Car hire is almost as old and complex as the rail industry itself. This complexity did not arise overnight. It is the result of a multitude of changes made to accommodate business needs and capabilities over the years. Understanding this history makes some of the complexity easier to understand. In this video, you'll see the basic data flow that car accounting information follows. The data flow is referenced in each of the Car Hire training videos so that the relationship of each phase to the whole process can be understood. You will learn about the definition of Car Hire, a brief history of Car Hire, types of equipment in Car Hire, and documents that govern each type of Car Hire, the committee structure responsible for Car Hire rules, the roles of TTX and Railinc, and selected descriptions of Railinc CarHire applications. This is a high-level graphical representation of the way information flows through the car accounting systems. Car owners and car users are engaged in an ongoing process of negotiating CarHire rates. These rates are used when CarHire is calculated. Movement events, haulage information, and information on damaged and defective cars are sent to the Event Repository at RAL Inc. The Liability Continuity System analyzes the information in the Event Repository to create interchange and transfer of liability information that must be used to calculate car hire liability. Carriers calculate the car hire owed to each car owner and report this information through the Car Hire Data Exchange File, or CHDX. CHDX information is used by the Railroad Clearinghouse, or RCH, to settle the funds due to and from the car owners and users. Each step of this process is covered in more detail in the videos that are part of the Car Hire Training Series. Car hire is a rental fee paid by the user of rail equipment to the owner of the equipment. Car hire is intended to provide income to equipment owner and to encourage good equipment utilization. As changes to processes are considered and discussed, it is important to keep the purpose of car hire in mind. The history of car hire is almost as long as the history of the rail industry. Prior to 1886, the calculation of car hire was very simple. Car hire did not exist. Numerous track gauges, the distance between the two rails, were in use. It was physically impossible to interchange cars between two railroads using different track gauges. Consequently, when cargo needed to be exchanged between carriers, the cargo was moved from one railcar to another railcar owned by the next carrier in the route. In 1886, a standard track gauge of 4 feet 8.5 inches was adopted. This adoption allowed railcars to be interchanged between carriers. Railroads started using other carriers'cars for free storage almost immediately. In order to encourage the return of empty cars, railroads were required to return one empty car for every loaded car received in interchange. As might be imagined, this plan slowed traffic and was scrapped. In 1887, the Association of Car Accountants was formed. Car hire rates were 15 cents per day and a half to three-fourths cents per mile. The plan for paying car owners was deemed to involve too much work and was scrapped. In the 1890s, the idea of paying the owner of a rail car for its usage was revisited. The Interstate Commerce Commission established car hire rates of 20 cents per day. In 1902, the Committee of Mileage and Per Diem was created. This was a predecessor to today's Equipment Assets Committee. Several of the existing car hire rules that allow relief from car hire were adopted, including Car Hire Rule 5, which allowed relief for cars handled in switching service, Car hire rule 7, which allowed relief for damaged cars, and car hire rule 8, which allowed relief for defective cars. For most of the industry's history, the interchange of cars meant that representatives from the involved carriers had to physically meet and exchange documents. Interchange documents were seven-part carbon forms that defined the cars to be interchanged. The agents signed the forms and two copies were sent to car accounting. One of these copies was cut into strips and pasted into record books to document the movement of the car. The second car accounting copy of the interchange report was used to manually calculate the car hire owed to the car owner. As might be imagined, this was a labor-intensive process. In the early 20th century, railroad efficiency improved. Between 1904 and 1906, the average distance traveled by a rail car increased from 24 miles per day to 25.7 miles per day. Car hire rates increased also. The daily car hire rate increased from 25 cents to 50 cents. In 1979, the existing system of calculating car hire based on hours instead of days was adopted. This change was significant. Without modern computer technology, a change of this magnitude could not be contemplated. Since the earliest days of car hire, rates were set by the ICC, but these rates did not respond to market conditions well. In 1993, in response to this inflexibility, the industry with the ICC's approval adopted a process that allows car owners and users to negotiate car hire rates. The process was referred to deprescription because prior to 1993, car hire rates were prescribed. During a 10-year implementation period, a car owner could deprescribe up to 10% of its fleet. In 1994, reclaims under Car Hire Rule 5 and 15 were replaced with Transfer of Liability, also known as TOL. A TOL is an electronic message that moves the responsibility for car hire to a carrier that does not have physical possession of the railcar. Car hire rates are considered to be extremely confidential and proprietary. Filing documents that showed the hours and rates subject to reclaim would disclose the highly confidential deprescribed rates. The TOL allowed liability to be transferred electronically without revealing the deprescribed car hire rate. As the industry moved into the 21st century, automation continued. In 1999, the liability continuity system was implemented. In 2003, deprescription was fully implemented. In 2008, the settlement of car hire funds through the railroad clearinghouse was implemented. In 2011, reclaims under car hire rules 7 and 8 were eliminated in favor of car hire being handled through the Damaged and Defective Car Tracking System, known as DDCT. In 2013, Reclaim for Empty Cars Moved under Revenue Billing was converted to a Transfer of Liability known as TOL. Railinc identifies the time subject to TOL by analyzing way bill and car movement information. In 2018, the Serving Area Table was introduced to simplify the calculation and audit of Rule 22 Reclaims. The Equipment Assets Committee continues to look for ways to process car hire more efficiently and more accurately. Further automation and centralization of car accounting functions are anticipated. Next, let's look at the different types of equipment and car hire. This is important because not all rail cars are equal. Some are owned by railroads and some are privately owned. For a variety of reasons, railroad-owned and privately owned cars are handled differently for car accounting purposes. The initial stenciled on the side of the car governs how car hire is handled. Railroad car hire is paid on cars with railroad reporting marks like AGR, BNSF, CSXT, and NS. Railroad car hire may have as many as three components. Car hire can be paid based on the amount of time a user has possession of a car. Car hire can be paid based on the distance a car travels while in possession of a user, and cars used to haul finished automobiles have racks or appurtenances attached to facilitate the loading of the vehicles and to protect the automobiles from damage. The appurtenances earn hourly car hire in addition to car hire paid for the flat car. A railroad marked car may earn any one or all three of these types of car hire. Another general category of railcar is the private railcar. Private railcars are stenciled with marks other than a railroad mark. The marks always end in X. For example, ADMX, GATX, and UTLX are private car marks. Private cars earn car hire based on the loaded miles traveled. Private cars do not earn hourly car hire. Car hire on railroad marked cars is governed by AAR circular OT10, the Code of Car Hire Rules and Interpretations Freight. This circular is published on the Railinc website at railinc.com. The direct URL to the OT10 circular is shown at the bottom. Private car hire is paid on cars with private reporting marks. Remember that car hire is governed by the initials stenciled on the side of the car. Private car initials are almost always four letters and end in X. ADMX, GATX, and UTLX are examples. Private car hire is always based on the loaded distance traveled on a user's line. There is no time component and there is no appurtenance component. Private car hire is prescribed by Tariff RIC 6007. The tariff is also available on railinc.com. For questions regarding private car hire, contact us at 877-RAIL-INC. Next, let's look at the governance structures responsible for the car hire rules. Car hire rules are governed by rail industry committees. The AAR Board of Directors is composed of the chief executive officers of the AAR member carriers. Two senior management committees answer to the AAR Board of Directors. The Policy and Advocacy Management Committee, PAMC, consists of legal and policy representatives. The Safety and Operations Management Committee, SAMC, consists of chief operating officers. These two committees work to create and prioritize the AAR agenda and provide direction to subordinate committees. Car hire rules are the responsibility of the Equipment Assets Committee known as EAC. EAC is subordinate to SAMHSA through the Operations Committee. The SAMHSA organizational chart shows the many committees that are subordinate to SAMHSA. Subcommittees do the majority of the heavy lifting in the committee structure. A parent committee assigns a subcommittee the task of reviewing a situation, formulating a solution, and presenting that solution to the parent committee for further action. Two types of subcommittees may be created by AAR committees. These are task forces and technical advisory groups known as TAGs. Task forces can be created by the parent committee. Task forces manage part of the parent committee's area of responsibility. For example, the EAC has three task forces to handle the main parts of the EAC responsibility. Task forces may exist for an extended period of time. Task forces routinely exist and meet for many years. Tags are the second type of subcommittee. Tags can be created by the parent committee or by a task force. A tag should respond to a single technical question. Tags typically exist only for a limited period of time. Once the single issue has been addressed, the tag should be disbanded. EAC has three task forces that deal with the committee's main area of responsibility. The Car Hire Calculation Task Force deals with issues related to the car hire rules and to the processing of car accounting data. The Car Service Task Force deals with issues related to the car service rules. Car service rules govern the handling of empty railroad marked cars. The Car Hire Rates Processes and Procedures Task Force deals with issues related to the process of negotiating car hire rates. It's important to understand that specific car hire rates and specific negotiation are never discussed. The committee deals with a process that facilitates the negotiations and the implementation of the results of the negotiations. The EAC also has a tag that is currently working on EOT issues. The EOT Automation tag works to streamline and centralize the business processes around end-of-train devices. Other task force and tags are formed by the committee chair as needed. It should be noted that formation of subcommittees and the selection of the subcommittee membership is the responsibility of the committee chair. If you want to join one of the subcommittees, contact us at 877-RAIL-INC or csc at railinc.com and we will put you in touch with the committee chair. Next, let's look at a couple of the companies with unique roles in the rail industry. TTX is a major supplier of intermodal flats, vehicle flats, and boxcars. TTX is a private company owned primarily by the Class 1 railroads. TTX was established in November 1955 and was initially owned by the Pennsylvania Railroad, Norfolk and Western Railroad and the Rail Trailer Corporation. TTX cars earn hourly and mileage car hire like railroad owned cars. The Surface Transportation Board, the government agency that replaced the ICC, has authorized TTX to manage national pools of cars. TTX manages several large pools. The Association of American Railroads, or AAR, is the trade group that represents the rail industry in Washington. The AAR has established two wholly owned subsidiaries to provide critical services for the industry. TTCI provides engineering and other technical services. Railinc provides IT support and a variety of business process support that increases productivity, improves operational efficiency, and helps keep assets moving. Railinc supports many centralized applications that are critical to the industry. A few of the car hire applications provided by Railinc include Car Accounting Self Service, or CAS, is an application that allows inquiry into the car movement data stored at Railinc. Car hire data exchange facilitates the electronic exchange of car hire payment information. Car hire liability file calculates the car hire owed by and to participating companies. The Damage and Defective Car Tracking System assists carriers in the management of damaged and defective cars. The system serves as a single repository for entering and processing information about damaged and defective cars. DDCT properly allocates CarHire for damaged and defective cars and has replaced the reclaims filed under CarHire Rules 7 and 8. The Event Repository, or ER, stores the official records used for car hire calculations for loaded and empty time, actual miles, and other event-related calculations. Railinc publishes several national tariffs, including RIC 6007, which governs the handling of private cars. Railinc also publishes AAR circulars, which includes the car hire rules. Railinc maintains several master files that store critical information. Here is a list of key reference files. The Liability Continuity System, or LCS, analyzes car movement information reported by carriers to establish a common interchange date and time for use in calculating car hire liability. The Railroad Clearinghouse facilitates the exchange of funds for several interline activities, including car hire. UMLR is a database that defines the physical characteristics of all rail cars in interchange service in the industry. Transfers of Liability, or TOL, allow the electronic transfer of car hire under the provisions of Car Hire Rules 4, 5, and 15. TRAIN2 is the electronic messaging system that allows car movement and other critical information to be reported and stored. Railinc provides many applications that are critical, not just for CarHire processing, but for all rail operations. That wraps up this overview and history of CarHire. Contact us for more information.