Escalation Consultants has been Reducing and Controlling Rail Expenses for over 30 years!

Solutions

Economic Analyses

Escalation Consultants is very close to the rate structure of railroads and how they have changed over time. The following are some projects Escalation Consultants has been involved with:

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  • Escalation Consultants analyzed the rate structure of all US railroads to determine a potential change to railroads' monopoly power over their customers
  • Escalation Consultants has determined the competitive status of all rail stations in the U.S. and Canada to better understand the rate structure at each rail station
  • Maps of each U.S. state and each congressional district have been created to allow companies and politicians to better understand the situation with railroads in areas that are important to them
  • Escalation Consultants has analyzed rail movements for all types of commodities over time to determine the following types of things:
    • The impact of rate changes in markets and the change in traffic flows in markets
    • Breakdown of rail profit for each type of commodity
    • Where rail rate increases have not been good for either the shippers or their carriers
    • Which commodities have the biggest problem and the best opportunities to reduce costs
    • Rates that are reasonable and unreasonable in markets

Macro Benchmarking

Understanding how your rates change in relation to your competitors is important for you to know. Escalation Consultants' macro systems benchmark all your movements so you know what reasonable rates are for all your traffic. The difference from benchmark rates on each movement are summarized to show which railroads and locations have the biggest difference from benchmark rates and the best possibility for rate reductions. Our benchmarks are designed to ensure you get reasonable rates for your movements.

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Macro Benchmark Rate Summary

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Benchmark Each Market

Know whether your rates put you at a competitive advantage or disadvantage in your markets. The more you know about your markets the more you know how to cut your costs in your markets.

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Opportunities open up when you know competitors' rates before you negotiate your rates. a global view of your markets shows your opportunities to help yourself, your railroads and sometimes even competitors. Our objective is for clients to view our services as a source of profits and not an expense, so we are results oriented.


Optimized Rail Bid Evaluation

An optimized rail bid evaluation is designed to reduce your rate structure by 5% to 20%. The objective of an optimized bid evaluation is to:

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  • Show how lower rates are better than higher rates for a railroad
  • Provide direction on the rate levels a railroad needs to provide.

Escalation Consultants reduces your rail expenses by finding hidden win/win opportunities with your railroads. Our macro systems determine:

  • Where lower rates are advantageous for both you and your railroad
  • When hidden arbitrage opportunities exist on Rule 11 Movements
  • When rates exceed an effective ceiling price
  • Minimum volume requirements that are and are not reasonable
  • The best bundle of movements for each railroad
  • The best way of optimizing your Rule 11 rates through multiple gateways to cut rail expense

Negotiation Assistance

If you don't have major rail negotiations every day you need to benefit from someone who does. Your railroads are always negotiating rates. Even the playing field by increasing your leverage with Escalation Consultants' rail negotiation assistance.

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Escalation Consultants rail practice is focused on reducing shippers rail expenses by increasing their leverage in rail negotiations. Our databases and services are used extensively by large and small rail shippers throughout the U.S. to support their rail negotiations.

Escalation Consultants assists and participates in many rail negotiations and has become a sounding board for what is working and not working in rail negotiations for a very large number of companies.

Benefit from Escalation Consultants experience through a process that is designed to reduce your rail expenses.


Strategic Planning

Strategic Planning is the key to obtaining the leverage you need to reduce your rail expenses. The purpose of strategic planning is to determine your best options for obtaining a more competitive rate structure for your rail movements. Escalation Consultants programs will expand your thinking on ways to interact and negotiate with railroads in order to obtain the leverage you need to reduce the rates for your movements.

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Some of the largest rail shippers in the U.S. have utilized Escalation Consultants' Strategic Planning to better control rail expenses.

Escalation Consultants' strategic planning provides the following type of information to raise your learning curve on what is occurring in the marketplace that can impact your rail negotiations:

  • Market intelligence on your railroads;
  • Market intelligence on your commodities;
  • Rates you compete against in the market place; and,
  • Proper rates for major movements

To help ensure an effective rail negotiation strategy Escalation Consultants covers the following types of issues:

Things to consider in order to deal more effectively with railroads

  • Being proactive and not reactive with railroads and rail rates
  • Sources of leverage which have little to do with the competition or the parameters of your movements
  • Making your movements more important to railroads

Developing your position for obtaining a more competitive rate structure

  • Determining your importance to your railroads
  • Using your competitors' rates and rate increases to help control your rates

Structuring rail negotiations to deal more effectively with large rate increases.

Negotiation strategies that have and have not worked for other shippers. Escalation Consultants rail strategic planning is designed to enable you to make better decisions on the best way to reduce your rail expenses.

Results of Railroad Negotiations

Captive Movements Reduced $2.50/Ton:

Showed the impact of the current rate structure on volumes and competition in the marketplace.

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Result:

  • Rates reduced $2.50 to $3.00 per ton.
  • This is the first time this company has ever received a rate reduction from railroad on captive movements.

Rates at Captive Plant Reduced 40% in Client's Major Market

Determined the cost of importing the client's product to a tank farm and demonstrated that this business would never touch the railroads system.

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Result:

  • Reduced rates for a captive plant that was the only producer of this product on the railroad's system.
  • Signed long-term contract with more than a 40% reduction in rates.

Eliminated Fuel Surcharge

Provided rates needed for the railroad to obtain clients competitive business

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Result:

  • The railroad captured the competitive traffic by providing competitive rates and discontinuing its fuel surcharge.
  • Amounted to more than a 20% reduction from current rail costs.

Rate Increase Pulled Back on Captive Movements

Railroad proposed a large rate increase on captive movements which already had high rates.

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Result:

  • Railroad pulled back its rate increase and signed a multi year contract.

Railroad Increased the Fuel Surcharge Strike Price with No Increase in Rates

An analysis of the profit structure for all of the company's movements on each railroad was performed to show a railroad, whose contracts were expiring, that it was pricing its movements above its competitors on captive and competitive movements.

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Result:

  • The railroad increased the strike price for fuel surcharges without increasing the rates for movements.
  • This substantially reduced the current rail costs for movements.

Captive Movements Reduced. But Not Enough

Showed the railroad that it was putting movements, at a captive plant, at a competitive disadvantage.

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Result:

  • Railroad came back with lower rates, but the transportation cost savings at a new plant were so great that the new plant was built anyway.
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