A leader in paper and paperboard recycling, with production plants in Canada and 80+ destinations throughout North America, was looking for rail commercial market expertise to help them maximize the outcome of their master rail contract renewals. With a tumultuous transportation market and railroads signaling significant price increases, this market leader wanted to optimize its rail logistics strategy, maintain its market position, and support future growth plans.
PLG Consulting’s team of experts provided the client with intelligence on current rail commercial market conditions, strategic guidance, and support that tied together the client’s rail-related initiatives, positioning them to maximize the outcome of their rail contract renewals. PLG was an integral part in helping the client both in the preparation and ongoing support through the client’s negotiations with the railroads.
Services Provided
The client services included:
- Overview of the current rail market conditions to help prepare for negotiations
- Comprehensive analysis of the client’s portfolio of business including:
- Total freight spend ($) including the addition of a new plant coming online in 2022
- Understanding the inbound and outbound flows and the pros and cons of competitiveness for the client
- Analysis of rail and truck data to identify opportunities for modal shift
- Review of rail contracts and rail rate analysis to establish competitive targets for renewal
- Consulted with the client’s logistics teams on the ways to move from a transactional nature to a ‘partnership’ relationship with the railroads
- Helped the client to understand how railroads think, their motivations, and the importance of developing a mutual partnership with a critical service provider
- Best practices on the interaction with the client’s logistics team and the railroads to achieve best results for daily rate requests to renewals
- Developed a renewal strategy to maximize results and minimize price increases
- PLG engaged the railroads and provide guidance to the client on how to best position themselves with each of them
Results
Through PLG’s guidance and experience, the client was able to:
- Realize a net increase of <2%, well below the average market rate increases, despite market volatility and lack of competitive options on much of their business
- Secure competitive rail rates for a 3-year period for a critical new plant starting in 2022
- Position themselves strategically with critical rail service providers, helping improve their future negotiations via a partnership focus
