You could opt for efficient and cost-effective railroad freight transportation. Even though road transport is a frequently used mode of freight, for specific loads, you simply cannot undermine the advantages of railroad shipping. When your shipment is required to move over 1,000 miles and is not that time-sensitive, it is a good idea to opt for rail transport as an effective and efficient solution for your chain of supply. We understand that railroads move approximately 40 % of American freight. It is crucial to the economy of the United States of America. Let us explore some advantages of railroad shipping and ways to negotiate rates in your favor.
The Main Advantages
Ensures High level of Safety & Security
Statistics reveal that it is relatively rare to hear of thefts from rail containers because it is quite a daunting task for criminals to get the opportunity of going close to a train. Unloading from containers on rail wagons is quite difficult. Hence, railroad shipping is quite a safe and secure mode of moving your freight.
Provides Multimodal Compatibility
The trailers and containers used are known to be compatible with rail and road freight-often referred to as multimodal transport. It implies that you do not have to load and unload at specific transit points. The trailer or container is lifted straightaway from the train to the truck whenever necessary.
Railroad shipping is economical and involves fewer fuel surcharges. Rail freight transport is best for long distances because the driver can successfully move containers with fewer rest stops. Railroad transport is more often than not electrically powered, which helps to avoid oil price fluctuations and fuel surcharges. As per Reuters, earlier this year President Joe Biden has announced that he will be ordering U.S. transportation agencies for cracking down at once, on unjust fees and anti-competitive conduct in the sea and rail shipping industries in an attempt to lower overall costs to consumers.
How to Negotiate Rail Freight Rates
Proper negotiation of railroad shipping rates is your responsibility and is an integral part of your organization’s bottom line. Let us explore a few tips:
Be Prepared with Your Story for Requiring an Improved Rate Structure
You must know precisely the railroad’s story for demanding a high rate structure. Likewise, you should be prepared with a story that justifies your need for getting a much better rate structure. You may weave several stories to negotiate a better rate. You can talk about a lost business you cannot pursue anymore. You may discuss all the potential competitive choices and even where capital investments would be done under diverse freight cost set-ups. These are some issues that could be crucial elements of a successful negotiation process.
Have a Thorough Understanding of All Your Traffic Lanes
Examine your shipping locations and the competitive rail situation and check if alternative logistics, production, or purchasing options are viable. If you have sound knowledge about your production options and competitive options, you can negotiate lower rates.
Benchmark All Your Movements
For getting cost-effective rates, it is critical to understand what rates would prove to be reasonable or cost-effective. We are aware that railroads have been thriving chiefly because of a lack of transparency of rates. If you can demonstrate that the railroad shipping rates are placing you at a disadvantage vis-à-vis your competitors in markets, there is every chance that you would gain success in your rate negotiations.
Conclusion: Networking is the Key
For getting better deals, follow all the tips discussed above. However, networking always pays. Know more about the railroads you are intending to use. Start listening to quarterly conference calls of railroads with Wall Street and start attending conferences.