Four Ways to Reduce Your Rail Freight Costs

Written by Michael D. Riley, MS | Nov 20, 2022 7:19:53 AM

If you are shipping by rail, freight is often the most expensive part of your supply chain. Normally, you are at the mercy of the railroad; however, over time there are several practical ways to keep rail freight costs under control.

Sometimes reducing freight costs are obvious - such as reducing the number of railroads handling your shipment (i.e. pay less switching fees), and using loading or unloading facilities that are dual served to avoid interchange fees. While this is a great strategy, it’s not always possible.

We’ve asked Jaime DeKelver, Vice President of Standard Rail, who has over 20 years of rail transportation experience for four ways a shipper can reduce their overall freight costs:

Explore transloading options to avoid having to ship on multiple railroads.

Interchange fees can easily kill the economics of a rail movement. If you can get your railcar close to your load or unload facility using one railroad, consider using trucks for the first or last mile. The additional transloading costs may be more economical in the long run, rather than using multiple rail carriers.

Avoid using railroad system cars.

If you do not have railcars, for some commodities, you can request railcars from the shipping railroads “pool” of internal cars. However, consider that private rail cars (cars owned or leased by a shipper) are typically associated with lower freight rates.

One of the biggest advantages of private cars is that you also don't have to worry about demurrage when on private sidings. The freight and demurrage savings normally more than offset the cost of leasing or ownership.

A word of caution when adding private cars to your fleet – I recommend to always have a pre-purchase/lease inspection of the railcars before committing to leasing or buying railcars, and ensure that preventative maintenance is performed on private cars or you might experience some costly surprises!

Take advantage of free moves.

When using private cars, you customarily get one free move (of approximately the same mileage) after each revenue move.

Here are the most common uses of free moves:

- To send your empty car back to your loading facility after a shipment

- To route your railcars into storage after a shipment

- To route your railcars into a shop after a shipment

Additionally, when leasing or buying new cars, make sure to ask if there is a free move that can be used to bring cars to your loading facility, local shop, or storage facility.

Have on-site railcar repair and maintenance or contract a Mobile Repair Unit (MRU)

Nothing is more frustrating than having a railcar arrive at a loading facility and finding out it is a Bad Order and needs repair. If this happens, you’ll need to ship the railcar to a local repair shop, which is a hassle for both the facility and the Railroad, who will send you a bill for the move. In addition to un-expected freight costs, you’ll also lose the car for up to 120 days.

Eliminate the freight costs and lost time from sending your railcar to a repair track or shop with a dedicated On-site repair and maintenance solution or hire a mobile repair unit to come to location

Want to save even more on your transportation costs, ask us how Standard Rail can help!

Standard Rail is Setting New Standards for railcar repair and maintenance and railcar storage needs in North America. Our services include dedicated on-site repair and maintenance, mobile repair units, repair tracks and repair facilities. Standard Rail offers high-quality and reliable railcar services at competitive rates. schedule a no-obligation consultative call here today: http://bit.ly/StandardRail

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