Part II of this post will dive into who is performing the repairs, types of repairs and how can the car owner or shipper dispute bills if needed. For discussion purposes we are going to look at a billing repair card on a gondola from February 2025. Some information has been changed to keep the identity of the railroad and agent private.
How can I tell if running repair agent or a railroad employee billed me for this repair? The billing road code will tell you if it was a railroad or a repair agent. For those of us who are more analytical we can simply add up to see if the material cost of the bill is less than 10% of the total bill! This is essentially the crux of the problem with running repair agents as contractors. Running repairs are billed at the prevailing AAR labor rates and unfortunately this is where things can get out of hand. The AAR labor rate is much higher than contract shop rates and is adjusted quarterly. The repair agent has an economical incentive to bill as much as possible in labor. The same agent has an economical incentive to bill as little as possible in material due to the material pricing is controlled by the AAR pricing master and is priced based on the Class One Railroad buying power. For example the chances of a repair agent changing a wheel set is very slim due to the carrying cost of the material. The sample car below had a wheel alert Ex.2 and in theory should have been changed while the car was bad ordered for items below in Ex.1.
SAMPLE AAR Billing Repair Card (Ex.1)
| Account Month | Car Init | Car Number | Billing Road | DS | Rep Party | Repair Date | SPLC ID | LOC | Qty | CC | AJ OB | QA | Narrative | Amount | Material |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | 2 | 1 | 1840 | BRAKE SHOE- COMP, HI... | $57.60 | $15.19 | ||
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | AL | 1 | 8 | 4580 | HAND HOLD OR GRAB... | $48.33 | $15.19 | |
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | AR | 1 | 8 | 4580 | HAND HOLD OR GRAB... | $48.33 | $15.19 | |
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | AR | 1 | 8 | 4800 | HAND HOLD OR GRAB... | $48.33 | $15.19 | |
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | B | 10 | 0 | 4580 | RU | FILLET WELD- TOP CHO.. | $68.30 | $0.00 |
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | BL | 1 | 8 | 4800 | HAND HOLD OR GRAB.. | $48.33 | $15.19 | |
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | BR | 1 | 8 | 4500 | HAND HOLD OR GRAB.. | $48.33 | $15.19 | |
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | L | 18 | 0 | 4800 | QW | FILLET WELD- SIDE PO.. | $122.94 | $0.00 |
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | L | 68 | 0 | 4800 | QY | FILLET WELD- SIDE SH.. | $464.44 | $0.00 |
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | R | 15 | 0 | 4800 | QW | FILLET WELD- SIDE PO.. | $102.45 | $0.00 |
| 25-Feb | EAMX | 400 | A000 | SH | XYZRR | 2/27/25 | 0 | R | 40 | 0 | 4800 | QY | FILLET WELD- SIDE SH.. | $273.20 | $0.00 |
| $1,330.58 | $91.53 |
EHMS Alerts (Ex.2)
The repair agent will only make certain repairs that produce a positive economical outcome and wheel replacements are not a positive outcome for most agents. Repairs that are billed 100% as labor such as welding is a positive outcome for a repair agent. Ex.1 above reflects that issue. Moreover, a billing repair card with excessive welding is a red flag that the repair agent may have not acted properly. Ex.1 above shows 151 inches of welding. Given the opportunity the car owner would probably have preferred to divert the car to a contract shop to have the wheel replaced and welding performed if needed. Billing Repair Cards should be audited in accordance with AAR rules in addition to the percentage that labor and materials equate on a bill. In most cases a billing repair card from a class one railroad such as UP or BNSF will equate to the material costs exceeding 50% of the invoice.
What can a railcar operator do to minimize the issues addressed in this post? Audit the bills and issue exceptions per the AAR rules. It would behoove the railcar operator when possible, in the case of excessive welding to inspect the subject cars after receiving invoices with excessive welding charges and document what they find and address those issues with the running repair agent.
It’s now obvious where “Shakedown Street” is.
