Custom Solution Saves $1 Million Annually

As one of the largest distributors in the foodservice industry, the customer relied heavily on rail transportation to move high-volume commodities and ingredients through its supply chain network. Increasing rail congestion, inconsistent car cycle times, and inefficient unloading processes were creating significant demurrage exposure and driving up transportation costs.

The customer recognized that continuing under the existing rail agreement would lead to ongoing financial risk and operational disruption. The company sought a partner that could not only analyze the issue but also implement operational improvements and deliver measurable cost savings before finalizing a new rail contract.

Watco logistics specialists performed an on-site review of rail operations, workflows, unloading schedules, and railroad coordination processes.

Through detailed analysis, the team identified several contributing factors to the excessive demurrage charges, including:

• Inefficient unloading workflows and scheduling gaps
• Limited communication between facility operations and the railroad
• Delays in railcar release and turnover
• Misalignment between railroad service schedules and customer operational capacity

Watco developed a data-driven action plan designed to improve railcar fluidity, reduce congestion, and create greater accountability among all stakeholders. The team also represented the customer directly in discussions with the Class I railroad, presenting operational findings and negotiating improved contract terms on the customer’s behalf. Key elements of the solution included:

• Operational workflow improvements to accelerate unloading and railcar release
• Enhanced coordination and communication protocols with the railroad
• Process improvements that reduced rail dwell and improved network efficiency
• Advocating on their behalf during contract negotiations with the Class I railroad
• Securing an additional free day before demurrage charges began accruing
• Development of a long-term operating strategy aligned with the customer’s supply chain demands

Key outcomes included:

• $1 million in total annual transportation savings
• $400,000 of that in annual savings from negotiated demurrage relief
• Improved railcar velocity and reduced terminal congestion
• Greater operational efficiency across the customer’s receiving and unloading processes
• A new rail agreement with more favorable commercial terms
• Improved collaboration between the customer and the Class I railroad

For the railroad, the solution also improved network fluidity and reduced congestion while strengthening a valuable customer relationship.