the "Road" to the future

[Noah Hofrichter]

Now I don't nessecarily like UP all that much, but I like the new slogan the've come up with in there recent comercial. "Maybe the road to the future isn't a road at all" I think this truely represents what the rail business is doing now days. I have to award this one to UP and whoever thought up that slogan, Its definately a good one.

Noah

[Anonymous]

That is clever, and probably quite true.

[csxns]

Will rail business ever catch up with trucking.Went to theTruck Line web site it says Trucking dominates the freight business at nine billion tons in 2003 at $610.billion in revenues.Rail 12.9 Percent . Waterborne 7.7 percent. Pipeline 9.4 percent. Air 0.9 percent. Rail Intermodal 0.9 percent.

[TH&B]

Numbers are a funny thing, you can prove anything you want with them. Half the trains I see on the big mainlines are intermodal, so that makes it hard to believe these numbers. According to these Nos. there are 12 times more freights then intermodals, does that make sence to you? How did they come up with these numbers? That must always be asked!

No doubt though the trucks are never gonna go away, just like the railways didn't go away like was once predicted.

[Anonymous]

The truckers will have to start raising their rates to cover the increases in fuel costs. For the first time in a long time it's going to cost more to haul by truck. Railroads will also pay more, but their charges are already pretty low. The RRs can raise a bit for fuel increases and still be attractive. (Now if the RRs could just make their service reliable and CONSISTENT!) Oh, and fuel costs will not be going down any time soon for any of us!

[Anonymous]

Can someone explain why long haul trucks are chosen over trains? Is it time, cost, or hassle? Can computerization make rail a better choice? Are the railroads too set in their ways to compete? Why aren't trains used as trunk lines with trucks the local feeder service?

In other words, why haven't railroads figured out how to compete even though they are mechanically more efficient and they've had a hundred years to think about it?

[corwinda]

That 'recent' commercial has been out for at least a year.

QUOTE: Originally posted by 440cuin

Numbers are a funny thing, you can prove anything you want with them. Half the trains I see on the big mainlines are intermodal, so that makes it hard to believe these numbers. According to these Nos. there are 12 times more freights then intermodals, does that make sence to you?

Probably not too far off on the UP main here in Eugene, OR. And I suspect that 12 to 1 ratio includes regionals/short lines and branch lines that don't have intermodal trains.

[jeaton]

This depends a little on the defination of long haul. If one looked at rail vs. truck numbers for 1000 miles or greater, I suspect the rails have a much larger chunk than trucks.

For railroads, the best bang for the buck is what might be called the road train. Once the railroad gets, say, 50 or more trailers or containers on, powered up and ready to go, the economics are pretty good. Getting to that point at competitive cost is the trick.

Here is what a railroad faces with truck competition. The cost of running a truck has almost a direct correlation to distance. To illustrate, if a truck's cost is $100 for a 100 mile haul, it will likly be about $500 for 500 miles, $1000 for 1000, etc. This is not true for railroad TOFC service, because there is the cost of the handling of the trailer at the origin and destination terminal. I don't know what those numbers are now, but if, for example, the terminal cost is $50 each side, there is not going to be a money making competitive charge from the railroad for a 100 mile haul.

So here is the deal. Even if a railroad could set up a TOFC/COFC terminal quickly and cheaply, there are still fairly daunting criteria for making a buck on the service. They would be:

1. The origin market has to generate about 50 loads a day in an area fairly close to the terminal and all these loads need to be going to a fairly compact geographic area so they can go to one destination rail terminal.

2. There has to be somewhere around 30 to 40 loads going in the reverse direction to cover the cost of getting equipment back.

3. In order to be cost competitive, the rail haul probably needs to be at least 400 miles. (A "long ago" figure, may be higher now).

4. The service has to be at least close to straight truck service.

Once these are met, they will come.

[edblysard]

Nora and Gary,

Look at it from this point.

Lets say you own and run Ed Bobs widget fabrication, and you make left and right handed widgets.

Now there are only six or seven widget makers in the US, and your the only one that makes left handed widgets.

You sell the widgets to a widget exporter in Chicago, and your business is in
Houston.

You only produce 20 to 25 pallets of widgets a week.

If you shipped by rail, you would need to have someplace to store your widgets, till you had enough to justify shipping by rail, it makes no sense to pay for a boxcar that holds 100 pallets, only to put 25 pallets in it, and your buyer in Chicago, who ships overseas weekly, needs a steady supply of widgets, delivered on a just in time schedule, because he too has no place to store large amounts of stock, yet still needs to keep his business fluid and profitable.

So, you contract with a trucking/shipping company, who makes regular truck runs every day from Houston to Chicago, and when you finish with the order for the left handed export widgets, you pick up the phone, give them a call, they drive up to your loading dock, your forklift operator loads the pallets into the back of the trailer, the rest of which is filled with shippments from other companies in your situation.

Off to Chicago.

At the Chicago end, the truck backs into the dock at the export company, they unload their widgets, the truck leaves, on its way to it's next delivery, and its all done, in a matter of days.

Their exports stay fluid, your business stays fluid, you can plan your production runs accordingly, because you dont have to worry about two or three types of delivery service, it goes from your dock to theirs in one step.

You dont have to warehouse widgets, and neither does you exporter.

Most of the 18 wheelers you see on the highway are NOT full of one product for one shipper only, they are the LCL(Less that Car Load) carriers of today, with four or five different loads of merchandise in the same trailer, just destined for different receivers in the same city.

Railroads left the LCL business long ago, for good reason, the demands of that type of shipping cant not be met by a railroad, with out incurring such a tremendous cost that not only would it would fail to generate profit, but instead, become a drain on the bottom line.

You dont see to many trucks loaded with, say, drill stems and pipe going from Chicago to LA, but you do see them by the hundreds going from Houston to New Orleans, because its cheaper to ship one or two truck loads of pipe that way.

But, if you need a thousand pieces of drill stem out in LA, its cheaper to put them on a flat car, and ship them all at once by rail.

Need a hundred in the next state, it goes by truck, need a thousand 6 states away, it goes by rail.

UP, and BNSF both have discovered that they make more money, and are more efficent, if they run big trains, on a fairly close schedule between big cities or big yards, then hand off the few or single car freight to a local or regional carrier, keeping the bulk moves, grain, coal, coke and auto trains, and things like the UPS train, for themselves.

The money is in getting the cars from city to city, not dock to dock.

There never was much profit for railroads in LCL shipping, and the same theory applies to general freight trains, its cheaper to take them all to one place, and let someone else do the door to door delivery.

Railroads are most efficent when the trains, and the cars in the trains, are all going to the same place, full of the same product for the same shipper/receivers.

Take a shippment of coal from Wyoming to Houston, for the HL&P power station.
Which would be cheaper for the railroad to do, run one big coal train directly from Powder River to Houston, dump it, and run back empty to get another load of coal, or run a train from Powder River to El Paso, stop and drop off ten cars, pick up five empties, and move on to Temple, doing the same thing, all the way to Houston, where they dump the coal, turn around, and head back, picking up empties and loads along the way, making small one and two car deliveries and pick ups all the way back?

The crew cost and fuel bill along would destroy the profit, not to mention the total chaos and delays caused to all the trains behind the coal move.

Any time a train stops, for any reason at all, before it reaches its final destination, it cost the railroad money.

On the other hand, trucks, and the roads they use, are designed for just that purpose, to make several small deliveries and pick ups, from door to door, or dock to dock.

Ed

[Anonymous]

QUOTE: Originally posted by csxns

Will rail business ever catch up with trucking.Went to theTruck Line web site it says Trucking dominates the freight business at nine billion tons in 2003 at $610.billion in revenues.Rail 12.9 Percent . Waterborne 7.7 percent. Pipeline 9.4 percent. Air 0.9 percent. Rail Intermodal 0.9 percent.

I don't know what site you went to, but right now railroads and trucking are in an even match of 40% vs. 40%, or at least hovering around it. I believe as time goes on the realization will come that we won't be able to support trucking because A. oil prices and B. roads will become too crowed and people will realize the potential that rails can carry goods faster, safer, and more economically.
I'm not as worried about trucks as all of our businesses moving thier plants to China and Mexico, though. There used to be a time when even the smallest towns had manufacturing all over the place. Coincadentally, that America was powered by rail, times were more carefree, and the world admired the U.S. of A. Also notice that after roads came into widespread use, America went into a steady decline. And look where we are today, everything good I've stated is either dead or not it's former self, and everything bad has just gotten worse.

[Anonymous]

Thanks for 2 good breakdowns. I asked these questions thinking containers and computerized scheduling would make smaller shipments profitable.

[jeaton]

g

Actually they have. You do get smaller shipment sizes in trailers or containers-maybe 20 to 25 tons tops- vs. 40 to 50 tons, maybe more, in a merchandise boxcar. And computers have eliminated the need for the gazillion clerks the had to be employed to keep track of shipments. Without the development of TOFC/COFC service-think highway are crowded now?

Jay

[csxns]

www.trucking.org

[Anonymous]

"The road to the future isn't paved".....my take on their slogan!

~Ra'akone