THE LOGISTICS BLOG

Keeping Records Straight: Correct Your Railway Billing Before it Costs You

By Triskele Logistics

How to Avoid Extra Railway Billing Costs

In a perfect world, railway billing mistakes would never occur. Unfortunately, supply chains are not perfect, well-oiled machines free from blunders. Mistakes based on human error or other issues happen and can cost you money.

How to Avoid Extra Railway Billing Costs 

Shipping products by rail requires shippers to have the most accurate and detailed information possible.  If even one piece of information is missing or incorrect, you may be subject to a penalty or your shipment can be delayed. One document that must be perfect is your bill of lading.

A bill of lading is required for every container or railcar on a train because it represents shipping instructions. Shipping instructions can be complicated, but it is your responsibility to submit them correctly.  There are multiple details that must be included in a bill of lading: equipment details (number, size, type); the billable party; shipper's name and address; consignee's name and address; container origin, destination, and routing; load or empty status; net weight; shipping authority; seal numbers; and commodity description also known as STCC (Standard Transportation Commodity Code).  Additional information is required for shipments passing over national borders or containers carrying hazardous materials. Cars without a complete bill of lading at the time of service will be left behind, which results in shipment delays and additional charges.

Knowing the details is especially important when you are billing a new customer or location. Once you have established billing that is valid, it is easy to duplicate the next time. When you have new "business", it is imperative to get the correct information before billing to avoid potentially making errors. To do so may require conversations with your account manager or another contact at the railway (or the consignee) to ensure the track ID, address of the origin and destination, and routing (if there is an interchange with another railway) are correct. Ensuring these are all valid will save both time and money with the correct information.

Last minute changes and corrections can also incur charges for the shipping party prior to movement of a car(s). If invalid shipping instructions are received or a component of the bill of lading is changed, a penalty may be applied. If there is a cancellation before the movement, a penalty could also apply in this case as well. Once the shipment has moved, if there are adjustments at that point, another charge can be billed as a diversion fee. Diversions are costly (the cost varies from one railway to the next) and can be avoided by researching the correct billing in advance. Therefore, it is of the utmost importance to ensure all your information is accurate and correct to avoid unnecessary additional expenses. Failure to pay additional charges or to keep your account up to date can result in the suspension of credit.

Most rail lines prefer electronic transactions and can bill you when they are required to handle a manual transaction that could have been performed online. Even if you like to complete tasks the old-fashioned paper way, it is time to evolve in order to cut down your costs. You can be billed for issuing a bill of lading in a non-electronic format and paying your invoice by cheque, wire, or in another non-electronic form.

Related: Effectively Manage Your Railcar Assets to Reduce Storage Costs

Electronic vs. Paper Billing

Paper billing is a widespread method of shipping and distributing products around the world. Although it has been around for centuries, there are several drawbacks to using paper bill of ladings. First of all, the paper system is expensive. It is estimated this cost is between five to 10% of the value of goods carried each year. Paper bill of ladings only increase your costs. Second, paper and loose leaflets are extremely easy to misplace if not filed immediately. Lost paperwork can cause delays, confusion, and conflict. Lastly, paper bill of ladings can be easily tampered with. If they have, carriers are liable for misdelivery.

Electronic billing, on the other hand, is far more secure than its paper predecessor. It is also instantaneous and lowers the administrative burden of billing departments. Invoices cannot get lost in the mail or delayed by a postal service. Corrections or amendments can also be done much more efficiently and are more cost-effective. The last reason why electronic billing is better is because it is more environmentally friendly, which is a priority that many companies take quite seriously. 

What to do When Railway Billing Goes Wrong   

If you have received an invoice from a rail line that is different than what you expected, you can review the charges with your contact at the railway (account manager or customer service representative). Each rail line is different, so it is imperative to consult with them about their dispute timelines, and talk to the correct department to get resolution. Some rail lines will allow you to dispute the invoice before it has been sent or within 30 days. After a certain time period, though, invoices can no longer be debated, and payment must be made.

Avoid getting billed unnecessary charges due to lack of information, accuracy, or effort. Know your shipping responsibility and what you must provide in your bill of ladings to elude more expenses. Embrace electronic billing, and know the limitations regarding billing disputes. Extra railway costs can be avoided if you are accurate with your paperwork. 

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