I was wondering how much it costs rail companies to exchange railcars with each other. An example is Canadian National having their railcars shipped from Alaska to the Cominco Smelter in Trail. I think there is 4 or 5 transfers in the process and the cost could be rather high. How are costs recovered without driving away customers due to high costs?
What are you trying to define as a ‘exhchange’?
Rail rates are normally set from origin to destination and are based upon the ‘perishability and/or loss damage’ potential of the commodity. Carriers have designated interchange points between them where cars are interchanged between the carriers to keep them moving to their destinations - this is a unexceptional routine in the carriers simple acts of doing business. The rates will also take into consideration the amount of switching that is required by both the origin and destination carriers to service the business.
Like ACD I am a bit confused by the question, so I will guess what you are asking and answer that.
ACD is correct in pointing out that interchange between carriers is a routine activity. To move anything anywhere on the railroad there has to be a rate and rate authority. When the traffic originates on one carrier and terminates on another, there has to be a joint rate authority, that states the “through” rate the customer will pay. There will be another document that states how the revenue will be divided among the participating carriers. If the move is new, then all carriers must agree to it and to the amount of revenue they will earn from it. In your case we will assume ARR, a car barge, and CPR are the carriers and that there is a through rate issued by the AAR. Through rate means the customer pays either the origin or destination carrier the total freight due. The carrier who gets the money will pay the other participating carriers their agreed portion of the rate.
The usual case is that the origin carrier, ARR in this case, is obligated to supply the car. In your example it is a CN car. The CN car is “foreign” to all of the involved carriers, so they must pay car hire to the owner, the CN. Car hire is paid on both time, hours, and mileage. I suspect, but do not know, that the barge line would pay time only, since the car runs no miles while on the barge. When the car comes up empty at Trail, the CP must either return it at nearest convenient point to CN or come up with a revenue load that includes CN in the route. CP will pay car hire for entire time the car is in its possession, interchange on to interchange off, plus all the miles, both loaded and empty.
In summary, first you must have a rate and route for the commodity from origin to destination. Assuming it is a through rate, the carriers will have agreed among themselves how the revenue will be divided.
The car will be interchanged twice under load plus once loaded or empty h
Thank you Mac.
I would presume then that the AAR would also pay car hire to CN from the time the car comes off the barge NB to Alaska, until it is loaded back onto the barge and is sent SB to Canada.
Bruce
Bruce,
That is correct. The basic rule is that if you have a foreign car in your possession, you pay for the entire time that you have it and for all the miles you move it.
Mac
Interchange reports by the carriers define when the cars move from one carriers per diem account to the other carriers per diem account.
In addition to reporting the move to the carriers involved, the move is also reported to the AAR (Association of American Railroads) which will also distribute appropriate records to shippers and consignees on their request. This is becoming more and more important for customers as a greater quantity of freight is being shipped in private owner cars and these cars are routinely on a ‘trip lease’ between the owner (normally the shipper) and the consignee. Shippers want to keep their cars moving, just like the carriers want to keep the cars they own moving.
If you are referring to ore coming from the Red Dog mine in Alaska, it does not travel in railcars in Alaska. The first time it is loaded into railcars is in Vancouver, BC. Here’s an article about the transportation process:
More on the Red Dog mine:
The costs would be much higher to NOT interchange equipment.
I don’t really understand the question either. Hundreds of thousands of railcars are interchanged between railways on a daily basis.