Per Diem

Per diem leases offer great flexibility and cost savings to the customer. Railcars carrying a railroad mark earn revenue in the form of credits for miles and hours travelled on railroads other than the "home road" who leases the railcars.

Advantages to entering into a per diem lease include the possibility of having cars modified to fit your mechanical specifications as opposed to being provided with system cars. Also, per diem leases are available at zero cost to the lessee.

When freight is loaded by a shipper on a home road in a home road railcar for shipment to a destination not located on the home road, out of necessity the loaded railcar will pass over one or more other railroad lines, known as as a "foreign lines,"  to reach the destination. When the home road railcar is off the home road it is said to be "off-line." The shipper — or, depending upon the payment terms, the recipient of the shipment — will pay a freight charge for shipment between the starting point and the destination. That charge will be shared by the home road and each of the foreign lines over which the loaded railcar passes. In turn, each of the foreign lines will pay the home road various charges for the use of the home road’s railcar on the foreign line. These charges are determined on the basis of (i) the time period the home road’s railcar is on the foreign line, whether or not the railcar is in transit (the "per diem allowance") and (ii) the number of miles the home road’s railcar travels on the foreign line (the "mileage allowance"). The combined per diem allowance and mileage allowance is referred to in the industry as "car hire."