For some time I have been wondering how do they handle loads that have to cross multiple railroad lines and returned. IE: N&W is hired to ship widgets to San Diego from Norfolok. In order to get the box cars across country they have to cross multiple separately owned lines. Surely the other railroads dont do this for free? Is the item unloaded at the different terminials and the widget owner has to hire each line ? Is there a gentlemans agreement between lines that allows one owner to use another owners ? If this is the method how who or how is these coordinated and the box cars returned to N&W ?
I’m not an expert, but I believe the shipper would only have to hire the original railroad. That railroad would coordinate all the other transactions. Everything would eventually be billed back to the shipper, either directly or indirectly. The freight would stay on the same car the entire trip, that is why you see “foreign” cars on all the railroads. Once the car has reached its destination and is emptied, it is supposed to go directly back to its home road. However, if an agent sees an empty come through, and they need an empty, they may take it and use it. Kalmbach has a book on operation that talks about the entire process. It is very helpful.
Cars are interchanged between railways constantly. Go out and actually watch a train go by, or find any photo or video of a train. You’ll notice cars from many different railroads in the train. If they didn’t interchange cars, every single car in the train would always only ever be from the same railroad.
A customer pays the railroad that serves them to supply a car and haul it to the destination.
If it gets interchanged several times, each railroad on the route gets a cut of the fee. Additionally, when the car of one railroad is on another railroad, the second railroad pays a car hire fee to the first. (These fees used to be daily (per diem) ending at midnight, but at some point became a consistent hourly rate (car hire).) Some smaller railroads owned fleets of pool cars that rarely ever returned home, and they just collected the usage fees for them. When empty, railroad two will try to send the car back to railroad one; but will also try to send it back loaded if at all possible so they don’t have to use one of their own cars.
Note that there are a lot of cars out there (especially tanks, covered hopper and coal cars) that are privately owned, and in that case car hire doesn’t apply and usage is restricted (the railroad can’t just reload it and send it merrily on its way, it has to go back empty to wherever the car’s owner specifies.) Just the shipping and movement charges.
And they’ve been doing exactly this sort of thing on a daily basis for over 150 years, so the system is pretty well refined and understood by now.
Railroad owned equipment runs in free interchange - they do not have to trans load the freight at each junction. In your example, NS the the originating carrier and does the billing for the entire trip west to San Diego. They get to keep their cut of the trip miles and a fee for originating the load. When the freight car gets to the interchange point with BNSF, it is handed off and BNSF moves the car to the consignee in San Diego. Once the car is unloaded, BNSF returns the car(if they do not own it) via the ‘reverse route’ unless there is an agreed other destination for the return of empties. BNSF pays a ‘fee’ to NS for each day that the NS car is on BNSF property - this insures that empty cars get returned. There are other variables that come into play, but this is the basics.
Jim
The AAR (Association of American Railroads) have formulated Car Service Rules (CSRs) which define how cars in interchange service is forwarded, revenue and cost sharing, how cars should be returned to or towards it’s owner when emptied, how damaged cars will be repaired and the cost billed to the owning railroad and so on and so forth.
https://www.railinc.com/rportal/web/guest/publications
Smile,
Stein
Its called interchange. The railroads have formulas, generally based on mileage, on how they split the revenue. In the old days, when there were hundreds of railroads, there were set fees for moving things between stations called tariffs. The were set by the ICC and weren’t negotiable. It didn’t matter how, much, how often, how long it took, how far it went, the rate was the rate.
To move widgets between New York City and Los Angeles it cost 52 cents a pound. It didn’t matter what route, it didn’t matter how far. It cost 52 cents a pound.So if I shipped 100,000 lbs of widgets it cost me $5200 dollars.
So lets say it took 4 railroads to do that (PRR-St. Louis-MP-Texarkana-TP-El Paso-SP). The railroad that collected my $5200 would have to split it with the other railroads. The PRR and SP each get al little extra for originating and terminating the shipment, lets say $100 each. The PRR carried the shipment 900 miles, the MP carried it 500 miles, the TP 900 miles and the SP 1000 miles. So, based on mileage, of the remaining $5000 the PRR gets $1363, the MP gets $757, the TP gets $1363 and the SP $1515 (rounding off the numbers). In addition certain gateways, terminals and shortlines had switching fees that might apply.
Since the Staggers Act shippers have been able to negotiate contract rate with the railroads. In which case the industry can negotiate a rate on each railroad that can have time requirements, volume discounts, specify interchange junctions, etc, etc, etc. Of course there are a lot fewer railroads any more.
The Staggers Act indirectly did away with Betterment Accounting three years later. That further helped railroads know the true cost and value of their freight cars running all over the US.
Thanks Jim
This raises more questions. How would N&W know which system had the N&W car so they can make sure they collect on monies due.Is there a level of trust among rail roads or do they have a tracking system so they know who has which car for how long and when they can expect it back so they can load the car again???
Thanks Jim
This raises more questions. How would N&W know which system had the N&W car so they can make sure they collect on monies due.Is there a level of trust among rail roads or do they have a tracking system so they know who has which car for how long and when they can expect it back so they can load the car again???
The route is on the waybill and if the N&W is on the route they would get a copy of the waybill. Only the cars on the waybill route are due the revenue. The railroads also report when they recieve cars in interchange to the car’s owners in order to pay per diem/car hire/mileage (which is a completely different subject.)
Here’s where it can get even more complicated. Say the car goes from the N&W to say the Pennsy. When the Pennsy gets it, it’s found to be a bad order or “cripple”. The car is set out on a siding or the cripple track in the yard where usually if it requires more than one day of repairs, the Pennsy would charge per diem to the N&W until the car can be repaired plus the cost of repair for parts and labor. This can get expensive if the car is a load. If it is found that the car was crippled on the Pennsy, they eat the cost of repair, plus they may have to cover the cost of lost time for delivery of the car.
There is also another thing here. If the ATSF loads an N&W car with a load going to Boston via the route ATSF-Chicago-PRR-New York-NH, then the N&W doesn’t get any of the revenue for that move because the car never went over the N&W. Only the ATSF, PRR and NH share the revenue.
The N&W would get per diem (a daily payment for the use of the car) from the PRR, ATSF and NH, but not any of the revenue. The 3 roads would tell the N&W when they recieved and delivered the car to account for the per diem, but the N&W would never see the waybill for the loaded move.
This must be an accounting nightmare ! Not to mention trying to keep up with Thousands of individual cars.[banghead]
There was a film by the N&W showing how freight was moved over their line. There is footage, from the early 1950s (i.e. pre-computers), showing the (army of) clerks working through the waybills.
But they did it…
And there is one other issue and that is Interchange locations. The Official Railway equipment Register lists every interchange for each railroad with other railroads so a car shipped on the PRR is handed off to the next railroad at one of those points. It would be senseless for the PRR to hand it off to C&O in DC when it could transport it all the way to Chicago. In fact the railroad may actually have a longer ruote to Chicago then alternate routes but the total mileage is based on the shortest route so it doesn’t enter the equation. For example Pere Marquette goes to Grand Rapids directly from Chicago. The PRR goes to Ft. Wayne and then back to Grand Rapids but the rate is based on the Pere Marquette mileage so the PRR gets more revenue to keep it on PRR rails to Grand Rapids. With computers it is quite easy for the railroads to keep each other informed of cars coming and going and when. Historically there has been more cooperation between non competing railroads then direct competitors.
Well, it used to be an accounting nightmare, but now-a-days, it’s so much easier, because:
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The whole car accounting system is usually automated, with even the smallest Short-Line RR using PC/desk top computers to keep track of car hire, perdiem, demurage and other data.
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The use of ACI transponders on all cars and even locomotives used in interline movements is very useful and timely in reducing the manpower necessary, and increasing the accuracy of car accounting.
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Private contractors offer car accounting services, as well as software for in-house use by various RRs.
I’ve had difficulties in convincing inexperienced Marketing and Financial officials of some RRs and parent company Accountants of the well established RR accounting procedures, but found out after I left the affected roads, that cooler heads prevailed, the “No-Goes” were released and collections were made, as I had urged during my employment.
JWH
And yet still more complicated-- if a train travels over track or infrastructure owned by a city or municipality, they might get a charge by the city. There was a mention of that btw, in the latest issue of classic trains.
John
In the coming years you’ll see less cars lettered for their home roads…I have notice lease companies have entered the boxcar business.
That really doesn’t enter into the car accounting at all, that charge is paid by the railroads and is figured out separately from the per diem, car hire and everything else. In addition there are charges for a train operating over another railroad.