April 09, 2048: A Railroading Vision

[ttrraaffiicc]

NorthWest

Railroads are good at hauling large volumes of freight long distances. They are very bad at hauling a small quantity less than 50 miles. If you expect them to, they're always going to be irrelevant. As such, ton-miles are the better metric.

Ton-miles are a very poor metric, but it is one that railfans cling to because it makes it seem as though railroads are more important than they are. When it comes to the actual market share of a mode of transport, it is important to gauge the ACTUAL amount of freight moved, and that comes from tonnage. Distance is irrelevant. When looking at tonnage, railroads don't actually move that much and are therefore significantly less important to the economy than trucks. In addition, the tonnage statistic strongly implies that if railroads were to disappear, truck traffic wouldn't increase by a huge amount. This is because even though railroads move things far distances, they actually don't move very many things. Ton-miles doesn't correlate to the actual amount of loads/goods moved, but tonnage does.

NorthWest

With increases in e-commerce and two day delivery, the number of small, short distance shipments will continue to grow, which will make it appear that the railroads are losing market share.

Market share loss is market share loss, and there is no fancy way to dress it up. If the freight market increases in size and railroads don't grow with it, then they have lost market share. Of course, this is completely ignoring the number of customers railroads have lost and continue to lose. Where I live, there were once many rail spurs serving local industries. In the last 20 years they have all since been torn out and those industries have swithed to trucks. Once railroads have lost a customer, they never get it back, and it is almost impossible for railroads to grow anymore since most branch lines have been abandoned. For a railroad to reach a new customer, the massive expense of building a new spur is required, and then there is the matter of routing a nearby local to serve them. This is a huge logistical task, and even then, the level of service may not be good enough for the customer. For a trucking company to acquire a customer, a trucker just has to drive 15 minutes down the road. You could make a point about intermodal, but intermodal is a bit of a joke, since shippers can only save very little by using it since drayage costs usually cut out any savings that are had by using rail. And all of this is not to mention that intermodal is usually low margin for the railroads and doesn't justify much investment to expand and capture new business.

You mention that railroads are a tool, and I completely agree, but the reality is that they are a tool whose use is falling out of favour. The job they are good at performing is shrinking and becoming less important to the economy every year. The service that railroads provide is just no longer useful to industry anymore.

[NorthWest]

You're still not addressing my point.

What matters isn't the actual amount of freight moved, it's the actual amount of freight that moves in corridors that are competitive between modes.

The railroad has no way to compete with trucks moving things short distances. Including them is thus pointless to any argument about utility.

Using your logic, airlines are totally irrelevant because they account for only 0.1% of passenger trips as compared to the car's 83.4%. My guess is that when you're travelling long distances, there's a good chance you're going to consider flying. When you look at passenger miles, the importance of airlines becomes visible. Most passenger trips are short. So are most freight trips.

The comparison is no different with railroading vs trucking. As shown in the data on the previous page, the railroads do have a large chunk of the long hauls. That's what they're good at.

(For passenger travel data above see https://www.bts.dot.gov/sites/bts.dot.gov/files/legacy/PTFF_Complete.pdf)

As for carload; it is dying. That's true, not just here, but in Europe as well. In Japan, it's already dead. Carload has higher costs and poorer service than intermodal. Trucking is more efficient in short hauls and terminal areas, and railroading is more efficient in line hauls. Intermodal blends the two, which is why carloads that can convert are. It's better for everyone. Thus, intermodal is growing. If it weren't cheaper than trucking, customers wouldn't use it at all.

The railroads don't need to preserve carload as long as the freight is still moving by rail. And much of it is, just in a container rather than a boxcar.

[tree68]

ttrraaffiicc

The service that railroads provide is just no longer useful to industry anymore.

Funny - watchers of the Deshler rail cams see 50-60 trains a day on a normal basis.  A lot of that traffic is auto industry related, among other things.  

Unless we stop making things out of steel, the 100 car trains of taconite (iron ore) will continue.  So will the coil cars moving between mill and factory.  So will the trainloads of finished vehicles.  So will the unit trains of metalurgical coal and coke.

What you're telling us is that instead of 100 cars of taconite by rail, we'll see 300 trucks on I75 each way, every day but Sunday and Monday.  And those loaded trucks will be grossed out.  This also means we'll need 300 drivers (already a scarce commodity), or at least 300 monitors who can take over if the autopilot fails.

Another type of train seen at Deshler is grain trains.  Again, we'll replace a 100 car train with 300 trucks...  All going to the same place.

I could go on.

A lot of "stuff" still moves by rail.  I don't think our nation's highway infrastructure is up to the massive number of trucks that will be required to replace the trains.  

I really have to wonder why you're on a forum dedicated to railroading if you are so anti-railroad.  

[CMQ_9017]

This thread provides a great laugh.... what are you going to do to transport bulk materials from rural places? Not everywhere has a highway. What about direct rail to ship moves? If take the daily number of tons transported in the US each day... how many more vehicles would you put on roads? So many that you'd have to have megahighways everywhere just to accomodate the level of traffics.  Also you going to put up a warehouse in every single vacant plot of land in the US? Half the advantage of rail is putting inventory into a slower pipeline... that is to say the concept of the rolling warehouse. SIT cars are still a meaningful lever as well. If everything is trucked you decrease the lead time in the supply chain, and the popular just in time model becomes 'just just just in time'. The reality is modality mix is extremely important in commoditzed goods gransportation. There are several supply chains that work soley due to the rails and how they feed manufacturing processes. You'd really need to completely restructure or change manufacturing and supply chain processes on a massive scale before rails died out.

One question I do have -- why are you posting such a 'fantasy' on a pro-rail group? I see no value in the discussion really. 

[ttrraaffiicc]

NorthWest

As for carload; it is dying. That's true, not just here, but in Europe as well. In Japan, it's already dead. Carload has higher costs and poorer service than intermodal.

This is the problem, railroads can't afford to let carload die. The margins for railroads on carload are much better than intermodal. In addition, the majority railroad traffic is carload, so if carload dies, a lot of traffic goes with it. For many industries, drayage is a killer for the value proposition of rail and a lot of loads, especially bulk commodities (yes, even for small shippers) just aren't suitable for intermodal and the railroads don't have the terminal capacity to accomodate all of their carload customers switching to intermodal. Intermodal isn't that much cheaper than truckload but carload is, and if you recall last year, intermodal rates exceeded truckload rates in many lanes. Lets also not forget that once trucking automation and electrification reduces overall costs of trucking, intermodal's value will be undercut quicker than carload. The trend is for the most part that if a customer stops using carload, they just move to truck and not intermodal. As as has been seen in Europe (UK specifically) and Japan, once carload dies, rail freight networks don't see significant volumes. A door to door service is very important to a lot of shippers, and once that is gone, they won't use rail.

tree68

I really have to wonder why you're on a forum dedicated to railroading if you are so anti-railroad.

I am not anti-railroad, I am a railfan, but at the same time, a lot of cracks are showing in this industry and I can't foresee anything positive coming in its future.

[NorthWest]

ttrraaffiicc

This is the problem, railroads can't afford to let carload die. The margins for railroads on carload are much better than intermodal.

Much of this is due to the pricing power railroads have over shippers that can't convert to trucking or barges. This carload traffic is much less likely to go away, and includes much of the large, heavy and volumous traffic. I don't see it dying soon. The stuff that convert to truck will have lower margins due to greater competition, and is best served by intermodal.

Intermodal rates have been inflated by PSR pricing strategies just as carloads have. Increasing velocity and asset utilization as I have suggested would lower costs and increase capacity.

As as has been seen in Europe (UK specifically) and Japan, once carload dies, rail freight networks don't see significant volumes.

Japan and the UK also are small countries with very short hauls. Things are better in Continental Europe where the same forces are in play, and intermodal hauls are longer (and growing).

A door to door service is very important to a lot of shippers, and once that is gone, they won't use rail.

Agreed. This goes back to the 'we run trains' mentality. If it shows up on a railroad truck and arrives on a different truck, it doesn't matter whether the trip was on rail or road. Railroads need to realize they are logistics companies in the business of freight. I'm encouraged by CN's attempts in this area. They are trying.

A lot of "stuff" still moves by rail.  I don't think our nation's highway infrastructure is up to the massive number of trucks that will be required to replace the trains. 

Glad we finally agree on this.

I am not anti-railroad, I am a railfan, but at the same time, a lot of cracks are showing in this industry and I can't foresee anything positive coming in its future.

.

I certainly see the same cracks that you see, and that's what prompted the other thread. But as I have said there and here, there are ways to fix many of them. The railroads just have to recognize them and want to.

[ttrraaffiicc]

trraaffiicc

A lot of "stuff" still moves by rail. I don't think our nation's highway infrastructure is up to the massive number of trucks that will be required to replace the trains.

Ok, I didn't mean to say this and it has been removed from my comment. This was a typo where I meant to include that as part of my quote from @tree68.

NorthWest

Japan and the UK also are small countries with very short hauls. Things are better in Continental Europe where the same forces are in play, and intermodal hauls are longer (and growing).

Now on to Europe, specifically the UK. The UK is a cautionary tale as to why carload cannot be allowed to die. Compared to continental Europe where mixed goods trains still persist, the UK sees much less goods transported by train. It's an important part of the mix, and can't be ignored.

NorthWest

But as I have said there and here, there are ways to fix many of them. The railroads just have to recognize them and want to.

I certainly don't think these problems will be fixed. The railroads likely won't recognize them or want to fix them. It will probably end up being that management and investors will seek to milk what money they can from the railroads and jump ship before everything collapses. What I presented in comparison to your vision is what I believe to be a more grim and quite frankly (IMO) much more likely future where railroads fall from internal and (more significantly) external threats. The external threat, being trucking cannot be fought against with better management as leverage against railroads from trucking comes from superior technology. Even so, better management is unlikely to step forward to run the railroads.

[NorthWest]

Understood on the misquote; my apologies.

The UK is a somewhat unique example. The country is only 400 miles or so long, and railroading struggles in markets under 300 miles, so there are fewer viable lanes, which is to be expected. The Beeching Plan's politically motivated disinvestment campaign also did far more than economics to decimate freight.

That said, as I've noted, certain things work best as carload and always will.

ttrraaffiicc

I certainly don't think these problems will be fixed. The railroads likely won't recognize them or want to fix them. It will probably end up being that management and investors will seek to milk what money they can from the railroads and jump ship before everything collapses. What I presented in comparison to your vision is what I believe to be a more grim and quite frankly (IMO) much more likely future where railroads fall from internal and (more significantly) external threats. The external threat, being trucking cannot be fought against with better management as leverage against railroads from trucking comes from superior technology. Even so, better management is unlikely to step forward to run the railroads.

And that is a valid opinion. I think more optimistically.

[CMQ_9017]

I appreciate you taking the time to write out your opinion and here is mine -- you are punching way above your weight class with this analysis. Remember, never build a house of cards, you rely on a myriad of assumptions that would need to align in a perfect way to say that one of the largest transportation sectors in North America will simply disappear in less than 30 years (Yes, 2048 is less than 30 years from now)

I don't understand the basis on your opinion for intermodal... the IMCs and 3PL are out selling on the spot market the excess capacity (IE the non-contracted capacity) to any shipper big or small who has something to ship. Have you ever seen a hay load? I have, quite a messy clean up. We've delived 53' boxes to the middle of fields, offloaded in streets and the like.

 

You have not taken into account velocity, inventory models or for that matter any kind of supply chain model in your analysis. A high velocity product, Intermodal, can survive on smaller margins. How much D&D do you think gets racked up in the carload business? Whats the average turn time on that equipment? You haven't really looked at that... intermodal is a good product and it IS truck competitive. 

Lets talk automation. Before trucks can be automated completely you have a lot of work to do. Long haul trucking can be automated, but final mile delivery to door needs a lot of work as that currently requires a human to complete. The intermediate step before automation is platooning, you haven't yet address that as far as I can tell either. Our freinds to the north are already running doubles, and playing around with triples on the road, so in reality that is similar to a platooning concept but with less cabs. 

 

Remember that rates are a function of capacity and there was a lot of excess capacity in the trucking market last year (how many companies folded). That'll bring the spot market down (remember difference between spot and contract markets) but if you are riding mostly on the spot market you're in a pretty rough spot from a management standpoint. If you can't promise drivers load on a consistent basis they'll walk.

EU rail networks are completely different in terms of their function and utilization. Someone mentioned the geography of the UK and that is correct. But you have to remember that Europe leans on a heavy inland barge network in lieu of rails, IE that IS their rail network. US has some heavy barge systems in the major waterways such as the Mississippi, Missouri and Great Lakes... but it pales in comparison the Rhine, Rhone, Main, ect... So again, you failed to take into account how tons are moving today (also their trucking networks are very limited in size due to infrastructure). And the rail networks are getting their piece, especially intermodal as you see new services bridging half the world with container trains from China to the UK just starting to come to fruition. 

Again, simply trucking everything creates an inventory problem. When you manufacture something, you try to stay on that product run (assuming you have a diversified product portfolio which you have to in order to survive) as long as possible (efficiency). That means if you are caracelling around making this and that, you lose productivity with line changes and have a period of time to 'settle in on a run'. So how do you stay productive? You produce the order book as far out as you can, meaning you make product 2 or 3 months in advance. This is where the supply chain picks up the slack, you can't keep product on your plant floor as you'll shut down the manufacturing operation, so you dump it into rail cars and move to RDCs or other networks with the slowest most economical way of moving it -- railcars. 

Door to door is important to some shippers, its a predominant model in the US, but actually the supply chain (or sub in value chain in some instances) is a lot more complex than that. Widgets don't always go from plant to retail store directly, there are a lot of stops inbetween. The Amazon model of course changed everything like the Walmart model before it, you rely on a robust RDC structure and no retail front. No one Amazon is one of the top users of intermodal... So to curtail my ramblings a bit, again my opinion is that your opinion is categorically inaccurate for a variety of reasons as listed above.

 

[Overmod]

NorthWest

ttrraaffiicc

 

It will probably end up being that management and investors will seek to milk what money they can from the railroads and jump ship before everything collapses ... better management is unlikely to step forward to run the railroads.

And that is a valid opinion. I think more optimistically.

I have another opinion on this specific facet.  Since almost the infancy of the railroad industry, successful operations have been developed from 'near-abandoned' efforts, often expensively financed, that were not run effectively in one sense or another.  The early history of empire-builder Hill, the van Sweringens, Ike Tigrett, and a number of others are potential examples.

ttrraaffiicc seems to think that when the current round of financiers have stolen all the easy money from railroad companies, like some of the LBO artists stripping companies in the '80s, there will be insufficient perceived value to retain the rights-of-way as operating properties.  This is highly unlikely for a number of reasons -- there will always be some Anspach, or even Hilal, to attempt a little empire-building.  Probably the economic 'worst case' is that railroads en masse give up owning enormous amounts of real estate and stranded capital; the Federal and state governments acquire it as they have so much mileage already, and set it up as a proper 'iron ocean' on the same semi-open model they'll have to adopt for automated highways; a wide range of operating companies and perhaps revived 'express lines' as in the late 19th Century provide more or less capable equipment tu run over it.  

Kneiling saw this as essential over 50 years ago.  It is still a hard default solution for any perceived 'obsolescence' of current owner/operatorship of railroads.  While it is possible that 'original' railroad companies and names disappear, it is highly unlikely that steel-rail traffic (with much of it still being distributed power and lightweight equipment) will.  On the other hand, with the proper mix of CBTC, autonomous operation, and AI/ES dispatch and operations oversight, a very large number of currently-impractical intermodal operations using rail for key parts of their traffic can be expected to flourish.  All but essential autonomous trucking across Manhattan, for example, can be expected to be effectively legislated out of existence in a cost-competitive sense during considerable portions of given weekdays (through higher tolls reflecting an adequate 'fair share' of costs and "safety" assurance, if nothing else) in favor of effective bridge operations across the metropolitan area.

[Bruce D Gillings]

Excellent conversations: really appreciate the way this is unfolding, especially from NorthWest. (And I certainly hope we don’t have to hear any more disparaging “you are anti-railroading” remarks just because I and others question the ability of railroads to survive. We’re all commenting here precisely because we do give a damn AND we see a serious need for change.)  Here's my thoughts, with a caveat that my thoughts and $5 is worth a Frappuccino at Starbucks.....  

 

The damage to highway infrastructure that ongoing market share conversion from rail to OTR trucking will cause is already tremendous and will only get worse as heavier trucks are allowed (and they will be).  Better shocks/cushioning on trucks, and likely even more axels, will only help to a limited extent.  But it won’t save the roads. The results are already here: increased weight/traffic capacity of roads themselves as well as bridges is being designed in and built. Guess who is paying? “We” are.  Not the trucks.

 

I agree that a public and government outcry is what would change this, but I have no faith at all it will happen.  The public is too busy worrying about who will win the next Survivor or The Voice to have to understand what is happening, how it affects/costs them in ways that don’t show up when they order whatever it is they do from Amazon. It is “hidden”: it involves brain power to analyze, and they won’t do that. It is not the kind of sexy talking point that the media (of all political leanings) wants: it is a non-story. I wish it were different, but I don’t see that changing.

 

Trucks are incredibly efficient, flexible, can turn in markets on a dime (moving around various regions as harvests of varying crops rotate through the calendar). The downside is they move on an infrastructure that is “publicly funded”, paying only partially for what they use. The upside is they are, by and large, so damn good at what they do, at understanding the changing world we are living in, that they fill an incredibly valuable need that railroading, generally, does not. Take away 20 or so mid- to long-haul intermodal lanes nationally, and railroads simply don’t exist. Places like Denver, Salt Lake City, Indianapolis, Phoenix, Minneapolis, etc, get MOST of their non-bulk goods from trucks.  Not a majority, but the overwhelming majority.  When I work on an industrial project, ANY industrial project, the logistics are either entirely truck-based or mostly truck-based. If intermodal is a factor, it’s in a few major markets, for primarily long-haul traffic. I have been a part of industrial facilities that, by themselves, generate as many truck inbound/outbound moves as quite a few of the intermodal ramps in North America.  That’s not a boast; that’s a dismaying observation.

 

Supply chain models are changing in certain industries.  There is a trend to locating parts, packaging, and raw goods suppliers nearer to processing/manufacturing facilities. Meaning less long-haul.  As the economy returns to growth, it will still mean less for rail. Because rail hasn’t adapted to those changes.  Trucks are so dominating in most lanes/markets such that freight railroading is incidental.  They have adapted to meeting the logistics needs of an entirely new generation of supply chain demands, driven by identifying true, full-impact costs that have rendered the “but our rates are really low” thinking of railroads (which isn’t even true that much anymore) increasingly irrelevant.

 

Back to the needed outcry: there has been very little of it about the huge amounts of truck traffic on roads currently that has had any impact.  Trucks just keep increasing until there is gridlock.  And then federal, state and local governments will push for adding lanes (including adding truck lanes). And the costs of those upgrades will be overwhelmingly, and disproportionately, paid by passenger vehicles. I would be willing to bet that in my lifetime there will never be true payment of road impact fees by OTR truckers.  Contrast that to a railroad wanting to increase/modernize capacity: they are easy targets for the public. Freight trains are dirty, covered with graffiti, block crossings, noisy. It is something to focus on. Stop railroad expansion, be it added sidings and main tracks or terminals: feel good because you saved your community.  Never mind the higher emissions/congestion from OTR trucks, because it isn’t something you can focus on (without some deep thinking) or control.

 

All the above seems the most likely way things will be to a large extent because the current round of railroad management leaves little to be optimistic about. With very few exceptions, the mantra is “lower operating costs = lower rates = building for the future”.  The real world is “lower rates + impeccable performance + supply chain information integration = the future”. Where are the railroad managers who get this? Where are the visionaries?  At UP?  At CSX? At NS? Unlikely….

 

I hope I’m wrong.  I am encouraged by the optimism that exists on these posts/blogs by articulate individuals. Maybe I just don’t see the light. 

 

 

[CMQ_9017]

Actually trucking is facing some enrmous issues and pressures. I work closely with a lot of very well known trucki partners, they are changing to regional 'daisy chain' models. The lifestyle of the longhaul trucker is going the way of the do-do, and the average age of those OTR guys is getting into the high 50s... the terminal model is what this generation of trucker wants, home every night or every other if possible. Teams will be interesting to see if those pan out or not. With that, intermodal and port drayage is attractive for drivers.

The intermodal model feeds heavily into the long haul of the supply chain, RDC to RDC. A tremendous amount of goods are crossdocked on the west coast into 53s from ISO boxes, almost 50% and a good chunk of those ride intermodal into the RDC network. Walmart, Target, Amazon and even a lot of the smaller to medium sized manufactures feed their RDCs with intermodal, while the final mile is typically your van/lift gate type solution. That's probably why you see a lot of trucks to your site, again, the JIT model keeps the RDCs stocked and in the hotbed markets. 

Remember in logistics, you can only rely consistently on having two of the three following virtues -- good, fast or cheap. Again, you can't have more than two, right now intermodal falls in the good and cheap category, where trucking is in the good and fast. As mentioned previously, occasionaly things flip and trucks become good, fast and cheap and that does put a bind on intermodal volumes, but returning to the equilibrium of things, it is not sustainable over the long term. Truckers walk away from the long-haul cab when other more attractive jobs open up, such as construction work or in-house trucking. 

Rail manifest works quite weel actually in short haul markets as long as its a single line haul (more than that you jump up costs, but also some regional/shortlines are able to come up with some creative models to make it work amongst partners). If that weren't the case, there wouldn't be over 700 active shortlines across America squeezing rocks to get nickels... and yet they are and they do.

[ttrraaffiicc]

Bruce D Gillings

And I certainly hope we don’t have to hear any more disparaging “you are anti-railroading” remarks just because I and others question the ability of railroads to survive. We’re all commenting here precisely because we do give a damn AND we see a serious need for change.

Thanks Bruce.

Bruce D Gillings

The upside is they are, by and large, so damn good at what they do, at understanding the changing world we are living in, that they fill an incredibly valuable need that railroading, generally, does not. Take away 20 or so mid- to long-haul intermodal lanes nationally, and railroads simply don’t exist. Places like Denver, Salt Lake City, Indianapolis, Phoenix, Minneapolis, etc, get MOST of their non-bulk goods from trucks.  Not a majority, but the overwhelming majority.  When I work on an industrial project, ANY industrial project, the logistics are either entirely truck-based or mostly truck-based. If intermodal is a factor, it’s in a few major markets, for primarily long-haul traffic. I have been a part of industrial facilities that, by themselves, generate as many truck inbound/outbound moves as quite a few of the intermodal ramps in North America.  That’s not a boast; that’s a dismaying observation.

This is why I can't understand why people insist on using ton-miles. It is one thing to move stuff far, but if you don't move much stuff, then you aren't relevant to the economy.

I think there is one thing that we on this forum need to get out of our heads, and that is the idea that America needs railways. It doesn't, and the last 50 years have proved that. If this was the case, you wouldn't have the situation where ALL tonnage growth for land transport for the last 50 years happened on trucking and not rail. Truck volumes dwarf rail volumes so much so that rail might as well not exist. You can say, "but I see (x) many trains going by my house every day." In that case, I implore you go to your local freeway overpass and just wait there. If a train moves about 200 truckloads worth of product, I can guarantee you can see an entire day's worth of mainline traffic pass by on the highway in a rather short period of time. Truckloads dwarf intermodal units, and carload, while greater in volume, still doesn't come close. You can say "I don't want all those trucks tearing up our roads" all you want, but the reality is that they already are. If the railroads were to disappear, the change in volume would be slightly noticeable, but nowhere near as severe as everyone, especially on this forum, makes it out to be. Rail freight is a highly specialized mode of transport that only fits the needs of a small group of shippers, and ultimately, its importance to the economy and everyday life is very much overstated.

As seen with the shutdown of UP Cold Connect, rail can't even compete with trucks on long hauls in a lot of cases now. The introduction of autonomation into trucking will make things even worse, which is hard to imagine. The truth is, rail is already a declining industry, and the only thing autonomous trucks will do is eliminate any remaining advantages rail and make it so that using rail under any circumstance financially insane.

[CMQ_9017]

You again are failing to take into account the entire supply chain. A train today is 400 trucks tomorrow. Modality is essential to the supply and value chain. You are looking at a snap shot saying, 'there are more trucks than trains out there' but again, something on a truck today, was likely already on a train a few days ago. Also, what about the LTL? You are assuming as well every single truck you see on the road is a load, what about empties? What about trucks being used to move assets around and not consumer goods/raw materials? 

Ton-miles is the actual measured movement of goods over a distance, again, if you are looking at simply number of trucks driving around then you've skewed the results. We stratify movements using the FHA data into buckets into length of haul and mode when looking at the market. I've paid reefers to come into a place just to keep some temperature sensitive product cool while requiring refrigeration capacity on site, and guess what that reefer came in empty and likewise left empty. What about company owned vans just moving their own product around?

UP was looking to dump Cold Connect for a few years now, and guess who is picking up the slack? The IMCs and their new reefer divisions (John B and Hub have already been knocking on those doors). CN & CP will pull some of that volume too. 

If you are believe only what you 'see' and make assumptions based on that, you again build a house of cards on your analysis-- remember always follow the data (By the way FHA data is public so you can look at that if you like)

 

 

[BaltACD]

CMQ_9017

If you are believe only what you 'see' and make assumptions based on that, you again build a house of cards on your analysis-- remember always follow the data (By the way FHA data is public so you can look at that if you like)

What you 'see' varies greatly depending upon where in the country you are looking.  Commodities being shipped vary in accordance with the economic characteristics of the various parts of the country.  One view doesn't tell all.

[ttrraaffiicc]

CMQ_9017

You again are failing to take into account the entire supply chain. A train today is 400 trucks tomorrow. Modality is essential to the supply and value chain.

I think a seldomly discussed aspect of rail operations is how well the percieved efficiency of rail actually holds up in the real world. It is often said that a rail car can haul the equivalent of 3-4 truckloads. The problem is that if in the slow transit time of rail car, a truck trailer hauls 5 loads, is a rail car more efficient. It is said that with the efficiency of rail, 2 men can move 300 loads, where a truck driver can only move 1. The problem is that when you factor in track and signal maintenance, locomotive maintenance and all the other costs that a railroad has, how much more efficient is a train actually?

CMQ_9017

Also, what about the LTL?

What about it?

CMQ_9017

You are assuming as well every single truck you see on the road is a load, what about empties?

Rail cars run empty much more often than trucks. Rail freight flows are famously lopsided (directional), and the ability for railroads to get a backhaul on a rail car is much less common than for trucking companies.


Now on to another topic I have been thinking about, and that is how the railroads should move forward. I feel like the strategy of "if you can't beat 'em, join 'em" holds very true here. The reality is that railroads will not be able to compete against automated trucks, so why not use them to their advantage? A good way forward to be to acknowledge that the current generation of equipment (locomotives, freight cars, etc) will be the last and withdraw any investment. No new sidings, terminals, cars, locomotives etc. Any money spent on that now will be wasted. The idea is to get what as much as you can from rail operations while they are still viable. The next thing to do would be to invest as much as possible in autonomous trucking firms like TuSimple so that when autonomous trucks recieve regulatory approval, they have first access to use the technology. Once the tech is ready, a fire sale on all of their railroading assets can commence. The land and scrap value of what the railroads have should be enought to start themselves a fairly strong trucking company using the autonomous trucks they invested in. That is how the Class 1s can survive as freight hauling companies.

[Murphy Siding]

ttrraaffiicc- Can you do some math? The Dakota & Iowa Railroad hauls unit trins of quarry rock 5 days a week 110 miles from Dell Rapids S.D. to Sioux City Iowa. What would it cost to buy automated trucks capable of doing the same job?

110 x 4= 440 truckloads per day
440 x 5 = 2200 truckloads per week
2200 x 52 = 114,400 loads per year

[CMQ_9017]

As someone who on a daily basis manages rail, truck and intermodal shipments I am very well adept at how these modes work. I also pay the freight bills, and our measurably best cost mode is rail.... so if it weren't efficient, than how would it be the most economical? Also if your viewpoint were true, why would anyone consider intermodal? And by the way, the LTL guys are getting into the Intermodal box game, they had been sourcing the IMCs for the long hauls but now they are cutting those guys out and save costs (imagine that). YRC of course being the black sheep of this.... someone with those mess of financials are headed for a singular destiny. 

So if I understand you correctly you are saying trucks are now maintenace free and the outfits require no sales, operations, accounting, finance, mechanical, procurement, customer service, IT, HR and/or legal department? 

I find the proverbial wheels here are spinning and I've yet to see any considerations from your side that perhaps your analysis is flawed (and don't doubt for a moment that it is). When you've got some concrete experience in this, let's keep the discussion going, I'm always happy to talk about the future of the industry (and its not going away anytime soon).

[SD70Dude]

Some customers view the longer transit time of rail as a benefit. 

Lumber mills still send a lot of cars on their way before figuring out exactly where the load is going.

A lot of chemical and oilfield outfits use their railcars as mobile storage.

[zugmann]

And some customers just use the cars to keep their silos/storage bins filled.  So the cars aren't normally needed in a great rush - they just need a dependable supply of them. 

[tree68]

zugmann

And some customers just use the cars to keep their silos/storage bins filled.  So the cars aren't normally needed in a great rush - they just need a dependable supply of them. 

It's been said here before that most customers don't care how long it takes for a regularly needed commodity to reach them (within reason, I suppose) - but that yes, they need them to arrive predictably.

[zugmann]

tree68

It's been said here before that most customers don't care how long it takes for a regularly needed commodity to reach them (within reason, I suppose) - but that yes, they need them to arrive predictably.

That was a thing with this PSR crap.  We had a few week period where we had to deliver to every customer 7 days a week.  If you ignore the fact we have waaay too many customers to do that (that's why we had service days), several of the customers (esp. the ones that had to be physically present) weren't amused.  They didn't need us there every single day.  They just wanted 2-3 days a week of reliable service. 

But, you know: the metrics, demurrage, storage fees, EHH fangirls, and the like.