Some time back, we had a pretty good discussion about just in time shipping, on a thread Gabe started about why intermodal trains are run so fast. The general thought was, that it had to do with getting all those containers from L.A. to distribution centers of people like Walmart.
I'm reading an anti-Walmart book right now. I know- there are literally 100's of them out there, and it's not nearly as exciting as reading about trains. Among other things, I think Walmart makes other companies-competitors and supplies alike-rethink how they do business. Vendors, for examlpe have had to figure out how to be more competitve, and how to survive on thinner margins. Walmart contends that they have pushed companies to do a better job at what they do, in order to get Walmart's business.
Has this change in retailing, by Walmart, and the other big boxes greatly affected how railroads do business? In essence, has it caused railroads to do a better job at what they do?
( Please- interested in the railroad aspect of it, not the pro/anti Walmart aspect of it. The anti-Walmart sentiment is so widespread, that an anti-Walmart book sells for about 99 cents. That's probably a supply and demand issue, as there are lots of those books out there..
Help me out here-is the proper word *effect*, or *affect* ?
Thanks to Chris / CopCarSS for my avatar.
If Walmart was relying heavily on RR service, they probably wouldn't have sited one of their distribution centers in St George, Utah - which is decidely not very close to the UP's line in southern Utah. I also heard that they were hurting from the rise in diesel prices since they were heavily dependent on trucking for getting the goods to the store.
My guess is that Walmart's impact on railroads is more negative than positive - and the operative word here is guess.
For better or worse, large retailers effect consolidation of purchasing, manufacturing, logistics, and sales, all of which redounds to the benefit of railroads because it creates larger and more predictable volumes on fewer lanes. The intensive off-shoring of labor-intensive assembly processes has created substantial volumes of container traffic from ports to inland distribution centers.
Railroads are fundamentally a consolidation business. Economies appear only in trainload volumes. While offshoring has wiped out labor-intensive low-tech manufacturing in the U.S., e.g. clothing, shoes, and cheap household appliances and electronics, that business was increasingly not railroad-available after about 1920 anyway.
Murph, as to your question about which came first, retailers demanding better economies and railroads responding, it's a chicken-and-egg question. The change in retailing certainly created conditions that enabled railroading to leverage its intrinsic economies. But without those intrinsic economies big-box retailing would have nothing to demand. Retailing, railroading, trucking, and warehousing are old, mature technologies, and innovation occurs in tiny increments. All of these industries are good at knowing exactly where the edge of their envelope lies, and when structural changes move the envelope edge one way or the other, they react very quickly. There are individual companies that for internal cultural reasons learn slowly or quickly, or trap themselves through contractual agreements, but those aren't hard to see.
RWM
From time to time I've seen Walmart listed on intermodal train lists. A distribution center wouldn't have to be on or near a railroad. Most likely anything received from a domestic supplier will arrive by truck. Something from overseas by container, which also will arrive over a highway for final delivery.
What containers that would go partly by rail would probably depend on how far the distribution center is from a port.
Jeff
Wal-Mart is built on efficient distribution.
Every store is within an overnight truck run from a distribution center. They track what a store sells through their scanners and they can restock for the next day overnight. (I know, they tend to be open 24 hours, but this overnight system works.) If a product is flying off the shelves they can keep it in stock. If it's not moving, they don't make the stores take it.
Their efficient distribution and restocking has just left Sears, etc. in the dust. How the product gets to the DC is a matter of efficiency and timing. And they do sell US made products, not just things made in China.
One case in point is Pampers, a disposable diaper. Now you can imagine how a young family with both parents working and a baby is stressed for time and money. They tend to buy disposable diapers at Wal-Mart. Traditionally, Sears would have bought the Pampers from Procter and Gamble, received them at a DC, then distributed them to the stores.
That ain't the way it works at Wal-Mart. They never buy the diapers from P&G, but they sell the diapers in their stores. P&G delivers the Pampers to the WM DC by the most efficient means. WM keeps track of individual store sales and restocks overnight. When the Pampers scan at check out, Wal-Mart electronically transfers an agreed upon amount of money to P&G. It's as efficient as Hell.
Wal-Mart is a largely untapped gold mine for railroads. So far, the Florida East Coast is the only railroad to figure this out. They opened a new intermodal terminal at Ft. Pierce to serve a south Florida Wal-Mart DC. (They'll also handle other freight there.)
One example. If the Union Pacific had a real marketing department, there would be an intermodal facility near the Wal-Mart DC in Tomah, WI. The UP has an underutilized line that goes right by there, but they let those containers go on I-94. And nobody in Ft. Worth or Omaha is even thinking about it.
erikem wrote: If Walmart was relying heavily on RR service, they probably wouldn't have sited one of their distribution centers in St George, Utah - which is decidely not very close to the UP's line in southern Utah. I also heard that they were hurting from the rise in diesel prices since they were heavily dependent on trucking for getting the goods to the store.My guess is that Walmart's impact on railroads is more negative than positive - and the operative word here is guess.
Murphy Siding wrote: Some time back, we had a pretty good discussion about just in time shipping, on a thread Gabe started about why intermodal trains are run so fast. The general thought was, that it had to do with getting all those containers from L.A. to distribution centers of people like Walmart. I'm reading an anti-Walmart book right now. I know- there are literally 100's of them out there, and it's not nearly as exciting as reading about trains. Among other things, I think Walmart makes other companies-competitors and supplies alike-rethink how they do business. Vendors, for examlpe have had to figure out how to be more competitve, and how to survive on thinner margins. Walmart contends that they have pushed companies to do a better job at what they do, in order to get Walmart's business. Has this change in retailing, by Walmart, and the other big boxes greatly affected how railroads do business? In essence, has it caused railroads to do a better job at what they do? ( Please- interested in the railroad aspect of it, not the pro/anti Walmart aspect of it. The anti-Walmart sentiment is so widespread, that an anti-Walmart book sells for about 99 cents. That's probably a supply and demand issue, as there are lots of those books out there.. Help me out here-is the proper word *effect*, or *affect* ?
greyhounds wrote:One example. If the Union Pacific had a real marketing department, there would be an intermodal facility near the Wal-Mart DC in Tomah, WI. The UP has an underutilized line that goes right by there, but they let those containers go on I-94. And nobody in Ft. Worth or Omaha is even thinking about it.
Wouldn't the value of that gold mine depend on the cost of the faclility construction, any necessary track upgrades (Adam's line still has jointed rail ), finding extra crews/equipment, coordination of existant traffic, and what WM is willing to pay? I know that line isn't very heavily used (IIRC) but I have heard that they are short of crews in certain areas.
Dan
All roads seem to lead to Walmart, even in transportation. Having had customers that move Walmart business, here's a bit of an overview at least from my account management experience.
First, Walmart moves over 100,000 containers a year on the railroad for which I work. What happens with a lot of the traffic is that products come into the US in international containers and then move in traditional doublestack service to inland points.
Second, a lot of the freight is broke down and reworked. Depending on the port of entry, the box will be worked at a warehouse on site or move to another inland where it often gets reworked and reloaded into a domestic container. It just depends on the commodity, destination, and port of entry. Generally, because the traffic isn't too time sensitive, the traffic generally moves in container versus trailer. Trailers move at higher priority, thus costing more. For general consumer goods, containers are the better price. And, we all know Walmart is the low price leader.
Overall, Walmart business on rail is big business. But to say they get preferential treatment, I wouldn't say that's the case. I've seen just about everything move for Walmart on the rail from Glade Air Freshners to Christmas ribbons and bows. Even lettuce and apples to Walmart touch the rail at some point, even in boxcars along the way into cold storage warehouses for distribution.
Norris, your title is correct as it stands. Complicated pair of words there, but if Wal-Mart has an effect on railroads, it affects them.
"Effect" could also be a verb, as in "Wal-Mart could effect a change in the way railroads do business." That could really affect the railroads.
Now that I've effectively infected this thread, I'll effect a retreat and watch how I've affected things.
Affectionately,
Carl
Railroader Emeritus (practiced railroading for 46 years--and in 2010 I finally got it right!)
CAACSCOCOM--I don't want to behave improperly, so I just won't behave at all. (SM)
http://www.bnsf.com/media/news/articles/2005/11/2005-11-09a.html
I read somewhere that Wal-Mart shipped 30% of their goods by rail, the rest being contracted out through other carriers like J.B. Hunt, Schnieder, etc. Once the containers are at the DC, they're unloaded and re-loaded onto Wal-Mart trucks bound for the stores. Those distribution centers must be enormous.
What I'm wondering is how much of the railroad intermodal business is Wal-Mart's? And how much more intermodal business could the railroads handle before being stuffed beyond capacity?
I think that one very important intangible is the way walmart has conditioned americans to accept flimsey trash so long as the selling price is low enough.
That way, if the widget you bought last time that you needed one, is broken before the next time you intend to use it, you run out and buy another cheapie...which the railroad gets an extra haul out of the bargain. This, as opposed to buying an heirloom quality widget that you would purchase once, and use the rest of your life, and eventually pass down for your progeny to use as needed during their lifetimes.
Dweezil wrote: I think that one very important intangible is the way walmart has conditioned americans to accept flimsey trash so long as the selling price is low enough.That way, if the widget you bought last time that you needed one, is broken before the next time you intend to use it, you run out and buy another cheapie...which the railroad gets an extra haul out of the bargain. This, as opposed to buying an heirloom quality widget that you would purchase once, and use the rest of your life, and eventually pass down for your progeny to use as needed during their lifetimes.
I thought we were not going to get into the pro/anti WalMart debate. But if you insist (I must, I must), last time I checked, there still are other stores that will sell you an heirloom quality widget. "Doctor, it hurts when I do this." Doctor answers, "don't do that."
Last two words when unloaded and ready to leave a Walmart DC...
"Comcheck Please"
That is how they get thier low prices. Charging truckers without drop/hook accounts fees up to 120 dollars per load inbound to unload it.
That was before 9-11 I dont know if they still continue that practice. I usually selected employers provided they have drop/hook accounts for WM DC's Drop a load, pick up an empty and gone in 20 minutes flat. Not wasting days waiting to unload.
That's why I'm more interested in the railroad aspect of it.
doghouse wrote:I thought we were not going to get into the pro/anti WalMart debate.
We're really NOT, m'kay?
Reality being that Walmart has been very influential in persuading American shoppers to place initial cost ahead of product quality in their list of priorities. And a fall out of that mentality is, that products made cheaply, are less durable.
So, It's quite legitimate to contemplate that such products will require replacement more frequently than their more durable counterparts. Enter the deliveryman..... do you think he's sad over the repeat business?
Youngrail wrote: All roads seem to lead to Walmart, even in transportation. Having had customers that move Walmart business, here's a bit of an overview at least from my account management experience.First, Walmart moves over 100,000 containers a year on the railroad for which I work. What happens with a lot of the traffic is that products come into the US in international containers and then move in traditional doublestack service to inland points.Second, a lot of the freight is broke down and reworked. Depending on the port of entry, the box will be worked at a warehouse on site or move to another inland where it often gets reworked and reloaded into a domestic container. It just depends on the commodity, destination, and port of entry. Generally, because the traffic isn't too time sensitive, the traffic generally moves in container versus trailer. Trailers move at higher priority, thus costing more. For general consumer goods, containers are the better price. And, we all know Walmart is the low price leader. Overall, Walmart business on rail is big business. But to say they get preferential treatment, I wouldn't say that's the case. I've seen just about everything move for Walmart on the rail from Glade Air Freshners to Christmas ribbons and bows. Even lettuce and apples to Walmart touch the rail at some point, even in boxcars along the way into cold storage warehouses for distribution.
How many times do you think a product is re-shuffled between railcar and a Wal-Mart DC..?
I live about a mile from a Wal-Mart distribution center and in 6 years I can count on one hand the number of times I've seen a truck w/a container behind it going in the gates. It all seems to be JB Hunt and Schnieder in, Wal-Mart trucks out.
Now....the number of times truck drivers turning down the frontage roads thinking they were on-ramps to the highway has been way more. Its funny in a way, seeing them backing up 3 miles in the dark down a crappy road wide enough for 2 geo's to pass eachother. Better yet, making a U-turn on a 2 lane road.
Gambi80 wrote: How many times do you think a product is re-shuffled between railcar and a Wal-Mart DC..? I live about a mile from a Wal-Mart distribution center and in 6 years I can count on one hand the number of times I've seen a truck w/a container behind it going in the gates. It all seems to be JB Hunt and Schnieder in, Wal-Mart trucks out.
CNW 6000 wrote: greyhounds wrote:One example. If the Union Pacific had a real marketing department, there would be an intermodal facility near the Wal-Mart DC in Tomah, WI. The UP has an underutilized line that goes right by there, but they let those containers go on I-94. And nobody in Ft. Worth or Omaha is even thinking about it. Wouldn't the value of that gold mine depend on the cost of the faclility construction, any necessary track upgrades (Adam's line still has jointed rail ), finding extra crews/equipment, coordination of existant traffic, and what WM is willing to pay? I know that line isn't very heavily used (IIRC) but I have heard that they are short of crews in certain areas.
No, not at all.
You'd want to at least start by using the RailRunner system (or alternative) to move containers. A terminal for such a system only needs:
1) An unused/underutilized side track near the DC 2) Some white rock dumped on that track to bring the rubber wheel surface up to track level 3) A local trucker with people trained to handle the RailRunner equipment
No significant expense there.
The RailRunner equipment is compatible with RoadRailers, so the existing RoadRailer trains on the route could handle the business. Make a set out NB and a pick up SB. (This may require that a brakeman be added to the crew for that district.) But otherwise, there are no new train miles and very minimal additional direct expenses. And no extra crews beyond the brakemen.
No track upgrades are needed. Jointed rail is not an issue. We're not talking 15,000 ton coal trains, we're talking some extra intermodal loads on existing trains.
What Wal-Mart is willing to pay is not an issue. They're willing to pay $0.04. Maybe. As long as the railroad can make timely deliveries at a charge below the motor rate, it will be WM's best choice and will get the business.
It shouldn't be a problem getting under the motor rate because there will be virtually no origin drayage expense. If the container comes into a Chicago intermodal terminal the railroad has to set it on a chassis anyway. It makes no difference if that chassis is RailRunner equipment. Might have to dray it from Priviso to the RoadRailer terminal on 103rd. I don't think that's going to be a deal breaker.
Destination drayage should also be minimal, since the idea is to locate the terminal near the DC.
An alternative would be to use the "Ramp Car" system. Ramp cars have been successfully used in mixed consists with RoadRailers by the CN.
It deserves a good look by the marketing folks. They've got an underutilized line to fill up.
Here's some information on RailRunner.
http://railrunner.com/
Dweezil wrote: Reality being that Walmart has been very influential in persuading American shoppers to place initial cost ahead of product quality in their list of priorities. And a fall out of that mentality is, that products made cheaply, are less durable.So, It's quite legitimate to contemplate that such products will require replacement more frequently than their more durable counterparts. Enter the deliveryman..... do you think he's sad over the repeat business?
You're absolutely right, and thanks for not attempting to turn this thread into a diatribe about Wal Mart, as Murph requested. It IS just like being Against Microsoft -- you buy their software and durned if you have to keep spending more money every couple years to upgrade.
I agree with your blanket indictment that Americans shop for low price vs. quality and durability. Shame on us. Everything inside the four walls of a WalMart is cheap, but less durable, as you say.
I never thought about it before, but the things I buy at WalMart do require frequent replacing -- GE light bulbs, Scott toilet paper, Bounty paper towels, Gillette razor blades, Edge shaving cream, Old Spice deoderant, Anco wiper blades, Pennzoil engine oil, Fram truck air filters, Planters peanuts, M&Ms peanut, 2-liter bottles of Coke Zero, Hallmark greeting cards, dog chewies, Scott's fertilizer, rolls of 35mm Kodak and Fuji film, Maalox antacids, milk, Campbell's soup, Coffee Mate, those $4 prescriptions... the list of "less durable" products they have hypnotized the American public into buying could go on forever.
Gambi80 wrote: Youngrail wrote: How many times do you think a product is re-shuffled between railcar and a Wal-Mart DC..? I live about a mile from a Wal-Mart distribution center and in 6 years I can count on one hand the number of times I've seen a truck w/a container behind it going in the gates. It all seems to be JB Hunt and Schnieder in, Wal-Mart trucks out. Now....the number of times truck drivers turning down the frontage roads thinking they were on-ramps to the highway has been way more. Its funny in a way, seeing them backing up 3 miles in the dark down a crappy road wide enough for 2 geo's to pass eachother. Better yet, making a U-turn on a 2 lane road.
Youngrail wrote:
You're right that a lot of WalMart product moves via intermodal, but it is with Schneider, JBH, and others. There's a fair amount that also moves "IPI" Inland Port Intact (i.e. International staying in steamship boxes to an inland point like Logisitcs Park Chicago. As mentioned, most of that is inbound to DC's where it will be held for a short period, mixed into WalMart private fleet trucks and dispatched in store-bound quantities to stores within a day's drive of the DC. WalMart has figured out where rail (intermodal) can fit into their supply chain and leverages it smartly.
WalMart will ship TOFC and COFC, depending on the transit spec of the product.
Poppa_Zit wrote:GE light bulbs, Scott toilet paper, Bounty paper towels, Gillette razor blades, Edge shaving cream, Old Spice deoderant, Anco wiper blades, Pennzoil engine oil, Fram truck air filters, Planters peanuts, M&Ms peanut, 2-liter bottles of Coke Zero, Hallmark greeting cards, dog chewies, Scott's fertilizer, rolls of 35mm Kodak and Fuji film, Maalox antacids, milk, Campbell's soup, Coffee Mate,
Which came first...the Chicken or the Egg?
Dweezil wrote:I think that one very important intangible is the way walmart has conditioned americans to accept flimsey trash so long as the selling price is low enough.
I dont recall any evidence of WalMart forcing people to purchase lower quality merchandise...
I tend to believe the chain of events is that the folks at Wal Mart figured out the cheaper stuff would sell better overall, by watching what folks bought.
Like wise, by paying attention, they could figure out the most economical overall way to get things TO the DC's and thus TO the stores.
It is interesting to hear reports that the stuff that comes from China in Containers arrives at the DC's in van bodies...It was probably less capital intensive to let someone else build the Logistics Center with sidings and warehouses to
a) receive the container
b) dray it to a loading dock, (since you can't off load it directly while on the rail car)
c) trans load it to a Van
d) send it out to the DC's.
I would be suprised to find that the entire contents of a single container actually end up in the same distribution center. By repackaging into Vans, and changing from Homogeneous packaging (Everything the same in the container) to Homogeneous Destination (Everything going to the same place) you optimize your Own warehouse space. Now, I dont have to have rail facilities at ALL of my DC's. (or any of my DC's). And, if things change, and I start purchasing items that dont arrive by container (hey, we find some items made in the USA at WalMart!) I dont have to invest in different infrastructure.
In retrospect, the system they have probably evolved into what it is today. Remember when WalMart was advertising "Made In America!"? How much of that traveled by Rail?
SO, here we have an amusing situation...some folks may now have a reason for liking (love may be too strong a word) WalMart...they provide lots of traffice for the Rail Road!
JSGreen wrote: Which came first...the Chicken or the Egg?
Well, as I recall it, there has always been an option to buy from the cut rate brands, but it was usually a niche market.
Walmart, with it's.....(*ahem*) unique style, is what pioneered the channel making the lower bin merchandise ubiquitous, the fact that many others have now followed suit does ABSOLUTELY NOTHING to undistinguish Wallmart as the pioneer in this venue. I'm sure the transportation middlemen do enjoy the repeat business.
Poppa_Zit wrote: I never thought about it before, but the things I buy at WalMart do require frequent replacing -- GE light bulbs, Scott toilet paper, Bounty paper towels, Gillette razor blades, Edge shaving cream, Old Spice deoderant, Anco wiper blades, Pennzoil engine oil, Fram truck air filters, Planters peanuts, M&Ms peanut, 2-liter bottles of Coke Zero, Hallmark greeting cards, dog chewies, Scott's fertilizer, rolls of 35mm Kodak and Fuji film, Maalox antacids, milk, Campbell's soup, Coffee Mate, those $4 prescriptions... the list of "less durable" products they have hypnotized the American public into buying could go on forever.
Thanks for (however unintentionally) making my point for me. You cite an extensive list of consumables. When durable goods are made so cheap and flimsy that they may become regarded akin to "consumable", the similarity is hard to ignore.
Think I'll buy a jumbo pack of lawn umbrellas this summer, there might be a little wind.
Dweezil wrote: JSGreen wrote: Which came first...the Chicken or the Egg? Well, as I recall it, there has always been an option to buy from the cut rate brands, but it was usually a niche market.Walmart, with it's.....(*ahem*) unique style, is what pioneered the channel making the lower bin merchandise ubiquitous, the fact that many others have now followed suit does ABSOLUTELY NOTHING to undistinguish Wallmart as the pioneer in this venue. I'm sure the transportation middlemen do enjoy the repeat business.
I'd have to strongly disagree with you on that. As a kid in the early in the early 70's, Kmart was the 800 # gorilla where I lived. A lot of people shied away from there, not wanting to buy any of that "cheap, throw away junk made in Taiwan". Walmart didn'y pioneer that market, they simply honed it. Even old Sam Walton says he got his ideas from others in the industry, then refined them more to his liking.
It seems rather silly, to villify the "transportation middlemen", for hauling freight. That is their business, after all. It appears to me, that ALL the big boxes are providing traffic to the railroads in the way of imports-no?
Murphy Siding wrote: I'd have to strongly disagree with you on that. As a kid in the early in the early 70's, Kmart was the 800 # gorilla where I lived. A lot of people shied away from there, not wanting to buy any of that "cheap, throw away junk made in Taiwan". Walmart didn'y pioneer that market, they simply honed it. Even old Sam Walton says he got his ideas from others in the industry, then refined them more to his liking. It seems rather silly, to villify the "transportation middlemen", for hauling freight. That is their business, after all. It appears to me, that ALL the big boxes are providing traffic to the railroads in the way of imports-no?
Red text: Where do you get the idea that I'm trying to "villify" (sic) the transportation middlemen? I'm being sincere when i say I'm sure they enjoy the second (and third, etc) hauls. Clearly it's not their fault my lawn umbrella disintegrates in any breeze stronger than 3 mph, they just bring me a new one as cheaply as possible.
Blue text: Well, I remember K-Mart from back in the day they were S.S. Kresge, and yes they certainly had their budget brands. But I don't believe they had the market share that Wallyworld now enjoys. But then most families I knew back then would not admit it if they did shop predominantly at K-mart
I suppose we could get into a debate about the meaning of words such as "pioneered" versus 'honed', but I think we are talking about the same thing, just differently.
As it pertains to the context of your original question, I stand firm in my belief that the shopping appetite that walmart has so expertly "honed" , where lower quality merchadise enjoys wider acceptance (the "low first cost" mantra).....has had a tangible effect upon railroading, in the form of replacement hauling.
Do you disagree with that premise, or is it various and sundry other sensitivities on the prowl here?
Dweezil wrote: As it pertains to the context of your original question, I stand firm in my belief that the shopping appetite that walmart has so expertly "honed" , where lower quality merchadise enjoys wider acceptance (the "low first cost" mantra).....has had a tangible effect upon railroading, in the form of replacement hauling.
My question is: Has the change in marketing, brought on by the big box retailers of the world (including Walmart of course) caused the railroads to have to become more efficient and competitive/
ps. If it's making you feel sic(k), I'll go and look up how to spell villify.
Murphy Siding wrote:I'd be fairly certain, that lower cost providers have been around as long as money has been around. I'd even wager that throw-away products have been around for a few years as well. Made in Japan....made in Taiwan...made in Mexico...made in China...etc. We'll always have a low cost labor provider somewhere in the world for manufactured goods.
Yes, but before all that finely "honed" marketing expertise went to work making lower bin products ubiquitous, it mattered less, because the slice of the pie was smaller.
Then there is the part where demand for quality merchandise drys up due to patron's succumbing to the "cheaper is better" philosophy...driving the quality products out of the market place, but since you said you didn't want to go there, I've purposefully been avoiding it.
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