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18 Feb 2016

Rail Diversions and Through Rates

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Complexity that costs.

Let’s say you have a joint line rate negotiated or published for a lane of traffic. In this case, you know who will invoice you and for how much. After your railcar ships, what if the customer cancels the order, the product is found to be out of spec, or you have a different client that needs the goods more urgently? You will have to request a diversion to alter the movement of the car. More than likely, however, when the original EDI transmission was sent to the carrier, a freight bill was already created in its system. If the diversion occurs with the originating carrier, they may or may not cancel the billing and invoice you correctly. Alternatively, if the diversion occurs on the subsequent carrier, you may find yourself shipping product to a point where you have no alternate through rate or have to pay the second carrier a “Rule 11” for their portion. In this instance, AAR accounting rules state:

A non-origin diverting carrier should submit a 426 challenge with a D1 code in the ZR13 segment if no 426 waybill has been received at the time of diversion. Challenges related to diverted shipments are not subject to a waiting period as defined in Freight Mandatory Rule 64B(2).

Sound complicated? It is! If the action described above did not happen, the originating carrier did not get the memo and the billing may still be in place for the first move. This type of scenario is extremely hard to catch and requires the transportation group to proactively communicate with the carriers involved. What makes it even more challenging is that many corporations are transferring such responsibilities to the accounts payable function, which is inadequately prepared to handle such freight cost complexities.

If this is your situation, you need a team of experts behind you who have been trained to identify these kinds of problems and more. Let AMTR ’s Smart® auditors review your freight for free today!

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