How to Negotiate for Rail Freight Rates Effectively? The Crucial Guidelines to Consider

Knowing how railroads price your good is the beginning of deciding your capacity to negotiate for the correct rail freight rates. The railroad costs have proven to be cycling in all these years, shifting between private contracts and public tariffs. Also, by making use of the differential costing, the railroads can offer various rates to various shippers in the similar lanes.

Irrespective of the costing methodology, the railroads’ objective is always to gain more profit. The guidelines for negotiating rail freight quote can enable you to have a wider picture of the entire market and reduce the rates in the industry. Here are a few factors to consider:

1. Recognize the scopes

With the know-how as to the way rail freight rate formats work, it becomes essential to come across the best scopes for enhancing the rates. A piece of detailed information about the rail rates across the commodities and distances can enable you to benchmark the rates. And with such estimates, you can have a clear understanding as to where you can start negotiating the rail freight rates. The data visibility will not just enable you to show where the rates are very high, but also you are placed with regard to other market players.

2. Assess the options

It’s always challenging to negotiate with very few choices. When you completely understand all the choices available, you will acquire a better negotiating place. In several situations, it’s easier said instead of doing. Almost 70% of the rail served locations gets served by the single carrier. And even if you get working on the captive route, there are choices. You need to opt-in for the following:

  • Alternative modes – The rail shipping is usually less priced in comparison to shipping by truck. However, it’s always better to get the estimate. If the rates are higher, the rail carrier will not negotiate and offer you increased options.
  • Alternative routes – In case your rates go high in comparison to other market players, you can negotiate for a reduced rate across the longer distances.
  • Transloading – The process of transloading can enable you to shift to other routes and expand your choices. You can find transload facilities that are available to you and provide you with negotiating places.

3. Manage the operations effectively

As you can anticipate, the rail freight rates might be more for the shippers who are always incurring the added accessorial charges and financial charges and don’t solve the issues with fleet management. When the payment or fleet management issues lead to any concern for a rail carrier, it has less incentive to negotiate the reduced freight rates.

On the other hand, the consumers who make timely payments, always retain a high-end fleet, manage the railcars timely and carry out effective operations. They will automatically have a better place in negotiations. Hence, if you encountered management issues earlier, you can start making capital and storage enhancements to enhance the process. In case you have managed the fleet well for several years you should use it in the negotiations. You can highlight all the attributes as the best railroad customer.

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