The Client, a world-leading chemical producer supplying products to large industrial customers, owns a major producing facility that is captive to a single railroad. The challenge was to develop and execute a rail freight negotiations strategy that would enable the Client to supply their market in a competitive manner while delivering top quartile results.
The Client’s cross-functional business team, with limited commercial and operational rail experience, selected PLG Consulting to help develop a strategic roadmap for its upcoming rail freight negotiations with all Class I railroads to achieve cost-savings, eliminate risk in delivering customer product, and improve their competitive market position. Leveraging PLG Consulting’s extensive years of rail industry experience and broad chemical industry knowledge, the Client engaged our team of experts to provide a strategy for successful rail freight negotiations including advice and counsel to its internal team.
Services Provided
The client services included:
- Developed a comprehensive commercial rail freight strategy, including leverage points, risk matrix/analyses/risk mitigations, detailed tactical execution steps, talking points, communications strategy, and timeline to provide a roadmap to achieve the best possible results in negotiations with all Class I railroads.
- Developed and conducted a series of half-day workshops with the client’s cross-functional business team to review the draft strategy, educate staff, and involve them in the completion of the commercial rail freight strategy.
- Conducted weekly review meetings between workshops to further refine details of the overall strategy.
- Finalized the comprehensive rail freight strategy and provided materials for internal
senior management review and approval. - Provided ongoing advice/counsel to the cross-functional team and negotiating team from the beginning to the end of the contract negotiations. This included:
- Planning and preparation for each railroad negotiations meeting,
- Providing recommendations for RFP/negotiations meeting responses, and
- Adjusting direction as negotiations progressed.
Results
Through PLG’s collaboration with the Client’s team, we were able to:
- Deliver an estimated 3-year savings of $49M based upon the results of their successful rail freight contract.
- Significantly improve the level of knowledge of the Client’s cross-functional business team – many with little to no previous commercial and operational rail experience – due to their collaborative involvement and engagement.
- Enhance the Client's competitive position via content and reference materials provided to the Client team with tools, talking points, and leverage points used during their negotiations with the railroads. This valuable information can be shared and utilized by the Client in future negotiations.
