Rule 11 and Rail Routing Set-up in SAP TM
For those of you working with north american shippers using rail the term Rule 11 certainly rings a bell.
In a nutshell it gives the shipper the opportunity to receive a rate and invoice per rail carrier for the part/stages the corresponding carrier is executing, instead of only having access to End-to-End rates by a single carrier.(For those not aware, you can find some online blogs explaining the business background in great detail)
In TM we have a specific function to analyze different routing and payment options for an Origin/Destination pair and present the options to the user in order to support the rail planning process. As the functionality requires some specific set-up, I hope this short guide will come in handy for some of you when facing this requirements in the future.
As a shipper, I want to send one or more railcars from a railway station in Houston to a railway station in Philadelphia. Due to the way the network is operated I will have Carrier 1 executing the transport from Houston to New Orleans and Carrier 2 executing the transport from New Orleans to its destination station in Philadelphia.
- Carrier 1 as single invoicing party based on a through rate from Houston to Philadelphia
- Seperate Invoices from Carrier 1 and Carrier 2 per stage, based on seperate Contracts including rates for their individual parts of the route
For the sake of simplicity, we will not add a 2nd physical routing option(set-up will be the same) and we will not include any No-Pay stages for e.g. shunting going from the shipping point to the first railway station.
Freight Agreements & Rates
In order to come up with valid cost and routing + invoicing options the system will combine the routing above with the rates maintained in your freight agreements. In order to determine a suitable rate for one or more stages of the routing, the system will match location pair based rates(including through rates) with the stages from the default route.
Leading Charge Type: In order to enable the system to determine those combinations in a performance optimized way it is not feasible to have the system go through every single charge type of the calculation sheets and check for fitting location based rates, therefore within a calculation sheet one rate will be set as the leading charge type including those location based rates(ususally something like a base freight rate). This attribute is determined based on the charge type customizing.
In the following step we will set-up 2 simple freight agreements for both carriers.
- On the freight agreement header maintain the basic information about your purchase organization and the corresponding carrier, validity etc.
- Create a new Agreement Item and Add a Calculation Sheet
- In the calculation sheet add a new Single Item and maintain the charge type from step above. In the details you will see that the leading charge type flag is determined.
- In our example we set the calculation resolution base to PASSIVE_RESOURCE, so the charge will be applied per railcar, as our Carload order could of course include multiple railcars and we pay the carriers per railcar.
Important: The leading charge type is not limitted to the 2 location scales. In this example I will add an additional scale for the equipment type, to make the example a bit more realistic.
The leading charge type for Carrier 1 includes 4 rates:
- Houston – Philadelphia(Through Rate) with Railcar Type T106(general service carbon steel tank car)
- Houston – New Orleans with Railcar Type T106
- Houston – Philadelphia(Through Rate) with Railcar Type C112(covered hopper)
- Houston – New Orleans with Railcar Type C112
The leading charge type for Carrier 2 includes 2 rates:
- New Orleans – Philadelphia with Railcar Type T106
- New Olreans – Philadelphia with Railcar Type C112
Make sure to release both of your freight agreements and the included rate tables.
Rail Freight Order
Now that we have spent all this effort in setting up our small rail scenario it is time to reap the benefits.
Create a new rail freight order and maintain the base information required to determine the routing.
- On the General Data Tab maintain your purchase organization(if not determined automatically) and the source and destination location of the order.
- On the Item Tab maintain some railcar information, as we maintained PVR based rates. It does not matter if these Items are local railcars which we will use to load freight units into or if the items are based on railcar unit predecessor documents.
Now click on the Routing Button on the header toolbar of the rail freight order. And check the resulting pop-up.
The system has determined the routing option based on the maintained default route and the responsible executing carriers. In addition it took our agreements into consideration and determined the 2 invoicing options described above. Based on the possible routing and invoicing combinations a detailed charge calculation was performed(given the information available on the FO at that time) for every single option and an exact price was determined.
The user is able to understand the cost impact on either taking the convenience working with a single invoicing party versus invoicing the carriers seperately.
You can select the routing by either clicking on the select icon marked on the left or select a routing line and clicking ok.
As a result: The freight order will be updated with the selected routing and carrier information on the stages tab. And the general data tab will show the applied routing reference and indicate that multiple executing and invoicing carriers are used.
When navigating to the charges tab you will see that the total amount is exactly matching the value from the pop-up and the detail section will give you the information how this was calculated.
Remark: Although the routing does only consider the leading charge type when looking up invoicing options, the cost calculation will consider all charge items from your calculation sheet, like fuel surcharge etc. The single charge line is just used for simplicity reasons in this guide.
Finally when creating the freight settlement for our freight order with multiple invoicing parties, instead of directly navigating to the resulting freight settlement, a pop-up will come up for you to chose for which carrier the settlement should be triggered.