I’m a salesman. (I know-boo!hiss![:-,]) I’m always interested in how other industries market their goods and services. How do railroads find, service, and maintain their business?
Well, they used to have sales offices hither and yon - check an old copy of the “Official Guide.” A southeastern RR, for instance might have a sales agent/office in, say, Seattle, for the purpose of getting traffic headed that way routed over said road.
Considering the relative move away from carload freight, and the limited number of railroads now available, I suspect that their efforts are much less aggressive these days.
I recall reading somewhere an account of a railroad salesman who caught holy h*** for acquiring a new customer - the railroad, it turned out, would lose money on every carload…
Murph:
As a fellow salesman, I have wondered the same. If you go to the websites of various railroads you can find who the local reps are. Often, the “marketing” is done by commodity…in other words a group of sales reps handle a certain group of commodities, such as coal, or automotive, etc.
There certainly has been a big change in the type of traffic (old school word) the rails handle with more and more intermodal and much of that is wholesale.
My guess is (and only a guess) that once a railroad has the infrastructure in place (sidings and terminals) then the business tends to take care of itself, with maintenance type of sales/marketing. Lately, the “marketing” aspect has been raising rates as frequently as possible to reflect the pricing power they have.
I would think the new business developement aspect of the industry would be very interesting…seeking new industries for developement. Out here in Indiana, there has been considerable new ethanol plants built…now it seems to be slowing down and the pricing has dropped.
ed
They use intermediaries (like me) to a great extent. The rails don’t want to deal with small lots…they want customers who give them the big volumes…i.e. thousands of loads per year. For example…a freight broker may have 50 customers who generate ten thousand plus container loads per year between them…that’s enough volume to get in direct with the class 1s.
The railroads also employ sales reps (I believe they refer to them as account executives) who look after major on line accounts.
This almost sound like saying the railroads already have the business, now they just have to decide how to raise the prices? Surely, the railroads try to steal business from each other?
Yeah, how about it? I seem to recall a few years ago, the UP took away some of the BNSF’s UPS traffic, because there was one particular train or trains that they could get to the west coast faster than the BNSF could… That particular train IIRC would leave from the Willow Springs faciltiy, and either make it’s way to the UP’s Geneva Sub, or use the BNSF for part of the trip, and furthermore, IIRC, the BNSF eventually got that traffic back…
Anyone care to clarify?
Railroads (at least the big ones) aren’t really marketing oriented companies. I think NS is the closest to being an exception to that.
For most of thier 20th century history they couldn’t be marketing oriented. Federal economic reglation greatly limited any real inovations (containerization, unit trains, intermodal development, the “Big John” case, etc.) Regulated rates were set collectively and blessed by the regulators. A competitor could stall or even prevent a rate by protesting it. So a marketing culture just didn’t develop.
Basically they could only compete on service and equipment supply. (If a railroad had equipment available, it got the freight.) Service was difficult to control because interline movements were subject to the whims of connecting carriers.
Salesmen did try to divert traffic to their employer. They did it with lunches, theater tickets, sports tickets and other methods of sometimes questionable legality.
For a few years in the late 20th Century the deregulated railroads were able to market their services like any other business. And we came to see things like the development of double stack and Tripple Crown. But the railroads just didn’t have the people or culture in place to fully take advantage of their freedom. Those things have to be developed, and that takes time.
Then a lack of capacity got in the way and the problem became how to handle all the freight instead of how to get more freight. Now things have slacked off a bit. Will the big railroads develop the needed marketing culture? Who knows.
As an example, the CN has this largely empty
Precisely that was tried by the Illinois Central and one of the eastern lines (in the 1980’s?). I’ve heard the reasons for failure were:
The need to avoid stopping in rail yards. Once the seal is broken on a load of meat, the whole load is pet food, and the railroads simply could not/did not provide adequate protection to shipments in their custody.
The inability to divert a portion of the load headed east (for example) to New York City to Boston.
Wholesale market distortions caused by the concentration of shipments.
Most large packing plants do generate several cars per shift of byproducts that are shipped by rail. Examples are hides or fats.
The more I thought about this it appears that railroad’s “marketing” is somewhat different from other industries.
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As indicated above, during the regulated era, marketing often consisted of relationship type selling. With a number of options for thru routing, the salesman would influence that routing, often with booze, tickets, etc.
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During the early part of the Staggers act, it appears that “marketing” consisted of shutting down unprofitable business. This was accomplished by several means including shutting down interchanges, cancelling joint rates, adding surcharges for handling cars, etc. In conjunction with this came the massive abandoning of branch lines and the selling off of lines to regional or short line start ups.
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The intermodal explosion would be an interesting marketing study. I recall years ago Trains had an excellent article on how the ATSF marketed it’s intermodal business based on rates and schedules. Low rates for low priority containers, high rates and fast delivery times for hot freight such as UPS or LTL freight (Roadway, Yellow, etc) and in between rates/service for the balance. That system seemed to work on a high density line such as the Transcon where multiple daily trains were scheduled. Does anyone recall the article and the Month/year of that article?
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It appears that considerable marketing expertise today is done by the regionals or shortlines. For example, take a look at the Indiana Railroad which runs on the old IC branch from Indianapolis to Newton. This might be a good discussion to take a look at how IR has handled short haul coal from Southern Indiana to Indy, pursued PRB coal for the Newton Ameren plant, secured the appliance business in Bloomington, developed a break bulk facility in Indy and possibly developed other business. Not a bad situation for the class 1’s either as IR does all the local switching, typically the
So, apparantly, the Class 1’s aren’t out beating the bushes for more business right now-perhaps just working on making more on their existing business.(?) What about customer service? If I’m having service issues with Mega/Rail here at my Jello mine, do I have a dedicted rep to call and wail to? Or is it just call 1-800-GET-LOST? Amazingly, option #2 is how most big companies deal with anyone who’s not their biggest customer.
The carriers are looking for business opportunities that make profitable sense. They are not looking for traffic just for the sake of having traffic. For business opportunities that make profitable sense, you are not looking for the shipper or consignee that is in the one or two car a day category…the switching time involved in servicing such customers make them unprofitable. The marketing that is done to capture new business involves designing logistical solutions to the customers needs. One area where this has occurred has been in the municipal trash business. Eastern carriers have created a business opportunity by transporting high volumes of municipal trash to out of state high volume landfill and/or co-generation facilities. This is a business that did not exist 10 years ago and now has several dedicated daily movements, some as long as 600 miles.
Referring to the operation of your Jello mine…how many unit trains of Jello are you shipping each week. If you are shipping in unit train volumes you will receive the attention you desire. If you are shipping a car load a week from the end of a 20 mile spur, that you are the only customer on…1-800-GET-LOST is the appropriate number to call…you will be put on hold.