Short Haul Intermodal - article in June Trains

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Short Haul Intermodal - article in June Trains
Posted by greyhounds on Sunday, April 22, 2018 7:32 PM

Author Bill Stephens has an article on short haul IM in the June issue of Trains.  He includes numerous quotes and opinions.  My work in intermodal marketing dealt extensively with routes of 300, 400, and 500 miles, i.e. shorter hauls.

I agree with some things Stephens wrote and disagree with others.  Here's a sampler:

"75% of truck shipments go 300-500 miles."  I agree.  That's the length of haul for the vast majority of freight and the railroads rarely even try to compete at that distance.  If the railroads want to really grow that distance is where the growth will be.

"You can't run a giant train short haul."  Disagree.  Customers don't care about train length, they care about service and price.  An economical way to serve a short haul market would be to add a set out block (DPU?) to an existing large, long haul train.  i.e., serve Chicago-Omaha by adding a set out block to a Chicago-Portland train.  That would be added revenue at incremental cost.

"Short haul doesn't make economic sense under the current double stack business model."  Agree.  Shorter haul terminals will be lower volume and cannot support the large investment required for DS.  A trailer or continer on chassis system will probably be more efficient.

"Locomotives are the largest above the rail cost for short haul IM."  Misleading.  That may be true for the rail portion of the move, but we're talking intermodal moves, not just rail.  Drayage costs are the killer for short haul IM.  

"Short haul IM must be operated totally by the railroad company.  (including the trucking).  This will put them in competition with their long haul trucker customers and the rails are naturally reluctant to do that."  Disagree.  Setting up a retail trucking operation will involve a long, expensive learning curve.  And no one is going to do it any better than the likes of JB Hunt.  The importance is the through door to door rate and service.  This can well be done in partnership with existing trucking firms.  There's no reason to reinvent the wheel.  The current partnerships work well and can be extended to shorter routes.

"Short haul economics are totally different."  Well, kind of.  The same cost factors are involved but their importance does change.  

I'd like to see the railroads target the remaining long haul truck business first.  But there is opportunity for growth in the shorter haul markets.  It's going to take some risk taking trial and error.  And getting people to do that is the main issue.   

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by Paul_D_North_Jr on Sunday, April 22, 2018 8:59 PM

Pretty much "+1".  

The loading/ unloading of containers sans chassis at the short-haul terminals can be done with one of the trailer-mounted rigs that John Kneiling used to advocate - then Steadman (Stedman?), now Swing-Thru, Hammar-Lift, SteelBro, etc.  Or use a Piggypacker to lift both trailers and containers with chassis. 

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Posted by samfp1943 on Sunday, April 22, 2018 9:05 PM

A couple of statements by greyhounds, seemed to jump out at me, as points of truths in the 'battle between Rails and Trucking:

He[greyhounds ] stated in part:"... "Drayage costs are the killer for short haul IM"  .               Absolutely!  The Trucking Company without a fleet of drivers/trucks under its control are at the mercy of the local situations{politics ?}  Drayage is a real deal killer, for the long/short haul trucker.  One can have a terrific rate, but the origin destination drayage can be an impossible, out of control expense.

He further stated "...Short haul IM must be operated totally by the railroad company.  (including the trucking).  This will put them in competition with their long haul trucker customers and the rails are naturally reluctant to do that."  Disagree.  Setting up a retail trucking operation will involve a long, expensive learning curve.  "And no one is going to do it any better than the likes of JB Hunt."  The importance is the through door to door rate and service.  This can well be done in partnership with existing trucking firms.  There's no reason to reinvent the wheel.  The current partnerships work well and can be extended to shorter routes."

The JB Hunt model seems to follow, somewhat, like the FedEx/UPS {Similar operation in competition with each other tend to opedrate, more or less, in a parallel business environment}.  From the outside JBH seems to have created a model that utilizes a hub and spoke system; utilizes drivers domociled withing a short distance of areas that either originate or terminate COFC/TOFC trains.

 Their sales pitch to the drivers seems to be, get home 'often' [Done by operating within a few hours driving- allows them JBH to solicit  freight to deliver and reload. Thus keeping some of their drivers within a 'home' REGIONAL areas]

 They still operate fleets of 'long haul drivers'; but these are drivers they can utilize on the Regional Operations if they are needed.  By this they are able to control the costs that would be for 'drayage'; if they lacked the regional drivers to meet their comitments.  They accomplish this by having large numbers of available equipment, and employees.  Not to mention, 'partner railroads' to work with as to their servce, and  scheduling, and problem solving.

As the rail service improves  there seems to be a growing presence of smaller carriers populating, what seems to be increasing TOFC traffic as well.  Refrigerated trailers[TOFC] seem to be increasing, and many are 'operating reefer units-on, as they pass throug this area.

 

 

Sam

 

 


 

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Posted by Los Angeles Rams Guy on Monday, April 23, 2018 9:50 PM

Have been hoping to see another thread on the short-haul intermodal discussion.  I'm all in with Greyhounds although I'm not so sure that you could do effectively as part of a block in a long-haul train.  In theory, I suppose you could but remember, for short-haul intermodal, speed has to be the key and I think you would lose that if you had it blocked in a normal manifest train.  I guess I'm more partial to the former MILW Sprint or ICG Slingshot model.

Another question:  Could short-haul intermodal work in some non-traditional lanes?  

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Posted by Shadow the Cats owner on Tuesday, April 24, 2018 6:24 AM

Short haul Intermodal might have a prayer these days with the current HOS.  With any delays getting loaded that burns any of my drivers clock overnight to more than 500 miles is hard unless it is a drop and hook pickup.  The HOS that where implemented then throw in ELOG's and you have just opened the door for short haul IM.  If the railroads can capitalize on it.  However drayage for them will still be the problem.  JB Hunt still has to follow the HOS Regs they just have enough manpower to throw at it to overcome the problems.  The same with the other mega fleets.  They just throw another driver on a problem load.

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Posted by CMQ_9017 on Sunday, April 29, 2018 7:01 AM

Surprised (or not really I guess) that the subject of intermodal never seems to talk about high terminal fixed costs, which is where the real opportunity lies. RR's are working on autonomous and other systems that will streamline operations at intermodal terminals, once that is unlocked short-haul intermodal will become quite competitive from a cost perspective. However, at currnet economic conditions given the available load to truck ratio and rising prices of fuel, short-haul intermodal is becoming attractive even at the higher rate due to a single factor -- capacity. 

Plenty of opportunity in this space if you take it for what it is at the moment. It won't be the cheapest option but what's cheaper, having your load sit out on inventory for 2 weeks waiting for someone to find a truck or spending more to move it out in 3 days (thus moving moving inventory off your floor and keeping the cash moving in and costs lower).

 

 

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Posted by greyhounds on Sunday, April 29, 2018 12:27 PM

CMQ_9017

Surprised (or not really I guess) that the subject of intermodal never seems to talk about high terminal fixed costs, which is where the real opportunity lies.  

I did talk about that.  Here's what I said:

 "Short haul doesn't make economic sense under the current double stack business model."  Agree.  Shorter haul terminals will be lower volume and cannot support the large investment required for DS.  A trailer or continer on chassis system will probably be more efficient.

Intermodal is never, ever, going to win a "Race" with a truck at <= 500 miles.  One driver can usually do that in one shift.  He/she can just drive.  The intermodal load will have to go through terminals and be aggregated in to a trainload lot.  This will delay things.

So, minimized the time differential as much as is reasonably possible and play to the railroad's strengh as much as is reasonably possible.  A reliable 40 MPH terminal to terminal schedule will be competitive for the majority of the traffic if the railroad can provide good cost savings.

That's where adding the shorter haul block to an existing long haul train comes in.  You're effectively getting the short haul train service with zero added crew costs.  It's going to take some operating discipline to make it work.  But that's what those guys get paid for. 

 

 

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Posted by CMQ_9017 on Sunday, April 29, 2018 2:37 PM

greyhounds

 

CMQ_9017

Surprised (or not really I guess) that the subject of intermodal never seems to talk about high terminal fixed costs, which is where the real opportunity lies.  

 

 

I did talk about that.  Here's what I said:

 "Short haul doesn't make economic sense under the current double stack business model."  Agree.  Shorter haul terminals will be lower volume and cannot support the large investment required for DS.  A trailer or continer on chassis system will probably be more efficient.

Intermodal is never, ever, going to win a "Race" with a truck at <= 500 miles.  One driver can usually do that in one shift.  He/she can just drive.  The intermodal load will have to go through terminals and be aggregated in to a trainload lot.  This will delay things.

So, minimized the time differential as much as is reasonably possible and play to the railroad's strengh as much as is reasonably possible.  A reliable 40 MPH terminal to terminal schedule will be competitive for the majority of the traffic if the railroad can provide good cost savings.

That's where adding the shorter haul block to an existing long haul train comes in.  You're effectively getting the short haul train service with zero added crew costs.  It's going to take some operating discipline to make it work.  But that's what those guys get paid for. 

 

 

 

 

Well, respectfully, I think you grazed it but the key word there is 'cost'. At 500 miles over half the revenue is eaten up by the terminal costs under traditional pricing models. So you have to either adjust the price upward or bring the cost downward. Or have another revenue stream to subsidize the costs for a net-net gain on the entire operation. 

 
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Posted by greyhounds on Sunday, April 29, 2018 8:29 PM

CMQ_9017
Well, respectfully, I think you grazed it but the key word there is 'cost'. At 500 miles over half the revenue is eaten up by the terminal costs under traditional pricing models. So you have to either adjust the price upward or bring the cost downward. Or have another revenue stream to subsidize the costs for a net-net gain on the entire operation.

I don't know what "Traditional Pricing Models" you are using.  But a 500 mile truck haul should produce around $1,000 or more revenue.  That's what the railroad has to work with.

Get down below that by $100 with reliable service and you'll get the customers' attention.  Big Time.

If you're saying that $450/load will be consumed in terminal charges (50%) then I'll say your model is bogus.  What exactly are you talking about?

I did "Graze" the terminal costs.  But then, I "Grazed" everything.  I'm not writing a textbook here.  I try to make my points short and sweet.  

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Posted by cx500 on Sunday, April 29, 2018 10:52 PM

One thing comes to mind.  Obviously the longer the dray the higher its cost, and the way to control that is to have more small terminals.  That goes counter to the current mindset of bigger is better, yet those big terminals are expensive to build, equip and operate.  Can a small terminal use cheaper equipment if only loading single stack containers on flat or spine cars?  With lower volumes a somewhat slower transfer speed would likely be quite acceptable.  Logistics could be managed remotely, so local staffing would not have to be on the same scale.  The rail moves would most likely be as blocks on suitably timed regular manifest trains, but these should be relatively reliable if anybody ever achieves an actual precision scheduled railroad.Big Smile

Just asking.

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Posted by tree68 on Monday, April 30, 2018 7:31 AM

cx500
Can a small terminal use cheaper equipment if only loading single stack containers on flat or spine cars?

A military installation near here routinely loads and unloads containers on the military trains using a wheeled loader.  They're singles, and it's not like they're in a huge hurry (as in trying to get ready for a specific departure time).  They also are doing the work in an area not specifically set up for the activity.

I suspect the practice could easily be set up in virtually any rail-served location.  The problem would be the last-mile rail service.  There are only two through trains - one north, one south - and one local working here, so a container will sit in a yard for upwards of a day before delivery.  If it were truck hauled, it would arrive the same day.

We do see a lot of containers on trailers here, most are likely from the I/M facility in Syracuse, ~70 miles to our south.

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Posted by Ulrich on Monday, April 30, 2018 10:56 AM

TOFC might the best option to capture shorthaul business.. mainly because of quick turn around and low cost terminal costs. All one really needs is a ramp on both ends.. and a truck to pull the trailers on and off. The main issue with containers is that expensive terminals are required. A ramp is relatively cheap and easy to operate and can be built in almost any community served by rail.  

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Posted by tree68 on Monday, April 30, 2018 12:55 PM

Ulrich
The main issue with containers is that expensive terminals are required

See my previous post.  

The area used for handling containers at the military installation isn't even paved.  The total cost to load/unload a container is the capital cost of the loader and the Diesel and personnel to make it run.  Maybe some snow plowing in the north country in the winter.

I don't know how long it takes to handle a container in that situation - 10 minutes?  

In theory, a train could stop anywhere that the big-wheeled loader could reach the train and have a few containers on or off in minutes.  If the skeleton trailer is waiting to be loaded, a container could be off the property in no time, while the car that carried the container never leaves the train.

 

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Posted by greyhounds on Monday, April 30, 2018 3:21 PM

Ulrich
TOFC might the best option to capture shorthaul business.. mainly because of quick turn around and low cost terminal costs. All one really needs is a ramp on both ends.. and a truck to pull the trailers on and off. The main issue with containers is that expensive terminals are required. A ramp is relatively cheap and easy to operate and can be built in almost any community served by rail.

I agree with that!

And you'll not have the expense and headache of owning and managing a chassis pool in a place such as Storm Lake, IA.  (Storm Lake generates a lot of freight;  pork and turkey, with eggs on the side.)  The CN runs right through there and doesn't haul a bit of it.  And I think it is a damn fool thing to pay for trucking a load to a distant terminal when the trains roll right close.  

Serve the smaller terminals with trailers or "Tee'd up" containers on a chassis.  If the containers go through a major hub, such as Chicago, on their way to the east coast population centers, they can be double stacked east of Chicago.

But keep the smaller terminals low cost by using circus loading.  And keep the drayage cost down by having a number of such terminals. 

 

 

 

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Posted by Murphy Siding on Monday, April 30, 2018 4:18 PM

Riddle me this Batman: If you have TOFC, you have a whole train of them. If my truck is on the 27th car, the train crew would need to break the train at the 27th car and switch the car up to my ramp-facing the right way.  At work we have about a 1/4 mile spur off a BNSF main. It's about a 20 minute process to spot or pull a car. That's with a roving switchman in a pickup.

     How would you account for downtime on a line like the CN through Storm Lake, for example?

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Posted by tree68 on Monday, April 30, 2018 4:43 PM

Murphy Siding
If my truck is on the 27th car,

Your business wouldn't get switched.  Your car would get dropped with all the others for your area at what would amount to a team track.  Once it was driven or lifted off the car, the last mile would be by road.

Going back to what I was saying earlier, if your load can be lifted, and the ability to do so is near your business, the train might stop briefly to unload your trailer/container without removing the car from the train at all.

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Posted by jeffhergert on Monday, April 30, 2018 4:50 PM

Murphy Siding

Riddle me this Batman: If you have TOFC, you have a whole train of them. If my truck is on the 27th car, the train crew would need to break the train at the 27th car and switch the car up to my ramp-facing the right way.  At work we have about a 1/4 mile spur off a BNSF main. It's about a 20 minute process to spot or pull a car. That's with a roving switchman in a pickup.

     How would you account for downtime on a line like the CN through Storm Lake, for example?

 

It wouldn't necessarily have to be facing the right way on the ramp track.  There are portable ramps that can be moved.  

I don't think downtime on the CN at Storm Lake would be a problem.  

Jeff

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Posted by Murphy Siding on Monday, April 30, 2018 5:15 PM

tree68

 

 
Murphy Siding
If my truck is on the 27th car,

 

Your business wouldn't get switched.  Your car would get dropped with all the others for your area at what would amount to a team track.  Once it was driven or lifted off the car, the last mile would be by road.

Going back to what I was saying earlier, if your load can be lifted, and the ability to do so is near your business, the train might stop briefly to unload your trailer/container without removing the car from the train at all.

 

OK now I'm following. Thanks.

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Posted by Gramp on Monday, April 30, 2018 9:45 PM

Ashley Furniture in Arcadia, Wi. is an excellent example of a customer off the beaten track that makes use of container rail right from their plant. Former GB&W, now CN, to connection with BNSF Mississippi River line. I think Ashley has been more innovative than the average duck when it comes to distribution. 

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Posted by Paul_D_North_Jr on Monday, April 30, 2018 10:06 PM

John Kneiling is smiling on this thread (esp. Larry/ tree68's points).

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Posted by 466lex on Tuesday, May 01, 2018 9:44 AM

From today's WSJ Logistics Report:

Quotable

“I don’t win any awards for how many truck trailers I move on our railroad. I win points as to how profitable my enterprise is at the end of the day.”

— CSX CEO James Foote
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Posted by Ulrich on Tuesday, May 01, 2018 10:23 AM

Pick pallets up by truck.. have them transferred to a BOXCAR at a transload facility.. let the railroad haul the boxcar to wherever it needs to go... move the pallets from the boxcar back onto a truck for last mile delivery to receiver. I know that's how it was done years ago.. worked well then.. can work well again today and into the future! 

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Posted by Murphy Siding on Tuesday, May 01, 2018 5:50 PM

Ulrich

Pick pallets up by truck.. have them transferred to a BOXCAR at a transload facility.. let the railroad haul the boxcar to wherever it needs to go... move the pallets from the boxcar back onto a truck for last mile delivery to receiver. I know that's how it was done years ago.. worked well then.. can work well again today and into the future! 

 




     I dunno. That sounds pretty labor intensive and we just don't have anyone to hire in our state.

     We got a boxcar of oriented strand board in last summer. It took 2 forklift operators 4+ hours to unload it. If they were unloading 53"x53" pallets instead of 4'x8' units I'd imagine it would take more like 5-6 hours each. That's 10-12 man hours to unload a car and perhaps 10-12 man hours to reload onto 4 trucks? That's in the range of 20-24 man hours, plus the truckdriver timeto shuffle trucks around and such. By the time you haul that truck an hour away you've got some money tied up.


     

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Posted by charlie hebdo on Tuesday, May 01, 2018 7:57 PM

tree68
The total cost to load/unload a container is the capital cost of the loader and the Diesel and personnel to make it run.  Maybe some snow plowing in the north country in the winter.

Two ramps sounds a lot cheaper and easier.

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Posted by tree68 on Tuesday, May 01, 2018 8:44 PM

Ulrich
Pick pallets up by truck..

Perhaps the pallets would be more along the lines of containers.  A container might be full width for the box car, and would simply be loaded into the doorway, then moved (rollers) toward the end of the car.  Rather like how cargo containers are loaded on to aircraft.

I realize I'm probably talking equipment that doesn't exist today.  One upside would be that a pallet could be left "open," ie, materiel stacked on the pallet and secured, but not covered as such.

I also don't know if there is a market for such a system...

Just thinkin' out loud...

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Posted by ruderunner on Wednesday, May 02, 2018 11:51 AM

iirc the original railroad containers were of the 8' cube range.  Maybe something closer to that size could come back.  Say a half TEU?

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Posted by erikem on Wednesday, May 02, 2018 10:59 PM

You recall correctly. There were several different implementations, a couple were driven by RR's, and one was pushed by Kroger. As Greyhounds pointed out many times, the idea was pretty much killed by short sided regulators in 1931 - one can only imagine the help these containers would have been during WW2.

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Posted by SALfan on Wednesday, May 02, 2018 11:21 PM

tree68

 

 
Ulrich
Pick pallets up by truck..

 

Perhaps the pallets would be more along the lines of containers.  A container might be full width for the box car, and would simply be loaded into the doorway, then moved (rollers) toward the end of the car.  Rather like how cargo containers are loaded on to aircraft.

I realize I'm probably talking equipment that doesn't exist today.  One upside would be that a pallet could be left "open," ie, materiel stacked on the pallet and secured, but not covered as such.

I also don't know if there is a market for such a system...

Just thinkin' out loud...

 

Seems like there was an article in TRAINS within the last couple of years about a system something like this, for moving containers of produce about the size of the cargo containers used on planes.  Can't remember if it was actually in use or just someone's proposal, but it your idea sounds very similar to what I remember.  IIRC, the containers had spherical "rollers", so that they could be used with any boxcar/reefer and box truck/refrigerator truck, and no special floor with rollers would be needed in the warehouse.  

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Posted by ruderunner on Thursday, May 03, 2018 11:48 AM

erikem

You recall correctly. There were several different implementations, a couple were driven by RR's, and one was pushed by Kroger. As Greyhounds pointed out many times, the idea was pretty much killed by short sided regulators in 1931 - one can only imagine the help these containers would have been during WW2.

 

 

Erik, my thinking is that drayage of the smaller containers could be done by the customers themselves. Class 6 trucks are cheap and could handle a smaller containers.

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Posted by MP173 on Thursday, May 03, 2018 4:47 PM

Any data of how many trailers move daily (on average) between Chicago and lets say:

St. Louis, Twin Cities, Detroit, Columbus, Pittsburgh, Memphis, Cincy, Louisville for example?

 

Currently NS is operating a daily Chicago - Detroit intermodal (20N) which is almost exclusively international 40 ft containers... usually 30 - 100 per day.

 

The Chicago - Columbus train (26N) is a mixture of international containers and JB Hunts.  My guess is this is a run thru from BNSF.

Their Chicago - Pittsburgh (26W) is an interesting train.  Since implementation about a year ago it has grown from about 20 units per day to 40 to 60 per day.  It is mostly a UPS train.  Interestingly it departs Chicago around 5am.  Thus, the overnight delivery option is not offered.  

CSX runs a daily "Christmas train" from Columbus to Chicago (we have discussed this in the past) which is a short intermodal.  My guess is that it is typically retail consumer moves possibly zone jumpers.

Short haul intermodal can be done.  But you need a great base of business and build off of it.  Gathering a load here and there will not work.  A UPS, FedEx, Amazon base is almost required...in my opinion.

 

Ed

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