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  • Short line freight revenue

  • General discussion about railroad operations, related facilities, maps, and other resources.
General discussion about railroad operations, related facilities, maps, and other resources.

Moderator: Robert Paniagua

 #1115699  by BobLI
 
I'm not sure if this is the right forum for this question.

How much revenue does a short line get when it delivers a car online? Is it a % of the total shipping charge or is by mileage on the shortline?

And if it originates online do they get a larger share of the shipping charges?
 #1115751  by Desertdweller
 
I'll take a shot at answering this.

There are two ways of determining what a railroad charges. The first, traditional way, is by the rate tariff. The rate tariff is a published compendium of rates set by tariff boards that combinations of railroads agree on and are approved by a Federal oversight agency (formerly the ICC, now STB). The tariff will list freight charges by commodity and point of origin and termination.

If the carriers involved are common carriers and line-haul carriers, originating and terminal carriers will get a share of the rate as allowed in the tariff. If the carriers at one or both ends of a line haul are simply the deliverers or originators of freight at a terminal (again, as defined by the tariff), then they do not get a part of the line-haul charge, but rather a terminal charge. Remember, all these charges are going to be different depending on the length of haul and the commodity carried (tariff rates for commodities vary according to the value of the commodity, and the need for special equipment needed for its transport).

Tariffs also set charges for things like demurrage, switching charges, break billing charges, hazardous material storage charges, etc.

If this sounds complicated and smells of price-fixing, it is. So as part of the Staggers Act deregulation of 1985, railroads are allowed to set their own price agreements with specific customers by contract. Tariff rates still exist, but they can be superseded by contracts. The contracts have to be written between specific railroads and specific customers. Railroads can also enter into contracts with other railroads. A delivering railroad, for example, can agree to deliver a unit train of fixed size to an on-line customer for a set charge per train to the line-haul railroad. The line-haul railroad includes this fee in the rate it charges the final customer.

So you can see that a railroad that originates or delivers a carload and also handles it in a line-haul move would earn more money than if it only carried that car as bridge traffic.

Les