UlrichDepends on the lane. Here in Canada most LCL (LTL) that goes any distance goes on the rail. Check out any container train on CN or CP.. you will see containers belonging to Armour, Midland, TransX, Roadfast, Day & Ross, Maritime-Ontario, not to mention others. All of those containers are loaded with LCL/LTL, domestic freight. The service is very service competitive too and at prices that over the road carriers cannot come close to. The service has grown over that last couple of decades, thanks in large measure to the sales efforts of freight forwarders.. and they of course get a big chunk of the profits. The carriers (like Day and ross, Midland, M-O) who ran trucks over the road 30 years ago have all migrated to rail.. sure.. they still run trucks, but largely in short haul lanes and of course to and from the rail head. The situation in the US is more complex because your population centers aren't all neatly aligned along the 49th parallel like ours are, and of course, you have many more large population centers than we do. But nonetheless, rail can recapture a big piece of the LCL market.. indeed it must as growing congestion and pollution render the status quo untenable going forward. LCL remains a money maker.. the question however is who is making the money? The answer (in Canada anyway) is that the freight forwarders do. And perhaps that's as it should be... the people who make the sale.. who own the relationship with the customer.. are generally the people who make the best margins. There's no reason that margin can't flow back to the rail by once again bringing that function back to the railroad..
The service has grown over that last couple of decades, thanks in large measure to the sales efforts of freight forwarders.. and they of course get a big chunk of the profits. The carriers (like Day and ross, Midland, M-O) who ran trucks over the road 30 years ago have all migrated to rail.. sure.. they still run trucks, but largely in short haul lanes and of course to and from the rail head.
The situation in the US is more complex because your population centers aren't all neatly aligned along the 49th parallel like ours are, and of course, you have many more large population centers than we do. But nonetheless, rail can recapture a big piece of the LCL market.. indeed it must as growing congestion and pollution render the status quo untenable going forward. LCL remains a money maker.. the question however is who is making the money? The answer (in Canada anyway) is that the freight forwarders do. And perhaps that's as it should be... the people who make the sale.. who own the relationship with the customer.. are generally the people who make the best margins. There's no reason that margin can't flow back to the rail by once again bringing that function back to the railroad..
The railroads are doing what they are supposed to - hauling shippers trailers/container - the same as the US railroads do. Haul the box from origin railroad location to destination railroad location. Shipper is responsible for loading the box and getting to the railroad facility. The Consignee is responsible for getting the box from the railroad facility and doing whatever is necessary with it.
Railroads are not in the LCL business
Never too old to have a happy childhood!
Correct. There are plenty of YRC, FDX, ABF, etc. trailers on IM trains. Hauling LTL trailers and being in the LTL business are two entirely different things.
Backshop Correct. There are plenty of YRC, FDX, ABF, etc. trailers on IM trains. Hauling LTL trailers and being in the LTL business are two entirely different things.
No reason the railroads can't do both..the money is in the consolidation and distribution/ first mile and last mile.. Dragging a box from A to B is nice and important..but doing only that leaves alot of money on the table.
Ulrich Backshop Correct. There are plenty of YRC, FDX, ABF, etc. trailers on IM trains. Hauling LTL trailers and being in the LTL business are two entirely different things. No reason the railroads can't do both..the money is in the consolidation and distribution/ first mile and last mile.. Dragging a box from A to B is nice and important..but leaves alot of money on the table.
No reason the railroads can't do both..the money is in the consolidation and distribution/ first mile and last mile.. Dragging a box from A to B is nice and important..but leaves alot of money on the table.
Best way to lose a lot of money - try to undertake business elements you don't fully understand against established organizations that understand their business.
While there may be money in the business of freight consolitation and distribution, to try to build that business from scratch against well established competitors is folly unless there is some specialized highly profitable niche to be exploited.
Established businesses this century have been striving winnow away the elements of the Conglomerate panacea that sprouted in the last decades of the 20th Century and get down to the core elements of their business. For railroad that has ment focusing on moving traffic from shippers to consignees from existing facilities with the business models they know.
No need to build from scratch..buy one of many existing businesses (most of which were started by people with a bit of get up and go, working from a kitchen table in their PJs). Personally I prefer the status quo..
UlrichNo need to build from scratch..buy one of many existing businesses (most of which were started by people with a bit of get up and go, working from a kitchen table in their PJs). Personally I prefer the status quo..
Status Quo means this discussion was of no account.
The real account is railroads know their business and also know what IS NOT their business.
And on that note, Happy Easter.
Does have to be said that when FedEx decided to go into trucking, they bought an established truck line.
But it was like pulling teeth for years to get them to go with rail intermodal. Only very substantial guarantees of QoS convinced them.
The business model for much of the "rail" LCL traffic would be TOFC with break-bulk crossdocking into smaller delivery vehicles. If I recall correctly, the part of the CRandIC interurban that survives built or invested in a large crossdock facility with this functionality. In my opinion railroads shouldn't try to capitalize, staff, and operate such an operation -- outsource it to people who understand and specialize in the specific rapid unloading of dunned and palletized vehicles, quick repalletization of specific outbound loads for ready handling, and rapid and effective loading, in order of prospective unloading, of the ongoing or last-mile trucks.
In my opinion the correct 'business model' for any attempt at this kind of service is the 'express line' that became compelllingly popular for 'other than W.H.Vanderbilt slow drag-freight service'. (Wasn't the UP service to Rotterdam, NY set up as its own 'business unit'?) That keeps the PSR railroads in the niche they've chosen for themselves: all the business they care to handle effectively, for a guaranteed amount of income at nominally marginal risk. I don't see a PSR railroad justifying the risks to analysts looking at quarterly financials...
OvermodDoes have to be said that when FedEx decided to go into trucking, they bought an established truck line. But it was like pulling teeth for years to get them to go with rail intermodal. Only very substantial guarantees of QoS convinced them. The business model for much of the "rail" LCL traffic would be TOFC with break-bulk crossdocking into smaller delivery vehicles. If I recall correctly, the part of the CRandIC interurban that survives built or invested in a large crossdock facility with this functionality. In my opinion railroads shouldn't try to capitalize, staff, and operate such an operation -- outsource it to people who understand and specialize in the specific rapid unloading of dunned and palletized vehicles, quick repalletization of specific outbound loads for ready handling, and rapid and effective loading, in order of prospective unloading, of the ongoing or last-mile trucks. In my opinion the correct 'business model' for any attempt at this kind of service is the 'express line' that became compelllingly popular for 'other than W.H.Vanderbilt slow drag-freight service'. (Wasn't the UP service to Rotterdam, NY set up as its own 'business unit'?) That keeps the PSR railroads in the niche they've chosen for themselves: all the business they care to handle effectively, for a guaranteed amount of income at nominally marginal risk. I don't see a PSR railroad justifying the risks to analysts looking at quarterly financials...
Remember too - UPS bought the truck carrier Overnite (from Union Pacific, I think - correct me if I am wrong) about a decade ago. UPS is now in the process of getting rid of it for whatever their reasons.
I started my adult life in the LTL industry. It is an asset heavy industry with company terminals and equipment typically being company owned (or leased). Further, the workforce is typically Teamster (nothing against them) which adds a level of costs. The Teamsters are indicating a tougher negotiating strategy in upcoming talks with the LTL carriers (and UPS ).
A downturn in the economy usually leads to intense pricing within the industry. There is little self discipline involving pricing. The industry is similar in many ways to airlines. If a lane is operated, it makes sense to fill the truck (or airplane) with as much revenue as possible. Terminals have fixed costs and finding the right balance of revenue and profitable freight is a challenge.
I left the industry 33 years ago and it was among the best decisions made in my life. The industry is a fascinating one but is challenging.
Railroads will probably (note I said probably) never enter the industry...the margins are low and it would be difficult to expand into the industry and face low returns on equity (ROE) and capital (ROIC). The best operator these days seems to be Old Dominion and their OR is mid 70s. Not very attractive to the big rails.
However, take a look at the domestic intermodal trains and one will find a number of trailers marked ABF, YRC, FedX, and even R&L. These are typically longer haul movements running between break bulk terminals.
Ed
MP173 I started my adult life in the LTL industry. It is an asset heavy industry with company terminals and equipment typically being company owned (or leased). Further, the workforce is typically Teamster (nothing against them) which adds a level of costs. The Teamsters are indicating a tougher negotiating strategy in upcoming talks with the LTL carriers (and UPS ). A downturn in the economy usually leads to intense pricing within the industry. There is little self discipline involving pricing. The industry is similar in many ways to airlines. If a lane is operated, it makes sense to fill the truck (or airplane) with as much revenue as possible. Terminals have fixed costs and finding the right balance of revenue and profitable freight is a challenge. I left the industry 33 years ago and it was among the best decisions made in my life. The industry is a fascinating one but is challenging. Railroads will probably (note I said probably) never enter the industry...the margins are low and it would be difficult to expand into the industry and face low returns on equity (ROE) and capital (ROIC). The best operator these days seems to be Old Dominion and their OR is mid 70s. Not very attractive to the big rails. However, take a look at the domestic intermodal trains and one will find a number of trailers marked ABF, YRC, FedX, and even R&L. These are typically longer haul movements running between break bulk terminals. Ed
True, the barrier to entry to LTL is steep, but on the flip side it provides a competitive moat that is difficult to breach. Truckload carriers are easy to start.. LTL carriers not so much..
Overnite is often cited as an example to prove that the idea doesn't work..that's like saying that running is bad for you because my uncle Fred took up running, and he died of a heart attack. One example can't be extrapolated to prove anything.
LCL is already moving on the rail..in the US it rides piggyback on Fedex and YRC trailers, among others. Why not bring it under one roof?
Overnite Transportation was a great LTL carrier, while the founder J. Harwood Cochrane was involved with the company. I was very aware of Overnite - I purchased stock and then used the gains to purchase our first house. The theory at the time of UP's purchase was the primary eastern US Overnite would meld well with the western UP. Two different cultures existed. UPS tried to run it...if anyone should be able to run a trucking company, it should be UPS! They couldnt make it work. Essentually it was given away, just to get rid of it. I have no idea how it is doing with TForce.
I have a theory about trucking companies...the best run companies are those in which a founder or family member is involved nearly EVERY DAY. Granted that becomes difficult to manage once a trucking company becomes very large.
One issue that I see with your proposal is that there are no 48 state railroads. LTL carriers are either regional or national in nature.
NS is (was?) trying to offer LCL boxcar service between Chicago and New Jersey and Atlanta/Miami. Not sure if it is still being offered. Early on I called NS to discuss service and it was difficult to find anyone. I left numerous voice mails at HQ and the regional offices in Chicago. After a couple of weeks I answered a call from a rep in Chicago. While he wasnt in charge of the sales in Chicago, he was aware of the program and we discussed service.
At the time they were offering 5th day service from Chicago to both New Jersey and Atlanta. I was incredulous that anyone would take that level of service seriously. Typical LTL service is either 2 or 3 day service. They were marketing that level of service to find a niche of low value freight....he suggested paper products would be an ideal lading.
I saw boxcars on a few Chicago - New Jersey intermodal trains....really cool to see. Nothing lately tho. My guess is the railroads would not be willing to fight in the trenches for this niche of freight.
Likely doing very well as TForce.. the parent company, TFI, has a long and well deserved good reputation for running trucking companies well. They've also recently puchased a sizable stake in ArcBest.. Interesting that Overnite is now essentially in Canadian hands..
Ulrich Likely doing very well as TForce.. the parent company, TFI, has a long and well deserved good reputation for running trucking companies well. They've also recently puchased a sizable stake in ArcBest.. Interesting that Overnite is now essentially in Canadian hands..
Ulrich No need to build from scratch..buy one of many existing businesses (most of which were started by people with a bit of get up and go, working from a kitchen table in their PJs). Personally I prefer the status quo..
CN did that a few years ago when they bought TransX and H&R Transport. Their containers had been a common daily sight on our intermodal trains well before CN bought them outright.
While you're complaining about the higher costs of a unionized workforce it might be worth remembering how the non-union independent contractor and rent-to-own models have worked out in the trucking industry.
https://www.usatoday.com/story/opinion/voices/2022/01/12/blame-truck-driver-shortage-shipping-companies/9080637002/
Greetings from Alberta
-an Articulate Malcontent
SD70Dude While you're complaining about the higher costs of a unionized workforce it might be worth remembering how the non-union independent contractor and rent-to-own models have worked out in the trucking industry.
Backshop SD70Dude While you're complaining about the higher costs of a unionized workforce it might be worth remembering how the non-union independent contractor and rent-to-own models have worked out in the trucking industry. What no one seems to mention is that UPS constantly outperforms FDX, even though FDX is non-union and much is independent contractor. I've interacted daily with drivers from both. The UPS drivers hustle and consider their jobs a career. The Fedex drivers complain and there's constant turnover. You get what you pay for. During Covid, UPS deliveries were much more regular than Fedex's.
What no one seems to mention is that UPS constantly outperforms FDX, even though FDX is non-union and much is independent contractor. I've interacted daily with drivers from both. The UPS drivers hustle and consider their jobs a career. The Fedex drivers complain and there's constant turnover. You get what you pay for. During Covid, UPS deliveries were much more regular than Fedex's.
FedEx local delivery trucks are only painted in the FedEx logo scheme. The trucks are owned and operated by some local trucking company - the company identification will be on the side of the truck - normally in silver printing upon the white of the logo scheme - meets the requirement of displaying the data, but hides it in plain sight as one has to be looking for it to see it.
SD70Dude Ulrich No need to build from scratch..buy one of many existing businesses (most of which were started by people with a bit of get up and go, working from a kitchen table in their PJs). Personally I prefer the status quo.. CN did that a few years ago when they bought TransX and H&R Transport. Their containers had been a common daily sight on our intermodal trains well before CN bought them outright. While you're complaining about the higher costs of a unionized workforce it might be worth remembering how the non-union independent contractor and rent-to-own models have worked out in the trucking industry. https://www.usatoday.com/story/opinion/voices/2022/01/12/blame-truck-driver-shortage-shipping-companies/9080637002/
Must be someone else's post you're referring to... I haven't said a thing about the cost of a unionized workforce..let alone complained about that..
The independent contractor model has endured for over 100 years and is the backbone of many successful fleets today. The trucking industry as a whole remains entrepreneurial..a person of limited means and a good work ethic has the opportunity to start a business. Of course, there's also the possibility of setbacks and failure.. which is part of the deal. About rent to own.. sure.. there have been some well publicized scams, but some of those programs work well too...they don't get the media attention.
I saw a T Force trailer on a Z train this morning.
Jeff
As a carload customer here at my employer I have this to offer. I also am in the OTR industry as we ship custom blend resins we buy from plastic manufacturers and have shipped to us by the railroads. Well I can literally give my customers an ETA that's accurate to within 15 minutes normally. With the railroads I maybe can get an accurate estimate when the carload will arrive within a day or so. See the difference in the level of service given. At least recently all of our cars aren't getting sent on nationwide tours before getting to us.
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