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22 Apr 2016

Do You Ever Pay More for Less?

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Many commodities ship in unit trains of 115 cars or more; however, some smaller rail stations may only be able to handle 65 or 85 car units. Marketing departments use factors such as these to set rates, but generally, the more cars shipped, the lower the rate. As a shipper, if you have a contract with a carrier, it usually includes a minimum car requirement for certain unit sizes to guarantee a set amount of revenue for the carrier. There may be times, however, when you will not be able to meet the minimum car requirement. This may be due to all sorts of scenarios such as bad order cars, miscommunication, or railroad error. What happens then? Depending on the commodity, falling short on an order by one car can sometimes cost over $20,000, as a higher rate is multiplied by the total number of cars. Some carriers offer rules–called “shortfall provisions”–that protect the lower rate for the shipper. Other carriers require notification in order to provide a similar waiver. Our auditors often see that a shipper was offered a lower rate via an email, but when computers got involved the bill was actually rated higher. Shippers need to know that relief is usually available if such an issue is brought to the attention of the appropriate parties, but don’t expect automated computer systems to have a heart. This is the type of situation that AMTR will investigate and get corrected for you. The AMTR difference is the “human in the loop” reviewing your freight to ensure that you never pay more for less.

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