Do Not Read: If You Want the "Truth" About Rail Pricing

Class 1 railroads say they want growth, innovation, and more freight on rail. But too often, their own pricing practices decide who gets to compete before the market ever has a chance.

I have seen both sides of it.

When you represent a large shipper with volume, influence, and long-standing relationships, the process tends to be more flexible. Class 1 railroads are more accommodating. They are willing to work with you because the business matters to them.

But when you are working with a smaller or newer company trying to enter the rail space, it is a completely different experience. These are the companies trying to grow, improve margins, and bring new freight into the market. They should be the kind of customers Class 1 railroads want to support. Instead, they often receive rates so far out of the market that they are shut out before they can even compete.

That means the Class 1 is not just providing transportation. It is effectively deciding who wins and who loses.

That is the real issue.

A "free market" is supposed to reward better service, better products, and smarter business models. But if transportation pricing is structured in a way that blocks newer entrants, then competition is limited before it can even begin. Innovation is discouraged. Market growth is restricted. And then the same industry turns around and asks why freight is moving to truck or why rail volume is down.

The answer is not that hard to find. Rail is often too difficult to access, too slow to price, and too relationship-driven to support new business.

Here is a real example.

I have a new customer trying to enter the industrial chemical market by rail, shipping from down South to the East Coast. They are small today, but they want to grow. The product margins are not huge, so transportation has to be competitive, ideally at or below truck, for the business to work.

We were quoted rates that were roughly 40% to 70% higher than what established shippers were paying on the same lane for the same product, forcing you into a long, drawn-out negotiation just to get into a competitive range.  At that level, the product was not just uncompetitive with truck, it was effectively priced out before it even had a chance.

At the same time, the supplier shared what their own freight rate looked like. That rate was materially 30% lower, what we had negotiated. My customer, being new to rail, believed they could move under that arrangement. They shipped in January and February.

Then the freight bills started arriving.

Instead of the expected lower rate, the bills came in at nearly double per car. This happened because the contract rate could not be applied the way it was assumed, and we did not publish our own negotiated rates based on the understanding that we could move under the shipper’s contract.

In reality, the shipper and the payer of freight must be the same party tied to the contract.

For experienced rail professionals, that may seem obvious. For a brand new customer, it was not.

And the result was a costly mistake.

Since then, we have been trying to work through it with the Class 1's. One has been relatively reasonable. The other has been difficult, slow, and inflexible.

That is part of the bigger problem. The system is too cumbersome.

If you are a large customer with established contacts, you call your person and get a quote. If you are new, you go into a portal, submit a request, and wait anywhere from a few days to several weeks. The first quote you get is often far above market. Then begins the exhausting process of trying to negotiate it down.

And that negotiation process does not feel like a modern, transparent business transaction. It feels like sitting at a used car lot, where the salesperson writes a number on a piece of paper, disappears to “talk to their manager,” and comes back with something slightly different. At the same time, it carries the confusion of dealing with health insurance, where you are never quite sure how the final number was calculated, why it changed, or what rules are actually driving it.

You are left guessing. You are left waiting. And most importantly, your customer is left without answers.

Meanwhile, the customer is unable to plan, unable to price, and unable to compete.

I recently priced another move totaling 523 miles. One Class 1 railroad handled most of the distance at a reasonable rate, while another priced a much shorter portion of the move significantly higher than the one moving more miles.

--How do you explain that to a customer who is new to rail?

--How do you tell them this is a rational system?

--How do you ask them to trust a mode of transportation that seems impossible to understand and even harder to access?

Then come the volume commitments. A Class 1 may offer to reduce the rate if the customer commits to future volume. But a new entrant often cannot make that promise yet. They need a competitive rate first so they can test the market, build volume, and prove the business case. Instead, they are asked to guarantee success before they are even allowed to try.

That is backwards.

One to fifty cars will not make or break a Class I. But those same one to fifty cars might be the start of a new customer, a new lane, or a new long-term market. Those are exactly the opportunities that should be nurtured, not priced out of existence.

And when they are priced out, the freight often goes to truck or to transload strategies designed to avoid rail complexity altogether. Then the industry wonders why rail is losing relevance in certain markets.

This is 2026!

--It should not take three weeks to get a freight quote.

--It should not require personal relationships, endless follow-up, or begging for a price that gives a customer a chance to compete.

Class 1's could make this easier. 

They could simplify access, improve transparency, speed up pricing, and support smaller entrants without putting their entire network at risk.

In fact, they might even lower their own costs by doing so. A more transparent and efficient commercial process could reduce overhead, reduce manual sales effort, and make rail easier to buy.

The current system does not just frustrate customers. It limits competition, discourages growth, and pushes freight away from rail.

If Class 1 railroads truly want more volume, better customer relationships, and a stronger future, they need to stop deciding winners and losers behind the scenes and start making the market easier to enter.

Because when access to rail depends more on relationships than on opportunity, that is not a competitive market.

It is a closed loop!

The system is not easy to navigate.
But that does not mean it cannot be navigated.

At RailCore Consulting, we help companies understand the rules, challenge the barriers, and find ways to compete.

If you are ready to approach rail differently, let’s connect.