RULE 4 UPDATE ACACSO Meeting Atlanta – November 14, 2013 Scott Churchill

RULE 4 BACKGROUND  Car Hire Rule 4 allows reclaim for car hire costs incurred while empty cars are under revenue billing  Currently, carriers must identify revenue empty shipments and the car hire costs incurred for those shipments  A reclaim must be created to recover these costs  Manual intervention may be often required  Car owners must verify that duplicate reclaims have not been requested and that systems have not generated multiple reclaims  Other administrative effort may be required to ensure all reclaims have been paid on a timely basis

RULE 4 CENTRALIZATION PROJECT  Replace the existing Car Hire Rule 4 reclaim process with automated processing at Railinc using car movement records, LCS interchanges and waybill data (waybill number, date, origin road and STCC)  The automation of Car Hire Rule 4 will greatly reduce reclaims and decrease associated efforts and costs within the car accounting function at car owners and railroads  Carriers will be able to redirect resources currently consumed on this activity

RULE 4 PROJECT THEMES  Collect, merge and store data from Railinc repositories associated to Rule 4 processing  Identify required elements to process Rule 4 situations (STCC, Umler, other)  Send information/event (TRAIN28) to car owners  Integrate messaging with internal Railinc applications

RULE 4 PROJECT BENEFITS  Cost reduction – Carriers will no longer incur the costs associated with identifying and processing Car Hire Rules for reclaims  Reduction of time and effort spent on processing, analyzing and responding to Rule 4 reclaims by the industry  Cost avoidance – Replacement of functionality requested by and/or currently contained in legacy mainframe systems at railroad customers via a Railinc solution will avoid future development costs

RULE 4 VERBIAGE - NOW  Rule 4 – Exemptions From Charges  A.Revenue Billed Empty Cars  For empty cars handled under revenue billing in line haul or switching service, car hire costs for the revenue billed cycle shall be reclaimed from the car owner  B.Time Limits and Procedures  Refer to Car Hire Rules 13 and 14 to determine time limits and procedures for issuing, handling and deducting reclaims

RULE 4 VERBIAGE  Rule 4 – Exemptions From Charges  A.Revenue Billed Empty Cars  For empty cars handled under revenue billing in line haul or switching service, car hire costs for the revenue billed cycle shall be the responsibility of the car mark owner  B.Assignment of Car Hire Liability  1.The AAR Car Hire Rule 4 process will identify empty revenue cycles based on the Standard Transportation Commodity Code (STCC) transmitted to Railinc on the EDI 417 waybill transaction. In order to be eligible for relief, the handling carrier must submit the EDI 417 waybill transaction to Railinc  2.The following commodity codes will designate empty, revenue shipments.  , , , , , , , , , , , , , , ,  3.A TRAIN 28 message will be created to assign car hire liability for the revenue empty cycle to the car mark owner  C.Invalid Relief  If investigation develops that a cycle was improperly identified as an empty, revenue cycle, the car mark owner will be allowed to reclaim the car hire due for the cycle from the handling carrier after receiving consensus from the handling carrier. These reclaims should not be deducted; a file outlining the reason for the reclaim should be sent to the erring carrier for review. The reclaim will be handled under the provisions of Car Hire Rule 13

DATES TO REMEMBER January 2014 – Expected project implementation 20 th day of month – waybills from previous month must be submitted 21 st day of month – TRAIN28 messages created

QUESTIONS ?