In the world of railroad transportation, there’s more to shipping than simply moving freight from Point A to Point B. Behind the scenes, billing rules shape how costs are calculated, carriers are selected, and supply chain strategies are executed. Two of the most impactful are Rule 11 and Railroad Interline Agreements.
If you're looking for ways to gain more control over your rail spend and routing decisions, or if conversely, you are more concerned with simplicity, a comparison of Rule 11 and Railroad Interline Agreements is a great place to start.
What is Rule 11?
Rule 11 is a billing regulation used in rail freight transportation that allows shippers to contract separately with each rail carrier involved in a multi-carrier move. Unlike traditional interline billing where one carrier handles pricing and billing for the entire route, Rule 11 gives the shipper the power to negotiate and manage rates directly with each participating railroad.
This rule dates back to legacy rail practices but remains a valuable tool for today’s logistics professionals navigating complex rail networks and pricing structures.
How Rule 11 works
The best way to explain how Rule 11 works is using an example. Let’s say you’re moving freight from Los Angeles to New York. This move may require both a western railroad (like the BNSF or UP) and an eastern rail carrier (like CSX or NS). With Rule 11 as a shipper, you would:
- Negotiate and agree on pricing with the western carrier for the first segment of the route.
- Separately contract with the eastern carrier for the remaining portion.
Each railroad bills you independently for its segment, and you’re responsible for coordinating the entire move to ensure handoffs happen smoothly between carriers.
Benefits of Rule 11
For the right situation, Rule 11 can offer a number of benefits.
Cost control
Rule 11 allows shippers to bypass bundled or “through” pricing that may include markups or lack transparency. By negotiating rates directly with each rail carrier, shippers can potentially lower overall transportation costs.
Routing flexibility
Shippers aren’t locked into a single carrier’s interline agreements. You can customize your route to fit service expectations, capacity needs and cost targets.
Carrier independence
In volatile market conditions, Rule 11 gives shippers the flexibility to shift parts of the route to alternate railroads without renegotiating an entire end-to-end contract.
Challenges of Rule 11
With all its benefits, Rule 11 isn’t a fit for everyone. Here are a few challenges to consider:
Administrative complexity
Managing multiple contracts, invoices, and service schedules requires more resources and precision - something that could prove especially difficult for smaller businesses.
Coordination burden
The shipper takes on responsibility for making sure railcars are handed off correctly between carriers, potentially involving more parties and requiring greater attention.
Limited use for smaller shippers
Without significant volume or leverage, smaller shippers often face difficulties negotiating favorable rates with multiple carriers. The good news is, this can be overcome by working with an IMC (intermodal marketing company).
When should you use Rule 11?
Rule 11 makes the most sense when:
- You have a high-volume or recurring lane that involves multiple carriers.
- You’re aiming to optimize rail spend by working with regional railroads or shortlines.
- Your current interline solution isn’t meeting service or pricing expectations.
- You want direct accountability with each rail partner involved in your supply chain.
What is a Railroad Interline Agreement?
A railroad interline agreement is a contractual arrangement between two or more railroads that allows them to jointly transport freight over a route that crosses each of their respective networks.
Key features of an Interline Agreement:
Coordination of freight movement
The agreement enables a shipment to move seamlessly across multiple railroad carriers’ lines, as if it were being moved by a single railroad.
Revenue sharing
The involved railroads agree on how to split revenue based on the portion of the route each handles.
Operational cooperation
The agreement typically includes arrangements for interchange points (where one railroad hands off the freight to another) and may outline service standards, tracking responsibilities, and liability.
Why It Matters:
- Interline agreements are essential in North America, where no single railroad has a nationwide network.
- They enable long-haul shipments across multiple regions or coasts, making rail competitive with trucks for certain lanes.
Example:
A shipment originating in Chicago on Union Pacific and destined for New Jersey on Norfolk Southern would move under an interline agreement between the two carriers, ensuring a unified routing, pricing, and handoff process.
Rule 11 vs. Interline Comparison
Comparing Rule 11 versus Rail Interline Agreement scenarios for the shipper shows clear strengths for each:
|
Feature |
Rule 11 |
Interline Pricing |
|
Billing |
Separate bills for each carrier |
Single bill for full route |
|
Rate Control |
High – negotiate directly |
Low – depends on lead carrier |
|
Administrative Burden |
Higher |
Lower |
|
Routing Flexibility |
High |
Limited |
|
Carrier Coordination |
Shipper-managed |
Carrier-managed |
The trick to maximizing the benefits of both options lies in using an IMC partner.
How InTek helps shippers benefit most from Rule 11
Managing Rule 11 shipments effectively requires expertise in rail operations, carrier relationships, and TMS capabilities. That’s where an IMC like InTek Intermodal Logistics comes into play for road plus rail shippers.
With our understanding of rail networks and strong partnerships with Class 1 railroads and regional carriers alike, we help:
- Design optimal Rule 11 routes for your freight.
- Negotiate favorable contracts across each segment.
- Handle billing, coordination, and issue resolution so you don’t have to.
Our transportation management system (TMS) is built to support complex rail billing scenarios, including Rule 11, giving you visibility and control without the administrative headache.
Making Rule 11 work for you
Rule 11 is more than just a billing mechanism, it’s a strategic tool for rail shippers looking to take control of their transportation costs and routing decisions. But like any tool, it needs to be used wisely.
When applied in the right situations and supported by the right logistics partner it can be a powerful way to optimize performance across your supply chain. In fact, working with InTek can get you the best of both worlds - the flexibility offered by Rule 11 with the simplicity for you the shipper that an interline agreement provides.
Curious if Rule 11 could benefit your rail strategy? Contact us to explore how we can help you unlock smarter, more efficient rail solutions.
For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides. And for more insights on intermodal logistics, subscribe to the Intermodal Logistics Podcast.
