Premium paid to ship chemicals by rail increased by 75% in 5 years
I hear many of our customers complain about rail rates, particularly those whose facilities are served by only one rail carrier. A new survey conducted on behalf of the American Chemistry Council puts these complaints in the spotlight. It makes sense that shipping chemicals by rail might cost a bit more than shipping other goods, but I was shocked at the results of this survey, conducted by Escalation Consultants and using data submitted by the railroads and maintained by the federal government. The report examines rail rates for chemical shipments in 2010 and 2005 and finds the following:
- “The premium paid by chemical and plastic shippers for rates above the railroad’s ratio of 180 percent Revenue to Variable Cost (RVC) exceeded $3.9 billion in 2010 alone – a 75 percent increase from 2005”
- In 2010, “Half of all chemical shipments moved at rates above 240 percent RVC”
- In the same year, “a third of chemical shipments moved at rates above 300 percent RVC”
When you consider that the rates for non-chemical shipments are about 120 percent of RVC, these figures are astounding. OK, I get it, rail rates are something to complain about.
Want to contibute your experience? I would dearly love to know what some of these rates actually are, as the ACC article did not publish them.