry? With the weekly carloads view you can find more approximate benchmarks.

Resources for Determining Options

Whether you’re a rail shipper or interested in the various options involved in rail shipping logistics, Rail Info’s Directories give you a wealth of information concerning options throughout the rail industry. You can use these to research options for your rail logistics or along the networks.

Serving Carrier Reciprocal Switch (SCRS)

This tool provides a standardized verification process for determining whether a railroad may serve, or under what conditions a railroad may serve, a specific customer. Our SCRS Directory also provides valuable weight and plate information for each customer.

Short Line Railroad Directory

Use this interactive map to find information for Short Line Railroads, those railroads falling outside the Class I classification. Filter the list down to focus on a specific state and railroad. You can also use find details such as website links, as well as sales and industrial development contacts.

Storage Directory

The Storage Directory was developed to provide a map of car storage locations across Canada and the United States and allows you to research organizations with available locations in specific regions.

Transloading Terminal Directory

This directory provides a one stop shop to find a transload facility to meet your needs. This interactive map is composed of terminals throughout North America, including our RSI operated terminals.

You can learn more about RSI’s terminal operations here – Rail Terminal Services | Bulk Terminal – RSI Logistics

Resources for Measuring Economic Activity

This section provides a selection of resources and tools for measuring economic activity, enabling you to gain a deeper understanding of economic trends, performance metrics, and their implications on broader market dynamics.

Fuel History

In addition to our fuel surcharge resources, Fuel History breaks average fuel costs down by the Class I railroad and by yearly quarter.

Railroad Revenue

With the Railroad Revenue dashboard, you can view revenue metrics for each of the largest Class I railroads.

Operating Ratio

Typically, the Operating Ratio (OR) is a primary measurement of a railroad’s efficiency. It can be defined as a company’s operating expenses as a percentage of its revenue. A lower Operating Ratio implies a more efficiently operated railroad.

Volume

This is a report to show the volume of shipments for each of the Class I Railroads and includes cars and intermodal units shipped. This is a higher-level view of volume than what can be seen in the volume reports under Railroad Performance and is an important measure for understanding how efficiently a railroad is utilizing its assets.

Fuel Surcharge Percent of Fuel Expense

This is another report to show the portion of fuel costs that are being recouped through the fuel surcharges being applied.

If you’re in the rail industry, related fields, or just interested in this mode of freight transportation, making the most of data analytics can be a game-changer. Mastering negotiation tactics, keeping a lid on costs, making smart choices based on data, and knowing your market positioning can put you ahead of the curve. And it’s not just about optimization—by utilizing these resources, you’re also set to build stronger partnerships and stay on the right side of policies and regulations.

The post Transform Railroad Data into Insights with Rail Info appeared first on RSI Logistics.

Table of Contents

• Conventional Methods of Managing Rail Logistics
• Rail Software – Efficient Technology and Interconnection
• Key Benefits of a Rail Transportation Management System
  • Integrated Logistics Network
  • Comprehensive Automation
  • Empowered Data Insights

Conventional Methods of Managing Rail Logistics

The traditional approach to rail logistics long relied on manual processes that are inefficient and overly complicated. Rail shippers are all too familiar with the rote work of carefully monitoring railcar locations, combing through data to find insights, and managing databases based out of disconnected systems. As you can imagine, this usually results in significant time and financial investments. In an era where every second and penny counts, these manual methods are not just a challenge – they’re slowing down your ability to optimize and grow your business.

Inefficiencies appear in various forms: delays in communication lead to slower response times, human errors can find their way into processes, the inability to adapt swiftly to changing scenarios can mean missed opportunities, and an incorrect conclusion pulled from manual data can have drastic reproductions. This leaves you struggling to keep up with the demanding responsibilities of managing rail logistics while trying to find what went wrong and where. Often this means sacrificing the time you could be spending optimizing operations, finding opportunities to save, or disputing charges.

Rail Software – What is a Rail TMS?

Enter the Rail TMS, system solutions that offer a seamless integration of logistics operations through sophisticated technology. A Rail TMS isn’t only about replacing paperwork with digital records (though that is an aspect); it’s a comprehensive management tool designed to interconnect every element of the rail shipping process.

This technology offers a more intelligent approach to rail shipping logistics. With a Rail TMS, you can access an integrated platform that provides visibility over your entire rail shipment lifecycle. From automating routine tasks and optimizing tracking to generating comprehensive data visualizations, a Rail TMS streamlines the complexities of rail logistics into manageable components, allowing you to focus on what you do best – moving your business forward.

In our forthcoming exploration, we’ll delve into the benefits that Rail TMS offers and talk about why these systems are having such a significant impact on the rail shipping world. For our examples we’ll use Rail Command^®, our Rail TMS that our rail shipping team built specifically for anyone who ships by rail.

Key Benefits of the Rail Software Rail TMS

Though the benefits of a Rail TMS like Rail Command are many, we’ll break them down into roughly three pillars: Integrated, Automated, and Empowered.

Integrated refers to the comprehensive nature of a tool like Rail Command. All the information you need for your rail supply chain is in one place and talks to each other. That’s where Automated comes in; when the system talks to itself, or other systems, it does so in a way that reduces the amount of manual work you have to do on your end, saving time and money while reducing the likelihood of errors. And Rail Command Empowers you to optimize your rail shipping with automated data visualizations that help you, at a glance, manage your logistics while also finding areas for improvement.

Integrated Logistics Network

At the heart of a Rail TMS lies its ability to create an integrated logistics network. For example, Rail Command contains features for managing your rail rates, demurrage, railcar tracking, patterns and execution, railcar maintenance, and more. Having all of these capabilities in one place provides more opportunities for you to focus on managing your logistics rather than traveling from system to system manually.

However, it’s not enough just to have everything in one place; it also needs to talk to itself. Rail Command achieves this integration by weaving together data that is relevant to one another within the system. For example, as long as you’ve uploaded your equipment into the Rail Command equipment feature, that information will be used when you are developing shipments. If you input a capacity above a saved railcar’s maximum capacity, Rail Command will flag that for you. Or if you want to ship a hazardous commodity, Rail Command alerts you if the equipment you’ve selected is not able to handle the commodity.

This level of integration ensures that data—historically siloed and prone to discrepancies—is now a cohesive, reliable foundation for decision-making.

The real power of this integrated network becomes apparent when we think about data and information being presented in near real-time. Accessibility to up-to-the-minute information empowers you to move from reactive to proactive. Whether it’s finding out about an unexpected delay so you can reach out to a client or work with the rail carrier to facilitate movement, the immediacy of data at your fingertips means decisions are timely and informed.

Comprehensive Automation

Next, we’ll take a look at the power of automation in a Rail TMS. As we’ve discussed, manual methods bring with them the danger of human error and significant time spent. Automation capabilities minimize human error while boosting the overall operational efficiency of your rail logistics. By automating critical activities, a Rail TMS like Rail Command ensures your logistics stay on track and reserves the need for manual attentions for critical interventions.

For instance, Rail Command is built so that exception logs are automated and automatically identify potentially delayed or problematic railcars. This allows for more immediate corrective measures than if you were monitoring that rail car manually. Rail Command’s automation provides a dual benefit: they reduce the scope for errors that can happen with manual operations and enable a more agile response to potential logistic challenges. This means that you can maintain a smooth, efficient flow of goods, ultimately leading to enhanced service reliability and customer satisfaction.

Empowered Data Insights

With rail software like a Rail TMS, the power of comprehensive integration and automation come together to provide powerful data insights. Solutions like Rail Command are equipped with sophisticated data visualization tools, giving you the ability to more easily interpret complex data sets, which leads to faster and more informed decisions. Rail Command comes standard with a plethora of data visualization Key Performance Indicator reporting and a grid view customer report builder.

By automating processes and reducing the necessity for manual analysis, these tools in Rail Command contribute to the ability to find areas of your supply chain you can optimize. Rail Command includes data visualizations for dwell, fleet turns, historical shipment volumes, lane performance, and more. These actionable insights take data that you would have had to interpret manually and give you a quick glance to judge your rail logistics performance.

For instance, in Rail Command’s equipment feature, you can input the expiration dates of your leased equipment. Once inputted, a lease expiration data visualization is created; this timetable warns you of upcoming lease expirations so you can be proactive with your equipment. Another example is the demurrage dashboard, which uses reports from your logistics to power a filterable data visualization that shows cars in actual placement, cars accruing demurrage or charges, and more.

A Rail TMS like Rail Command is designed to bring you Integrated Automation that Empowers your rail logistics. By adopting a Rail TMS, you can save time and money on your rail shipping operations, all while finding new areas that you can optimize. And as the industry continues to move more towards efficiency and optimization, it’s time to consider a comprehensive Rail TMS.
Interested in learning more about our Rail TMS, Rail Command? Explore more now and command your rail shipping.

The post Rail Transportation Management Systems (Rail TMS) – The Rail Software that Empowers Your Rail Logistics appeared first on RSI Logistics.

This blog delves into how understanding and applying these critical data points can transform your rail shipping logistics, providing an advantage in planning, negotiating, and optimizing freight movements. With the right analysis, rail data opens doors to smarter decisions, enhanced service quality, and ultimately, more robust supply chain solutions.

Table of Contents

1. Quarterly Commodity Statistics
   1. Tips for Leveraging Quarterly Commodity Statistics
2. Peak Season Surcharges
   1. Tips for Effectively Utilizing Peak Season Surcharges
3. Carrier Market Shares
   1. Strategic Insights on Carrier Market Shares
4. Track and Equipment Investments
   1. Strategies for Leveraging Track and Equipment Investments Metrics

Rail Data: Quarterly Commodity Statistics

The Surface Transportation Board (STB), a government entity, releases a Quarterly Commodity Statistics report that showcases volume and revenue trends broken down by Class 1 railroads. This report is an invaluable indicator of the health of the rail freight industry. It breaks down volume and revenue trends by commodity group, offering granular visibility into which sectors are experiencing growth or decline. By analyzing these patterns, you can forecast demand cycles and manage your rail freight schedules and capacities.

If a quarter, for example, shows certain commodities having a marked volume increase, this may signal heightened activity in those markets. These trends can inform strategic rate structures and potential infrastructure investments for handling capacity surges. Conversely, commodities with contracting volumes might reveal emerging market challenges or competitive pressures.

This information is available in our rail rate management tool, Rail Impact^®.

Tips for Leveraging Quarterly Commodity Statistics:

• Commodity-Specific Analysis: Break down data to understand the nuances of each commodity class and adapt your logistical strategies accordingly.
• Revenue Versus Volume Insights: Balance the analysis of volume with revenue trends to spot the profitability of different commodity groups.
• Benchmark Against Industry Averages: Compare individual railroad performance against industry statistics for benchmarking and competitive analysis.

Rail Data: Peak Season Surcharges

Peak season surcharges are tools rail carriers use to manage increased demand and optimize revenue during high-volume periods. These surcharges are typically implemented during seasonal spikes, such as agricultural harvests or holiday merchandise shipping, when railroads face capacity constraints and heightened operational demands.

For shipping managers and supply chain directors, understanding the timing and magnitude of these surcharges can inform budgeting and logistical planning. By anticipating these additional costs, you can implement strategies to minimize expenses—for instance, by scheduling non-urgent shipments before or after peak periods.

Tips for Effectively Utilizing Peak Season Surcharges:

• Forecast Demand: Use historical data to predict possible surcharge periods and plan accordingly.
• Communicate Early: Engage stakeholders early to align expectations and shipment schedules.
• Evaluate Shipment Priorities: Strategically decide which shipments can justify the additional cost of peak season timing versus those that can be delayed.

Rail Data: Carrier Market Shares

Understanding carrier market shares is important if you’re aiming to secure the most favorable rail rates and reliable service. Market share distribution among Class 1 railroads and regional carriers can significantly influence pricing strategies, service availability, and route optimization. A carrier with a dominant market share in a specific corridor might leverage its position to command higher rates, while those with smaller shares could offer competitive rates to attract more business.

Strategic Insights on Carrier Market Shares:

• Negotiation Leverage: Knowledge of market shares can strengthen your position during rate negotiations, allowing for more competitive pricing.
• Diversification: Consider distributing shipments among several carriers to avoid dependency on a single provider and to leverage different strengths.
• Service Evaluation: Carrier market share can be an indicator of reliability and capacity; a larger share might suggest more comprehensive network coverage and investment in infrastructure.

Rail Data: Track and Equipment Investments

According to the Association of American Railroads, each year, freight rail companies invest an average of $23 billion to bolster and modernize their networks. Investments in track and equipment can be indicators of a rail carrier’s commitment to service quality, reliability, and future capacity. Observing where and how much carriers invest can provide deep insights into future rail rates and logistical efficiency. Enhanced tracks and modern equipment contribute to faster, more reliable deliveries and can signal a carrier’s ability to handle increased freight volumes without proportionate rate hikes. In contrast, insufficient investment could hint at potential service degradation or future rate increases to cover upgrading costs.

Strategies for Leveraging Track and Equipment Investments:

• Long-term Partnerships: Look for carriers investing heavily in infrastructure and equipment, as they are more likely to provide reliable and cost-effective services over time.
• Capacity Planning: Use investment data to anticipate which corridors or services might see improvements in capacity or speed, aiding in more effective supply chain planning.
• Negotiation Insights: Understanding a carrier’s investment trajectory can be a powerful tool in rate negotiations, empowering you to discuss future service levels and stability.

The post Strategic Rail Data Metrics for Enhancing Logistics and Reducing Costs appeared first on RSI Logistics.

Table of Contents

1. Benefits of International Rail Shipping
   1. Efficiency at the Border
   2. Infrastructure and Safety
   3. Cost Savings
   4. Modernized Rail Systems
2. International Rail Carriers and Connections
3. Customs Brokers and Documentation
   1. Key Customs Documentation
   2. Finding a Customs Broker
4. International Rail Freight Forwarders
   1. When and How to Engage a Freight Forwarder
5. Understanding Border Permits

Benefits of Shipping Rail for U.S. Shippers to Canada and Mexico

When shipping freight between the United States, Canada, and Mexico, rail as a modal choice possess advantages that can address international border challenges. Compared to truck as a modal choice for freight, rail is more efficient and timelier, and in more rural areas with less infrastructure, safer as well. Rail also offers cost savings in the form of optimized networks from first to last mile, while consistently receiving modernized expansions and improvements.

Efficiency at the Border

One of the most significant challenges with truck transport is the extensive border delays. Every truck entering the United States from Mexico undergoes a thorough inspection, which leads to an average delay of up to three hours per trailer. Rail shipments, in contrast, avoid these extensive wait times. The streamlined processes at rail border crossings greatly reduce downtime, as railcars are typically pre-cleared and grouped for fewer inspections.

Infrastructure and Safety

Mexico’s infrastructure poses another logistical challenge, particularly outside the major trade corridors. In those more rural areas, the road conditions can be suboptimal, and the risk of collisions with livestock is high. Approximately 40% of transportation accidents in rural Mexico involve livestock collisions due to unfenced farming areas. Rail transport makes these risks less substantial with safer and more reliable tracks that bypass the less developed roadways.

Cost Savings

Shipping via rail through Canada offers a particular advantage for reaching U.S. markets. Often, the combination of ocean and rail through the Canadian Gateway costs considerably less than other routes, allowing you to reduce expenses while maintaining efficient transit times. This is mostly due to the nature of duties and a shipment’s country of origin and provides a possibility for managing fees from incoming international shipments.

Modernized Rail Systems

Over the past decade, international rail networks, particularly in Mexico, have seen significant modernization efforts to make them not only safer but faster. Enhanced rail services such as those provided by Class I railroads like the Union Pacific (UP) and Canadian Pacific Kansas City (CPKC), who consistently upgrade and expand their networks into and out of Mexico, means that by switching to rail from truck, you could potentially save on transportation costs and lower your carbon footprint by 75%.

International Rail Carriers: Cross-Border Connections

North America’s major railroads, including the Canadian National (CN), Canadian Pacific Kansas City Limited (CPKC), and Union Pacific Railroad (UP), play pivotal roles in facilitating seamless cross-border trade across the continent.

CN boasts an extensive network that reaches from the eastern shores of Canada across to Vancouver and stretches further into key U.S. midwestern and southern states. This vast spread not only ensures smooth transportation of goods across North America but also connects effortlessly with other U.S. Class 1 rail carriers, enabling connections and distribution possibilities through critical trade corridors.

Emerging from the merger of Canadian Pacific (CP) and Kansas City Southern (KCS), CPKC offers a unique and comprehensive rail link stretching from Canada directly into the heart of Mexico. This network serves as a direct thoroughfare for goods traveling between the manufacturing sectors in Mexico and the consumption and distribution centers in the United States, extending up into Canadian ports and agricultural regions. The former KCS’s exclusive Mexican cross-border route is part of a critical role in this integrated rail system.

The UP enhances the U.S.-Mexico trade landscape with robust cross-border capabilities, particularly through its strategic Eagle Pass, Texas, gateway. This pivotal point enhances the link between UP’s network and Ferromex (Ferrocarril Mexicano), streamlining the cargo movement through one of the most crucial conduits for bilateral trade.

Rail Freight Customs Brokers and Documentation for Cross-Border Rail

When transporting goods across North American borders by rail, the documentation and customs clearance process is crucial. Collaborating with a customs broker that aligns with your shipment destination—whether it’s the U.S., Mexico, or Canada—is essential. These brokers assist in securing all necessary customs paperwork, pivotal for a smooth transition through border checkpoints.

Key Customs Documentation Needed for Mexico:

If you’re shipping freight by rail to Mexico, some documentation may be required:

• Bill of Lading: A legally binding agreement that lists goods details, origin, and quantity. Signatures from both the buyer and carrier are required.
• Commercial Invoice: Must be provided in Spanish, detailing the transaction for the freight forwarder and Mexican broker.
• Packing List: Specifies cargo contents, including weight and material type.
• Commodity Permit and Material Safety Data Sheet: The Commodity Permit may be necessary for specific goods; additionally, the Material Safety Data Sheet (MSDS) is crucial for hazardous materials, outlining storage, handling, and safety instructions.

Additional documents may include: the United States–Mexico–Canada Agreement (USMCA) Certificate of Origin, sales contract, customs declaration, and insurance policy, among others. Your customs broker should be able to advise you if there are additional paperwork needed; or a Third-Party Logistics companies like RSI Logistics can coordinate with customs brokers on your behalf.

Finding a Customs Broker:

It’s important to ensure you do your research when searching for a reliable, licensed, and knowledgeable broker who can handle import and expert details. If you’re beginning your search for a customs broker, the below resources may offer some assistance.

• U.S. Customs & Border Protection (CBP): Offers a list of licensed brokers, accessible on their website under the Permitted Customs Broker List.
• Tax Administration Service (SAT) and Confederation of Associations of Customs Agents of the Mexican Republic (CAAAREM): Both organizations offer options; the SAT through a verified list of Mexican customs brokers, and CAAREM through a directory of Customs Agents.
• Cross-border Freight Providers: These providers may work with multiple brokers and can help you refine your search. For instance, Coyote, part of UPS Supply Chain Solutions, can offer connections to their customs brokerage solutions.

Role and Selection of Freight Forwarders in North American Cross-Border Rail

For seamless international exchange of freight across borders, freight forwarders often become an important point of contact. These entities are engaged in not only the physical transport of commodities but also in ensuring that all export compliance requirements are met. Working in conjunction with customs brokers—who are responsible for navigating governmental import and export regulations—freight forwarders facilitate the end-to-end logistics of international shipping.

Freight forwarders may take charge particularly when goods need to go beyond the rail endpoint, coordinating the onward journey by road to the final destination. This may involve transloading—the transfer of goods from one mode of transportation to another.

When and How to Engage a Freight Forwarder:

Freight forwarders come into play when shipments need integration with other transportation modes, typically at border crossings where rail services end. To identify a reliable freight forwarder experienced in navigating the country’s export landscape, consider these factors:

1. Reliability: Ensure the company you choose has a track record of dependable service in cross-border logistics.
2. Experience: An established forwarder with experience in international shipping is likely to have existing relationships with trusted customs brokers.
3. Customs clearance expertise: Select companies that have specialized knowledge in customs procedures can steer shipments through border controls without delays.

Understanding Border Permits for North American Cross-Border Rail

Cross-border rail shipping requires an understanding of border permits and their various requirements. The need for such permits often depends on the specific nature of the commodities being shipped, as well as any additional embargoes that might affect the movement of specific commodities or movements. It’s important to be aware that, alongside the essential customs documentation, certain shipments might also require additional border permits, as well as the settlement of relevant duties and fees,

Coordinating with a rail logistics provider can significantly make securing these permits simpler. For instance, at RSI Logistics, our rail experts leverage our rail management solution Rail Command^®, which is designed to accommodate the intricacies of cross-border shipping intricacies. This includes specific regulatory requirements, such as Carta Porte for shipments destined for Mexico.

The post Cross-Border Rail: Shipping Rail Freight Across North America appeared first on RSI Logistics.

1. Current Trends Influencing Rail Freight Costs
   1. Growth of Intermodal Transportation
   2. Precision Scheduled Railroading and Costs
   3. Seasonal Trend Effects
   4. Fuel Cost Dynamics as a Part of Rail Freight Costs
2. Historical Influences on Rail Shipping and Rail Shipping Rates
   1. The Staggers Rail Act of 1980
3. Rail Shipping Outlook and Emerging Trends
   1. Rail Freight Technology and Efficiency
   2. Rail Sustainability Initiatives
   3. Modal Shift Towards Truck Freight

From the impact of intermodal transportation growth and precision scheduled railroading to the effects of fuel cost dynamics and sustainability initiatives, join us as we delve into the factors dictating today’s and tomorrow’s rail shipping rates.

Current Trends Influencing Rail Freight Costs

Growth of Intermodal Transportation

Though seemingly remarkable, the rapid expansion of intermodal transportation is unsurprising. Since intermodal integrates different modes of transportation (e.g., rail, truck, and ship) for the movement of freight goods, it has become a powerful tool for shippers, and one that can impact rail pricing strategies. As of the last couple of years, intermodal volumes have seen a consistent increase, and now account for a vast portion of rail shipping. According to the Association of American Railroads, “in 2022, U.S. rail intermodal volume was 13.5 million units, and intermodal accounted for approximately 27% of revenue for major U.S. railroads, more than any other single rail traffic segment”.

By leveraging the efficiency and environmental benefits of rail for long hauls combined with the flexibility of trucks for last-mile connectivity, railroads are adjusting their pricing strategies. Generally, truck rates tend to be the benchmark for pricing if a railroad wants to compete for the business. As a result, since intermodal has expanded over the last several years, the railroads not only have to substantially invest in their intermodal facilities, but they must also manage their rates accordingly.

Precision Scheduled Railroading

Precision Scheduled Railroading (PSR) is the term for the railroad’s efforts to move to a system of streamlined operations to facilitate improved service. When PSR was introduced in the 1990’s, it represented a transformative approach to optimizing railroad operations and reducing operational costs. PSR focuses on maximizing asset utilization, improving service reliability, and streamlining operational processes.

However, PSR has been criticized as being incapable of keeping up with surges in demand during critical moments. Using PSR, railroad management’s job is to drive down the “operating ratio,” or operating expenses as a percentage of revenue. But in times of crisis, running without excess capacity can cause issues, which then can be placed onto the shipper in the form of higher costs. All of that extra effort, cost, and delay from PSR means higher prices for businesses or consumers that rely on rail for transportation. Shippers or shipper trade groups interviewed said that PSR and rail service resulted in higher costs.

Seasonal Trend Effects

Seasonal trends have the potential to significantly affect rail shipping costs by influencing supply and demand patterns, thereby causing shipping rates to fluctuate at certain periods. During peak agricultural seasons, for instance, rail demand often surges due to high volumes of crop shipments. Another example is when the retail sector influences rail traffic, particularly in preparation for holiday seasons during winter months; during these periods, carriers will charge more due to high demand and inclement weather. Conversely, the first quarter of a year often sees a lull in demand, leading to lower rates.

Fuel Cost Dynamics as a Part of Rail Freight Costs

The volatility of fuel prices has a direct and significant impact on rail operational expenses and, consequently, shipping rates. As fuel represents one of the largest variable costs for railroads, accounting for approximately 15-20% of total operating expenses, fluctuations in fuel prices can alter cost structures markedly. In order to recover their expenses, the railroads use a tool called Fuel Surcharge, which passes on some of the costs of fuel to the shipper. This surcharge is published monthly and is important to understand when dealing with rail shipping costs.

Historical Influences on Rail Shipping Rail Shipping Rates

The Staggers Rail Act of 1980

The Staggers Rail Act of 1980 revolutionized the rail industry by significantly deregulating it, providing railroads with the freedom to set prices, streamline their operations, and compete with other transportation modes. According to the Federal Railroad Administration, “by 2011, freight rates adjusted for inflation had declined 0.5 percent a year since the passage of the Staggers Act, compared to an increase of nearly 3 percent per year in the 5 years prior to 1980”. It also spurred market competition and service improvements. The Staggers Act laid the vital groundwork for today’s flexible pricing strategies, which has allowed shippers to negotiate contracts directly with railroads.

Market-based pricing has led to some railroads shifting back to tariff rates for some of their commodities. The intent is to simplify their rate negotiations and ensure an even playing field for all shippers. Despite these public tariffs, private contract rates remain prevalent.

Rail Shipping Outlook and Emerging Trends

Rail Freight Technology and Efficiency

The future of rail shipping is being shaped by investments in technology, digitalization, and automation. Railroads, providers, and shippers alike are beginning to leverage a host of advanced services, including automated analytics, GPS and sensor monitoring, smart management services, and more. Technology-driven initiatives not only promise to elevate service levels but also present opportunities for more dynamic and potentially lower pricing strategies.

For instance, at RSI Logistics, our rail shipping experts have found that implementing a solution to track daily railcar movements at a facility could save up to 30% on their annual rail shipping costs. Technological advances are often directly tied to improved efficiency, and as the industry trends towards further optimization, technology becomes increasingly important.

Rail Sustainability Initiatives

Sustainability initiatives are becoming increasingly emphasized throughout all modes of transportation, with the adoption of green technologies poised to reshape long-term cost structures and pricing strategies. For rail transportation, railroads are investing in eco-friendly locomotives, such as those powered by battery-electric and hydrogen fuel-cell technologies. And for shippers, considering rail over truck for long distance movements can improve their carbon footprint. In North America, freight trains can move one ton of goods nearly 500 miles on a single gallon of fuel, compared to trucking’s 130 miles per gallon.

Implementation of energy-efficient practices not only supports environmental goals but also helps in controlling operational costs, potentially translating into more stable and competitive pricing for shippers. Consider monitoring these developments, as the industry’s push for sustainability is expected to potentially influence rail costing strategies in the future.

Modal Shift Towards Truck Freight

With the increasing consumer demand for rapid delivery and the railroad’s struggles with on time delivery, the rail industry’s competitiveness in the freight shipping landscape has been challenged. This shift towards trucking encourages anyone involved in shipping with rail to reassess their pricing strategies, service offerings, and negotiation power. With total revenue derived from primary freight shipments expected to reach over 1.5 billion dollars in the US by 2032 (an increase from 1 billion in 2021), rail providers are prompted to innovate and potentially adjust pricing to remain attractive options. This can be an opportunity to negotiate with more leverage.

While all the above industry trends affect rail pricing, one of the most important factors is the leverage that shippers have. For instance, if your facility that ships rail is dual served (more than one railroad is available to drop off and pick up your railcars), there is the opportunity to negotiate with each railroad. Or, if you can perform an analysis on alternate routes and lower rates from other rail carriers, you can negotiate with your current carrier. By presenting these competitive factors to the railroad, they tend to price to get the business.

However, even if you are captive to one railroad, you can influence your rail rates by developing more leveraged negotiation strategies, as well as considering other modal options, transloading, or alternative sourcing.

The post What Influences Rail Shipping Costs? appeared first on RSI Logistics.

Welcome to our comprehensive guide on demurrage, the often overlooked yet significant cost associated with shipping freight. Whether you’re new to logistics or a seasoned professional, understanding demurrage is crucial for optimizing your operations and keeping costs under control. This blog serves as an ultimate resource, diving deep into every aspect of demurrage – from its fundamental principles to advanced management strategies.

In this blog, we’ll start by demystifying what demurrage actually is and why it matters to your business. We’ll explore the key factors that contribute to detention charges and provide a detailed breakdown of how these fees are calculated. Recognizing the common pitfalls is only the beginning; the core of our guide focuses on effective strategies and tools for managing, disputing, and reducing detention costs.

You’ll also find insights into leveraging rail logistics management technology, including a look at specialized services. Furthermore, we’ll share expert advice on negotiating terms with rail carriers and practical tips to improve your operation’s efficiency and minimize demurrage fees.

Table of Contents

1. 1. Section 1: Definition of Demurrage and Related Terms
      1. Demurrage versus Detention versus Storage
      2. Rail Owned versus Private Cars
      3. The Demurrage Clock
      4. Key Measurements and Events
   2. Section 2: Demurrage Operational Context
      1. Open versus Closed Gate Customers
      2. Understanding Specific Railroad’s Demurrage Rules
      3. Events That Impact Demurrage
   3. Section 3: Financial Aspects of Demurrage
      1. Understanding Credit/Debit Days
      2. Financial Strategies to Minimize Charges
   4. Section 4: Managing Demurrage Charges
      1. Submitting a Demurrage Dispute
      2. Identification of Bunching and Its Impact
      3. Proactive Measures to Avoid Charges
      4. Tips and Tricks for Efficient Demurrage Management
   5. Section 5: Leveraging RSI’s Experts for Demurrage Management
      1. Comprehensive Reporting Tools
      2. Demurrage and Storage Charge Audit
      3. Enhanced Visibility
      4. Regular Performance Reviews
      5. Proactive Consulting

Section 1: Definition of Demurrage and Related Terms

The terms used in demurrage can be confusing and not easily comprehensible. Furthermore, sometimes terms are used interchangeably; for instance, we often hear ‘demurrage’ and ‘detention’ used to describe charges that are one or the other, and vice versa.

However, it is important to have an understanding of how each term is used, why, and when. When it comes to disputing charges and lowering costs, a necessary foundation is the knowledge of how demurrage works and what goes into producing your charges.

Demurrage vs. Detention vs. Storage

Demurrage is sometimes used as a catch all term for storage, detention, and demurrage, but there are differences depending on who is holding onto cars, and who owns the cars.

Demurrage in Shipping

The definition of demurrage is a charge that compensates rail carriers when railroad owned railcars are detained by rail shippers. It serves as a penalty for undue railcar detention to encourage the efficient use of railcars in the rail network.

Private Car Storage

A private car storage fee is for privately owned railcars that have excessive use of railroad owned tracks.

Customer Detention Fees

Also known as customer holding, detention charges occur when a customer detains a shipper’s cars for a longer period than agreed.

Rail Owned vs. Private Cars

No matter your product or cargo, if you are shipping via a rail mode of transportation, you will require rail cars. There are a wide range of rail cars utilized in North America for a diverse range of materials, but all of them are either rail owned, or privately owned.

Rail Owned Cars

Rail owned cars are the property of the railroad companies. The railroads are responsible for the maintenance, insurance, and regulatory compliance of these cars.

• Usage: These cars are used to provide service to shippers who do not own their own cars. Railroads maintain a variety of cars to cater to different types of cargo and shipping requirements.
• Demurrage: Shippers using rail-owned cars are subject to the railroad’s standard rules and rates. Railroads typically enforce these rules to ensure the efficient use of their fleet and to incentivize the quick turnover of cars.
• Flexibility: Using rail-owned cars offers flexibility in that shippers do not need to invest in a fleet, manage logistics, or handle maintenance. However, they have less control over the specific cars they get and may face availability issues during peak times.
• Cost: Shippers do not need to make a direct investment in equipment, but they may face higher charges and less favorable terms compared to those with private rail cars, especially if they frequently ship goods that require specific types of cars.

Private Cars

Private rail cars are owned by corporations, leasing companies, or individuals rather than by the railroad companies. Owners typically bear the responsibility for the maintenance and insurance of these cars.

• Usage: These cars are often specialized to meet the specific needs of their owners, such as custom configurations for transporting particular types of freight or enhanced features for sensitive cargo.
• Demurrage: The demurrage rules for private cars can vary, sometimes offering more favorable terms or reduced rates because the railroads do not have to provide, maintain, or insure the equipment.
• Flexibility: Owners have more control over their rail cars’ movements and usage, potentially optimizing logistics and reducing operational costs. However, they also need to manage the logistics, maintenance, and any regulatory compliance of these cars.
• Cost: While owning or leasing a private car requires upfront investment and ongoing maintenance costs, it can offer cost savings and operational advantages for frequent shippers with specialized needs.

The Demurrage Clock

The “demurrage clock” refers to the period during which charges accumulate. Understanding how the demurrage clock operates is essential for shipping and receiving entities to minimize additional charges. The mechanism of the clock involves several key components and processes:

1. Free Time: This is the allotted period given to load, unload, or store a railcar without incurring any charges. Free time is defined by the rail carrier’s tariff or the contractual agreement and can vary depending on the type of cargo, destination, and specific rail carrier policies.
2. Start of the Clock: The clock starts ticking immediately after the free time expires. The initiation of the clock is usually triggered by specific events such as the arrival of a railcar at a designated interchange, placement of the railcar at the customer’s facility for loading or unloading, or notification to the customer that the car is available.
3. Accrual of Demurrage Charges: Once the free time is exceeded, demurrage charges begin to accrue. These fees are generally calculated on a per car, per day basis. The rates and calculation methods are specified by the railroad’s tariff and can significantly affect the overall cost of rail logistics.
4. Stopping the Clock: The clock stops when the condition causing the charge is resolved. For loading or unloading scenarios, this is typically when the railcar is fully loaded or emptied and is released back to the railroad. For storage scenarios, it stops when the railcar is moved out of the storage area.
5. Exceptions and Adjustments: Certain conditions, such as weekends, holidays, force majeure events, or railroad-caused delays, may influence how the demurrage clock is calculated. Railroads may offer specific exemptions or adjustments in these cases, detailed in their tariff or service terms.

Key Measurements and Events

To manage and potentially minimize charges, it is important to understand several key measurements and events, along with the terminology used in rail transportation and, more specifically, demurrage. Here’s an overview of some of these terms:

Free Time

As we just saw with the clock, free time is the period during which a railcar can be used for loading, unloading, or storage without incurring any demurrage charges. This period is predefined by the rail carrier’s policies or contractual agreements.

Importance: Free time is used to provide a buffer period for shippers and receivers to handle railcars without accruing additional costs. Pay attention to your allotted free time with your carrier, as they do vary.

Notification Time

Notification time refers to when the railroad notifies you that your railcar has arrived and is ready for pick-up or unloading.

Importance: The accuracy and timeliness of this notification can significantly impact your ability to manage your railcar’s movement efficiently. If the carrier’s notification is not timely, that will make it more difficult to avoid charges.

Placement

Placement occurs when a railcar is moved to a specific spot designated by the receiver or shipper for loading or unloading.

Importance: The clock for free time often starts when your car is placed, not when it arrives, making the timing of placement critical.

Actual Placement vs. Constructive Placement

Actual Placement is what happens when your railcar is physically placed in a spot where it can be loaded or unloaded directly. Constructive Placement is used if your railcar cannot be placed because of reasons such as lack of space or preparedness on the part of the receiver. Even though it’s not in its final spot, for demurrage purposes, the clock may start.

Importance: Because constructive placement can still start the demurrage clock despite not being capable of being unloaded, it is important to pay attention to what placement your car is received.

Release

Release marks the end of the demurrage clock for a specific railcar. It occurs when your car is fully loaded or unloaded and the organization with the car notifies the railroad that the car is ready for pickup or has vacated the spot.

Importance: The time of release is critical; delays in notification can extend the demurrage period unnecessarily.

Credits and Billing

In some cases, railroads may offer credits for demurrage, and these can be applied to offset charges under certain conditions. Demurrage charges are typically billed after the event occurs.

Importance: Understanding if you’re receiving credits, and what conditions they can be used for, can help you overcome expensive charges.

Section 2: Demurrage Operational Context

The operational context of demurrage is critical since effective handling of demurrage charges can significantly influence cost management. Since demurrages charges can rapidly escalate, managing these requires understanding the intricacies of logistical operations that affect demurrage.

Open versus Closed Gate Customers

In the context of rail demurrage, the terms ‘Open Gate’ and ‘Closed Gate’ customers refer to the type of facility that is receiving or shipping railcars and the procedures these facilities use to manage rail traffic. The choice between Open or Closed Gate can have significant implications for how your demurrage charges are incurred and managed.

In both scenarios, the key to managing charges is efficient management of railcar movement and turnover. And though both types of facilities have unique methods of improving rail logistics, for both it is helpful to have clear communication channel with the rail carriers and to understand all terms of your service agreements.

Open Gate Customers

An Open Gate customer operates a facility where railcars can come and go without the need for an appointment. There are no gate restrictions, and railcars are typically moved in and out of the facility as they arrive.

Implications:

• Pros: The facility may handle railcars more quickly because there’s no waiting time for appointments, potentially reducing the likelihood of demurrage charges.
• Cons: Without a structured system for managing incoming and outgoing railcars, there might be less control over railcar movement, which could lead to congestion or delays if not managed properly, potentially increasing demurrage exposure.

For Open Gate customers, having a robust system for monitoring railcar traffic and quickly processing cars as they arrive, and leave can help to minimize charges. Since cars can be processed on arrival without waiting, quick turns are advantageous but require coordination.

Closed Gate Customers

A Closed Gate customer operates a facility that requires an appointment for a railcar to enter or exit. There are specific gate procedures, and railcars are often scheduled and managed more tightly in terms of their movement in and out of the facility.

Implications:

• Pros: The appointment system provides a more controlled environment, potentially leading to better planning and management of railcars, which can decrease the likelihood of incurring demurrage charges.
• Cons: If appointments are not scheduled efficiently or if there are delays outside the customer’s control, there could be higher risk of demurrage if cars are sitting idle waiting for their appointment slot.

For Closed Gate customers, advanced scheduling software and strong logistic planning are essential. They need to align railcar arrivals with available unloading/loading slots to avoid railcars sitting idle waiting for an available slot, which leads to demurrage.

Understanding Specific Railroad’s Demurrage Rules

The nuances of demurrage rules can significantly impact the charges you receive, and each railroad’s rules may differ. Here’s a deeper look into the components that govern demurrage rules:

The Length of ‘Free Time’

The duration of this period can vary significantly from one carrier to another and may also depend on the type of cargo or specific agreements. Shorter free times require faster turnaround, which can challenge operational capacities, especially during peak times or unexpected delays.

The Rate of Demurrage Charges

After the free time expires, charges begin to accrue at a rate specified by the carrier. These rates can be fixed or variable, and sometimes escalate the longer a railcar remains unutilized. Understanding these rates is essential for forecasting potential costs and for making informed decisions about the timing of cargo movements. It influences not just budget planning but also operational strategies for avoiding or minimizing demurrage fees.

Tiered Charging Structures

Many carriers implement a tiered system where the daily rate increases after certain thresholds are reached. This is designed to discourage prolonged use of railcars as storage and encourages more efficient cargo handling. This system makes it crucial for you to prioritize the movement of railcars within or shortly after the free time to avoid escalating charges that can significantly inflate costs.

Exemptions

Carriers may offer exemptions or waivers for demurrage charges under specific conditions, such as natural disasters, operational disruptions not within the control of the shipper, or when railcars are misrouted by the railroad. Awareness of potential exemptions allows you to negotiate waivers or reductions in charges when unforeseen circumstances affect your ability to load or unload in a timely manner.

Dispute Process

Rail carriers have established procedures for disputing demurrage charges. This might involve submitting evidence of timely loading/unloading, proof of extenuating circumstances, or errors in billing. Knowing how to navigate the dispute process is crucial for rectifying unjust charges and can help maintain financial planning integrity. It requires meticulous record-keeping and an understanding of the carrier’s documentation requirements.

Events That Impact Demurrage

Rail demurrage charges are triggered when railcars are not loaded, unloaded, or moved from the railroad’s property within the allowed free time. Various events and scenarios can lead to the accumulation of these charges. Understanding these common situations can help shippers and receivers plan better and take preventive measures to avoid or minimize demurrage costs. Here are several events that frequently impact rail demurrage:

Delays in Loading or Unloading

Insufficient staffing, equipment failures, or inadequate preparation for the railcar’s arrival can delay the loading or unloading process. Once the free time expires, demurrage charges start accruing until the railcar is freed up for movement.

Congestion at Facilities

Overcapacity at loading, unloading, or storage facilities can lead to congestion, preventing timely access to railcars. Railcars remaining stationary due to inability to proceed with loading or unloading procedures due to congestion start accumulating charges after free time.

Inaccurate Scheduling or Planning

Miscommunication or poor scheduling could result in rail cars arriving when the receiver is not ready or when space is not available. Misalignment in scheduling leads to railcars sitting idle, thereby incurring demurrage.

Documentation or Customs Delays

Incorrect, incomplete, or delayed paperwork can halt the movement of goods, particularly for international shipments undergoing customs clearance. Any hold-up related to paperwork can cause your rail car to be detained beyond the free time.

Equipment Availability

Lack of necessary equipment to load or unload cargo, such as cranes for heavy lifts, can delay operations. The absence or failure of essential loading/unloading equipment precipitates demurrage charges.

Weather or Natural Disasters

Extreme weather conditions or natural disasters (floods, earthquakes, severe storms) can disrupt rail operations and facilities. Although these are uncontrollable events, they can still lead to railcars being detained beyond their free time, initiating demurrage charges, though some railroads might offer waivers in these situations.

Operational Inefficiencies

Inefficient internal processes, poor yard management, or lack of coordination with the railroad can cause delays. Inefficiencies within the shipper’s or receiver’s operations that result in railcar detention beyond allocated free time lead to demurrage.

Section 3: Financial Aspects of Demurrage

Understanding Credit/Debit Days

Credit/Debit Days is the time frame that railcars are utilized for loading and unloading versus the time they are allowed to be used as per the rail carrier’s policy. Credit days refer to the days when demurrage credits (non-chargeable days) are applied to your account with the carrier, versus debits (chargeable days).

The concept of credit days refers to the days for which no demurrage charges are applied if the loading/unloading of a railcar is completed within the specified free time. This free period varies by carrier but typically ranges from 24 to 48 hours after the railcar’s arrival. If the loading/unloading exceeds the free time, each additional day (or part of a day) that the railcar is held is counted as a debit day.

Demurrage fees are then calculated based on the number of debit days—the days when the railcar is occupying space beyond the free allowance—multiplied by the applicable demurrage rate set by the carrier.

The basic calculation for demurrage charges can be expressed as follows:

Demurrage Charge = Number of Debit Days * Daily Demurrage Rate

To apply this with a practical example, if you hold onto a railcar for three days beyond the free time, and the daily demurrage rate is $100, then the demurrage charges would be:

Demurrage Charge = 3 Debit Days * $100/Day = $300

Credit Days would simply be the days within the free period where no demurrage was incurred and would not usually need to be calculated unless they are part of a more complex credit accrual system with the rail carrier.

Financial Strategies to Minimize Charges

Here are some financial practices that can help you reduce both the likelihood and the magnitude of demurrage charges:

• Accrue Strategically: Set aside a budget for potential demurrage charges based on historical data and future estimates. This helps in managing cash flow effectively and avoids surprises.
• Regular Review: Conduct regular reviews of demurrage invoices to ensure charges are accurate and justified. Identify any patterns or recurrent issues that could be addressed to prevent future charges.
• Detailed Record-Keeping: Maintain meticulous records and documentation for all shipments, including times of arrival, loading, unloading, and departure. This data is crucial for disputing unwarranted charges.
• Negotiate Terms: When entering contracts with rail carriers, negotiate demurrage terms that are favorable or that reflect realistic turnaround times based on your operations.
• Volume Discounts: Leverage your shipping volume to negotiate better rates or terms regarding demurrage charges.
• Demurrage Insurance: Consider purchasing demurrage insurance to cover unexpected demurrage costs that exceed normal occurrences, especially for high-value shipments or during periods of increased risk.
• Escrow Accounts: Some companies set up escrow accounts specifically for demurrage fees, helping to manage the financial impact separately from regular operating expenses.

To see if you could be saving on your demurrage costs, use our Demurrage Savings Calculator, designed by RSI Logistics’ rail logistics experts.

Section 4: Managing Demurrage Charges

Submitting a Demurrage Dispute

To effectively submit a demurrage dispute and potentially have the charges waived or adjusted, follow these typical steps:

1. Review the Invoice and Terms

Before filing a dispute, thoroughly review the demurrage invoice and the terms of service regarding demurrage as laid out by the rail carrier. Understand the charges and why they were incurred.

2. Gather Supporting Documentation

Collect all relevant documents that you believe support your case. This might include timesheets, railcar tracking data, communications with the railroad, or evidence of force majeure scenarios like adverse weather conditions.

3. Submit the Dispute Form

Railroads usually have specific forms and processes for submitting demurrage disputes. You often need to fill out a dispute form which requires details such as:

• Your company’s contact information
• Details of the disputed charge (such as invoice numbers, railcar numbers, dates of service)
• A clear explanation of why you believe the charges are incorrect
• Any supporting documentation

4. Send the Dispute Within the Deadline

It’s crucial to submit the dispute before the deadline, which is typically within a set number of days after the invoice date (e.g., 30 days). Late submissions may not be considered.

5. Follow-Up

After submitting the dispute, keep track of the process. Rail carriers have their timelines within which they aim to resolve disputes (e.g., 30 days).

6. Review the Decision

Once the railroad reviews the dispute, it will make a decision to either adjust the invoice, waive the fees, or uphold the charges. Review the decision carefully to understand the outcome and the reasoning provided.

Reasons to Submit a Demurrage Report

You might choose to dispute demurrage charges for several reasons. These generally align with situations where you believe the charges are either unwarranted or incorrect.

• Carrier-Caused Delays: If the delay in unloading or moving the railcar is due to the carrier’s own operational issues, such as equipment failures, misrouting, or crew shortages.
• Force Majeure Events: Events beyond the control of either party, such as severe weather, natural disasters, or other extraordinary events, might justify waiving demurrage charges.
• Incorrect Billing: Discrepancies in the bill, such as incorrect calculation of charges, misidentified railcars, or charges applied outside the agreed free time.
• Inaccurate Time Tracking: If the carrier inaccurately recorded the arrival or departure times of the railcar, resulting in unfair demurrage charges.
• Lack of Notification: If you were not properly notified about the railcar’s arrival, thus preventing you from making timely arrangements for unloading.
• Facility Issues: If the receiver’s facility was not accessible due to carrier’s operations, such as track maintenance or congestion caused by the carrier, then demurrage charges may be disputed.
• Disputes Over Free Time: You might be able to contest demurrage charges if there’s a disagreement over the amount of free time allotted or if there was a misunderstanding about the terms and conditions surrounding free time.
• Exceptional Circumstances: Sometimes, there may be unique or exceptional circumstances that could be considered as a basis for waiving demurrage charges.

Identification of Bunching and Its Impact

In the rail transportation context, “bunching” refers to the occurrence when several railcars destined for a particular location arrive at the same time or within a very short timeframe. This can happen due to various scheduling reasons or inefficiencies in a rail network, causing multiple trains or shipments to converge simultaneously. Bunching conflicts with the expectation of evenly spaced arrivals, which allows for smoother unloading processes and better resource management at the receiving end.

Bunching can have a significant adverse impact on demurrage:

• Overwhelms Facilities: Facilities may not have the capacity or manpower to handle a large influx of railcars simultaneously, leading to delays in unloading.
• Exceeds Free Time: Due to the unanticipated accumulation of railcars, the time required to unload can exceed the free time allowed by the carrier, resulting in demurrage charges.
• Strains Resources: Limited rail tracks, loading docks, or storage areas may become saturated, causing additional railcars to be held up on the rail network, which also can result in more demurrage costs.

Mitigating Bunching Effects

• Improved Communication and Coordination: Regularly communicate with the rail carrier to be informed about the expected arrival of cars. Coordinate with other shippers and the rail carrier to spread out the delivery of cars.
• Scheduling and Tracking: Schedule unloading resources efficiently and use railcar tracking technology to monitor the movements and anticipated arrival times closely.
• Buffer Stocks and Storage: Maintain buffer stock or additional storage capacity to handle unexpected surges in railcar arrivals.
• Contractual Terms: Negotiate terms with rail carriers that account for the possibility of bunching, such as extended free time or flexible demurrage policies.
• Efficient Resource Management: Optimize resource allocation, such as workforce and equipment, to handle peak unloading times.
• Operational Improvements: Implement process improvements to increase the speed of unloading when bunching is imminent or occurring.
• Strategic Planning: Develop a comprehensive logistics plan that anticipates potential bunching scenarios and includes contingency strategies.
• Diversifying Supply Chain: Consider using alternative transport modes or different routing options to reduce reliance on a single rail carrier or route that may be prone to bunching.

Proactive Measures to Avoid Charges

Proactively avoiding or minimizing demurrage charges before they occur requires strategic planning and efficient operation management.

1. Efficient Loading and Unloading Operations: Streamline operations at your facility to ensure quick loading and unloading of railcars. This may involve investing in better equipment, optimizing labor shifts, or redesigning storage for easier access.
2. Regular Communication with the Railroad: Maintain open lines of communication with the rail carrier. Inform them of any potential delays or operational issues at your facility that might impact railcar movement. Similarly, get real-time notifications from the carrier about railcar statuses.
3. Utilize Tracking Tools for Railcars: Invest in railcar tracking technology or use carrier-provided tracking systems to have real-time information on the whereabouts and estimated arrival times of your shipments. This allows for better preparation and resource allocation.
4. Review and Understand Tariffs and Policies: Be well-versed with the carrier’s demurrage policies, free time allowances, and applicable tariffs. Understanding these details can help you strategize to maximize free time and minimize additional charges.
5. Consolidate Shipments: Whenever possible, consolidate your shipments to reduce the number of railcars used and minimize the risk of demurrage. Larger, less frequent shipments may be easier to manage than numerous smaller ones.
6. Implement a Just-in-Time Inventory System: Adopting a just-in-time system can reduce the time goods spend in your inventory, synchronizing your supply chain to the arrival of railcars and thus minimizing idle time.
7. Engage in Partnership and Collaboration with Carriers: Work towards building a collaborative relationship with your carriers. Negotiating terms that are mutually beneficial can sometimes lead to more favorable demurrage terms or increased flexibility during unforeseen circumstances.

Tips and Tricks for Efficient Demurrage Management

These tips and tricks are offered by our team of demurrage experts, who specialize in assisting our clients in minimizing their demurrage charges.

1. Maintain Open Spots: Leave some open spots available so that railcars can be immediately ordered in upon reaching constructive placement. Rail carriers charge from the date of arrival to the date the car was ordered in for unloading by plants.
2. Plan Ahead: Anticipate the arrival of incoming railcars and ensure an equivalent number of railcars are unloaded/loaded and released upon their arrival. For instance, if you have five railcars arriving over the next three days, plan to have five railcars unloaded/loaded and released before then.
   1. Coordinate with Shipping Partners: Work closely with partners, especially in plants unloading various commodities, to streamline operations.
   2. Leverage Transit Time Insights: Take time to understand your lanes’ typical transit time. If you’re not certain how to do so, at RSI we offer a Transit Times data visualization report.
   3. Monitor Load/Unload Times: Compare load/unload times with transit times when developing logistical plans.
   4. Expand Storage Options: If possible, consider additional storage methods (e.g., silos, bins, containers) to build a reserve of products, reducing reliance on railcars for storage and minimizing demurrage costs.
3. Optimize Internal Processes: Regularly evaluate your load/unload times and improve these processes for maximum efficiency.
4. Negotiate Terms: If you’re a shipper who has a considerably large amount of rail freight, negotiate terms with railroads, who are often willing to provide favorable conditions to large partners.
5. Incorporate Buffer Time: Establish a cushion for unexpected delays to avoid the domino effect.
6. Educate Your Team: Ensure your staff understands the carrier’s specific tariff rules to avoid preventable charges.
7. Audit Demurrage Invoices Regularly: Implement a routine review of demurrage invoices to catch any discrepancies or opportunities for dispute.
8. Create a Contingency Plan: Develop backup plans for unforeseen logistical challenges.
9. Utilize Demurrage Management Technology: Take advantage of technology like Rail Command to plan, track, and maintain a historical record of your demurrage activities.

Section 5: Leveraging RSI’s Experts for Demurrage Management

Our Demurrage Management Service combines Rail Command, our rail shipping management technology, with our rail demurrage experts to minimize unnecessary demurrage costs. By offering tailored solutions, we empower you to not only track but also actively manage and optimize your demurrage. By improving the accuracy of tracking, enhancing the visibility of railcar movements, and fostering proactive management practices, you can not only dispute demurrage charges but also preemptively address issues that typically result in charges.

Our Demurrage Management Service includes:

Comprehensive Reporting Tools

Demurrage Reports:

• Summary and Detailed Reports: Offer an overarching view and granular data about rail car movements and standing times.
• Site Report and 5 Days Out Report: Enable proactive management by forecasting potential demurrage scenarios before they occur.
• CP Report, Transit Time Report, and Lane Performance Report: These specific reports target performance metrics that influence demurrage costs directly.
• On-Time Report and Pipeline Report: Help in understanding schedule adherence and the sequencing of cargo loading/unloading operations.

Manual Reports:

• Invoice Tracker: Records demurrage charges and disputes, effectively associating costs with plants and providing a history of disputes.
• Total Demurrage: Visual comparisons across different periods showcase the financial impact of demurrage and the effectiveness of dispute management.
• Switch Performance Report: Focuses on operational failures like missed switches, aiding in accountability and improvements in scheduling efficiency.

Demurrage and Storage Charge Audit

Our process involves a thorough audit of demurrage charges:

• Dispute Submission: Engaging with railroads to contest unjust or erroneous charges with documented evidence.
• Relationship Management: Maintaining strong connections with railroad demurrage contacts to facilitate negotiations and dispute resolutions.

Enhanced Visibility

Included is a dedicated email for our demurrage management experts that serves as a direct line for inquiries, providing you with a straightforward method for communication.

Regular Performance Reviews

If needed, our demurrage management experts can hold strategic sessions with your railroad representatives to ensure continuous improvement and accountability, as well as address systemic issues that are causing charges.

Proactive Consulting

We advise you on best practices and strategies to avoid demurrage:

• Preventative Planning: Understanding railroad-specific nuances which can be leveraged to avoid charges.
• Historic Data Analysis: Identifying patterns and preparing for predictable fluctuations in railcar usage and demurrage accrual.

Ready to take control of your demurrage costs? Discover how RSI’s Rail Command technology, paired with our expert Demurrage Management Service, can transform your approach to demurrage. Get started with RSI today and elevate your rail management strategy.

Effectively managing demurrage is crucial for maintaining cost-efficiency and operational smoothness in rail freight shipping. Throughout this guide, we’ve explored what demurrage is, the key factors influencing these charges, and detailed strategies to manage, reduce, and dispute them effectively. By implementing the insights and tools discussed, particularly RSI’s Rail Command coupled with our expert Demurrage Management Service, you can proactively handle demurrage, leading to significant cost savings and enhanced operational efficiency.

Remember, demurrage doesn’t have to be a cost of doing business; with the right approach, it’s a controllable factor that can dramatically improve your bottom line. Take charge of your demurrage management today and drive your business towards greater profitability and efficiency.

The post The Ultimate Guide to Demurrage: Understanding, Managing, and Reducing Your Costs appeared first on RSI Logistics.