Doublestack One critical problem is that in lengths of haul, under 700 miles, the fixed cost for the lifts and other terminal costs is distributed over so few miles that the cost per mile is close to truck and truck is typically more reliable, so that's a tough sell. Also, on short haul intermodal moves, the out of route for the dray (truck) segments can drive up costs. (I.e if I have to go west 50 miles by truck, to get to a ramp to rail a load east, I've added extra miles to the move. A direct truck move can generally head in the right direction immediately. Longer er intermodal moves spread out the fixed costs and they reduce out of route miles, as a % of the overall length of the move (a little out of route can be absorbed into a long move, whereas it can't on a short move.). I'm an advocate of intermodal wherever it makes service and economic sense, but that isn't everywhere. The market is pretty good at figuring those issues out.
One critical problem is that in lengths of haul, under 700 miles, the fixed cost for the lifts and other terminal costs is distributed over so few miles that the cost per mile is close to truck and truck is typically more reliable, so that's a tough sell. Also, on short haul intermodal moves, the out of route for the dray (truck) segments can drive up costs. (I.e if I have to go west 50 miles by truck, to get to a ramp to rail a load east, I've added extra miles to the move. A direct truck move can generally head in the right direction immediately.
Longer er intermodal moves spread out the fixed costs and they reduce out of route miles, as a % of the overall length of the move (a little out of route can be absorbed into a long move, whereas it can't on a short move.).
I'm an advocate of intermodal wherever it makes service and economic sense, but that isn't everywhere. The market is pretty good at figuring those issues out.
To what Doublestack said:
"...Longer intermodal moves spread out the fixed costs and they reduce out of route miles, as a % of the overall length of the move (a little out of route can be absorbed into a long move, whereas it can't on a short move.).
I'm an advocate of intermodal wherever it makes service and economic sense, but that isn't everywhere. The market is pretty good at figuring those issues out..."< Dblstack>
He is exactly spot-on!
I spent a lot of years in a number of areas on the Operational side of the Trucking business, and those fixed costs are 'a mountain to climb'. Particularly, on the trucking side of the business. The bigger issue for the Intermodal Industry is the cost of the transport of the leg, to and from the railroad. Historically7, those legs have been performed by the trucking sides, owner-operator community.
More recently, major carriers have gotten into this 'haul' ( Schneider, JB Hunt and others, as well) more or less a response to a 'driver pool' that was sold on an ability to be home frequently, and not OTR for weeks on end. [They were never told that the old metric,' make miles and money, and be home, regularly "] would not exactly work out to their advantage [ "...If the wheels ain't turning, you ain't earning...] was, and still is a trueism in the business, IMHO.
Point being, the major links in the chain: Loading Containers/trailers and their transport to and from the railhead, fall as expenses to the trucker. The links form the load/unload, and the rail transport, belong to the railroad, and must support its massive infrastructure investment.
On the other hand, The trucker ( Company, or truck owner-operator) bears a lot of risk exposure on their side. They have an equipment investment (Truck) to protect, not to mention an 'infrastructure' to provide for their operations; and personnel investments as well, to support. Necessities if they are to stay in business for any length of time. Ask any Trucker about this, and be prepared to be regaled with anecdotal, Horror stories, likey as long as you are willing to listen.
The Intermodal Industry, and the railroads are going to have to restructure the whole 'cost' structures to continue to be viable, IMHO. Both sides are pressed by viable fuel costs, rising costs of equipment, across the board regulatory burden costs, time constraints as automotive traffic grows on an infrastructure of roads and highways that increasingly need more money for their repair and replacement. Then both sides are pressed by rising costs for personnel issues.
Pretty gnarly stuff!
Paul_D_North_Jr Link to an interesting and pproovocative article from the Journal of Commerce a couple months ago (date-lined Jan. 6th) - I just got a copy of the merger prospectus the wek before last: https://www.joc.com/rail-intermodal/intermodal-shipping/xpo-pacer-merger-expand-intermodal-market_20140106.html From the first 2 paragraphs of the linked article: " . . . XPO Logistics’ acquisition of Pacer International, the third-largest U.S. intermodal operator which handles some 10 percent of U.S. intermodal volumes, promises to speed the integration of asset-based intermodal services and non-asset truck freight brokerage and deliver intermodal options to many shippers not yet using rail. The $335 million deal is clearly a step in the transformation of a truck freight brokerage — traditionally all about the truck and the load — into a more multimodal business, a step many observers have been expecting and encouraging as international and domestic intermodal volumes in North America grow." Wonder if this will greatly improve the marketing of domestic intermodal and its reach towards shorter hauls and smaller markets, where little 'penetration' is presently evident ? Note that the railroads wold not be directly involved with this, except as contract train-haulers for Pacer, etc. - Paul North.
Link to an interesting and pproovocative article from the Journal of Commerce a couple months ago (date-lined Jan. 6th) - I just got a copy of the merger prospectus the wek before last:
https://www.joc.com/rail-intermodal/intermodal-shipping/xpo-pacer-merger-expand-intermodal-market_20140106.html
From the first 2 paragraphs of the linked article:
" . . . XPO Logistics’ acquisition of Pacer International, the third-largest U.S. intermodal operator which handles some 10 percent of U.S. intermodal volumes, promises to speed the integration of asset-based intermodal services and non-asset truck freight brokerage and deliver intermodal options to many shippers not yet using rail.
The $335 million deal is clearly a step in the transformation of a truck freight brokerage — traditionally all about the truck and the load — into a more multimodal business, a step many observers have been expecting and encouraging as international and domestic intermodal volumes in North America grow."
Wonder if this will greatly improve the marketing of domestic intermodal and its reach towards shorter hauls and smaller markets, where little 'penetration' is presently evident ? Note that the railroads wold not be directly involved with this, except as contract train-haulers for Pacer, etc.
- Paul North.
The impact will hit unevenly among RRs. CSX and UP are the two big Pacer suppliers. NS and BNSF have little to no Pacer traffic. Pacer is the old American President's Lines or APL. These guys were the original big pushers of domestic stack trains.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
http://goo.gl/maps/ShFbW
The new CSX Intermodal Yard does not have much room to play around in either
If XPO took on the business risk with a different approach to intermodal you'd like the think the railroads would at least be willing to run the trains. They railroads made their decision about benchmark distances for their own intermodal operations based on their own analysis of risk and reward.
One problem is that even if XPO takes on the business risk, a lot of railroads have made it difficult to locate an intermodal facility in some areas. The BNSF had its own intermodal facility in Galesburg IL and then shut it down, using the land for other purposes. The CP has now pretty much done the same thing with its port-side intermodal facility in Milwaukee WI, and the other Milwaukee intermodal facility was pretty much shut down by the CNW before the UP takeover. I don't expect Pacer/XPO to change that in those locations; my point is that an intermodal facility of any scope and size is a big deal space-wise and that in many locales the space that used to be there has been repurposed.
Dave Nelson
Railroads benchmark of 300 miles of min ship distance does seem to be changing anytime soon. However having one less big player could mean lower rates and less RR profits
Our community is FREE to join. To participate you must either login or register for an account.