Service level and penalty

[faraway]

Do US railroads guarantee service levels to it's freight customers and do they have to pay penalties if they miss them?
I think customers may depend on delivery on time to get their production up and running without huge locals stocks to buffer delayed inbound freight (just in time manufacturing). A delayed freight train would be a little disaster if the productions runs out of supply. I assume the freight contracts will exclude liabilities for consequential damage but a steep penalty clause sounds reasonable to me.

[railohio]

Depends on the contract. Customers can specify such penalties but they'll pay more up front for guaranteed service. Most, however, don't. UPS is the largest and most widely known but other LTL truck firms make use of guaranteed service, too.

[faraway]

Depends on the contract. Customers can specify such penalties but they'll pay more up front for guaranteed service. Most, however, don't. UPS is the largest and most widely known but other LTL truck firms make use of guaranteed service, too.

Thank you. Looks like it is a similar procedure as in my industry.

[lajry]

Reinhard
Better have your trainmen (YOU) "turning & burning" to keep the customers happy!

[jwb]

In the past, SP ran special locals from West Colton to Gemco (Van Nuys) with one or two cars if a lack of the parts in them would shut down the GM auto plant there. However, this level of service would be for the very largest and most influential customers. My family knew the former AVP Traffic who was responsible for the GM business, and GM gave him a brand new Cadillac when he retired -- a sign of how important that business was to SP.

[Bob C]

NS (and predecessor Conrail) took great care of some special clients. We ran "Plant-Shutdown" trains of critical parts & supplies both east and west on "Special" movements through Pittsburgh, stored loads of "on-time-inventory" loads of freight in yards (acting as a rolling warehousing) for movement to Blue-Chip Business customers, again often on dedicated special trains. UPS Intermodal was the utmost Priority Customer, particularly during the (~3 month) Christmas Holiday shipping season. Some trains were mostly or only UPS - and would be held (for hours, if necessary) not to leave before UPS trailers could be delivered/loaded at the Intermodal terminal. Such service is not common, but (IMHO) likely depends on the type of freight andf the needs and compensation paid by special customers...much of this activity "enforced" by performance penalties in the contracts with the shippers. We did also guarantee coal deliveries (unit-train service) to some power plants, with non-performance penalties, due to inventory constraints and producer contracts - so not just 'finished goods' shipments. Bob C.