Cost increases coming soon for rail shipment tracking data?
Most Class I railroads have a practice of providing shipment tracking data such as CLM (car location messages) and waybills (EDI 417 format) to those directly involved in rail shipping for no charge. The practice of doing the same for third parties (VANs – value added networks, on-demand software vendors) seemed to be same, but the policy of providing them for no charge was not as clear (at least to me). Recently, data provided to third parties has come under more scrutiny with charges being levied by at least one Class I and possibly more to follow. This change in practice may cause prices for many systems that rely on this data to rise. In this article, I am going to outline how this might affect you and what you can do to minimize its impact.
First of all, let’s clarify what is considered directly involved in rail shipping? If you are party to the waybill (sometimes referred to as PTW) you are considered directly involved. So if you are listed as a shipper, consignee, or freight payer, Class I railroads consider you party to the waybill. My understanding has been that those companies that were party to the waybill would not be charged for data as long as it went directly to them. If the data was sent initially to a third party and then sent to them, the third party could be charged… but often was not.
So how might you be affected?
If you get data from a third party, you may experience increased data costs. What are the options?
- Contact your existing third party and inquire if they have recently contacted the railroads and are confident of their costs. If you are going to need this data long term, see if you can get a price lock for at least a year if you don’t have one already.
- Shop around. Check with other third party data providers to see if they are less expensive. Be sure to check that they have recently contacted the railroads and have a clear understanding of their relationship and the related charges before making a switch. Contact me for a list of third party data providers. The sponsorof this blog is one.
- Get the data directly from the railroads. Refer to this articlefor specific instructions on how to request waybill data from the railroads (if you need CLM data, just add that to the request). The article will also help you gauge whether this is an appropriate choice for your company. You can establish this direct data feed and then test it against the data you are getting from the third party. When you are confident that it is accurate and complete, then turn off the third party data feed. If you find this process time consuming and difficult, you are not alone. The up front effort can be significant, but usually once the data feed is established, much less time and effort is required. If you don’t have time or feel technically inadequate to take this on, hire a consultant to help.
- Try a mixed approach. Get the data directly from just a few railroads that handle most of your traffic. Then get the rest from a third party. Note, there are some third parties that have the ability to set the data feed to get data from virtually all of the railroads (over 530) in North America except the ones that you are getting data directly from.
A word from the sponsor
If you would like assistance getting data directly from the railroads, contact Railcar Tracking Company, which offers expertise, on-premise and hybrid solutions that make it much easier to acquire data directly from railroads.
If you are a user of an on-demand (i.e. hosted by a third party) rail shipment tracking system, you may be seeing price increases in the near future. Call your vendor and ask them if they have contacted the railroads recently and if they expect prices to increase due to charges levied by the railroads. If you determine that prices are going to increase, explore these things:
- Shop around. Check with other on-demand systems to see how their prices compare. Be sure that they have contacted the railroads recently are confident of their cost structure. Consider at least a one-year price lock.
- Ask the vendor if the system can be installed on-premise(i.e. your own computers) and if they will support it that way. The system will need to have a way of connecting directly to the railroads and third party data providers otherwise there is no reason to even consider this. You will need to consider the trade offs of supporting software on-premise vs. increased costs of the on-demand system.
- Install the system on a private cloud that is purchased (usually a monthly subscription) by your company, but accessible by the software vendor as well, so it is isolated and easier to support and update. The data will still need to go directly to this system from the railroads. This is a hybrid of on-premise and on-demand.
- Consider systems that have the ability to install on-premise or on a private cloud and can get data directly from the railroads and third parties (if needed). The sponsor of this blog offers such a system.
I hope you have found this article useful by alerting you to something that deserves further investigation and by providing you with options if it turns out that you will be affected. I will keep this article updated as more information becomes available. If you have information to share, please comment!
All the best,