jgiblin wrote:Well, it's doubtful that any significant change from truck back to rail will ever occur thanks to one very simple phenomenon. Every trucking company manager knows that if he does not find a way to continually meet or exceed his customer's expectations, there are at least 10 other trucking companies lined up just outside the customer's door waiting for the chance to handle that customer's business. Competition is a wonderful motivator and it has given us the highest standard of living in the world today.By contrast, railroads are not under this kind of pressure for continuous improvement. All of them either have an oligopoly or monopoly, depending on the commodity and market. They just don't have the same level of intense commitment to the customer and the marketplace that truckers have. An awful lot of them just don't seem to care very much anymore. Remember that the infamous phrase "demarketing" came out of the railroad industry not the trucking industry.Yes, it's true that rail service is the best it's ever been. And most shippers and receivers will tell you that rail service overall is about where the trucking industry was 10-12 years ago.
Well, it's doubtful that any significant change from truck back to rail will ever occur thanks to one very simple phenomenon. Every trucking company manager knows that if he does not find a way to continually meet or exceed his customer's expectations, there are at least 10 other trucking companies lined up just outside the customer's door waiting for the chance to handle that customer's business. Competition is a wonderful motivator and it has given us the highest standard of living in the world today.
By contrast, railroads are not under this kind of pressure for continuous improvement. All of them either have an oligopoly or monopoly, depending on the commodity and market. They just don't have the same level of intense commitment to the customer and the marketplace that truckers have. An awful lot of them just don't seem to care very much anymore. Remember that the infamous phrase "demarketing" came out of the railroad industry not the trucking industry.
Yes, it's true that rail service is the best it's ever been. And most shippers and receivers will tell you that rail service overall is about where the trucking industry was 10-12 years ago.
I don't disagree with anything you say, espically if you compare an owner operator with a an employee of any company. If the owner operator does well his kids get to eat! If he doesn't do well it is a personal disaster. Maybee that is why their are very virtually no financially succesful truckers. They give great service but for what? On the other hand the railroad guy can go to his boss and get millions of dollars to run apples from the PNW to the Northeast.
In addition a succesful trucker and railroad serve two distinct markets. People pay UPS pay very high rates per ton mile to move packages for service first and cost second. People pay the NS very low rates per ton mile to move coal from WV to Tidewater for cost first and service second. Things get very interesting when you move toward the middle and things are not quite so clear cut weighing service vs. cost.
jgiblin wrote: Well, it's doubtful that any significant change from truck back to rail will ever occur thanks to one very simple phenomenon. Every trucking company manager knows that if he does not find a way to continually meet or exceed his customer's expectations, there are at least 10 other trucking companies lined up just outside the customer's door waiting for the chance to handle that customer's business. Competition is a wonderful motivator and it has given us the highest standard of living in the world today.By contrast, railroads are not under this kind of pressure for continuous improvement. All of them either have an oligopoly or monopoly, depending on the commodity and market. They just don't have the same level of intense commitment to the customer and the marketplace that truckers have. An awful lot of them just don't seem to care very much anymore. Remember that the infamous phrase "demarketing" came out of the railroad industry not the trucking industry.Yes, it's true that rail service is the best it's ever been. And most shippers and receivers will tell you that rail service overall is about where the trucking industry was 10-12 years ago.
I think you're being overly pessimistic. The railroads can, and do, handle perishable commodities in competitiion with over the road trucking. So we're not talking about breaking in to a new line of rail business, but instead expanding an existing line as the economics of rail vis a vis trucking shift to favor rail.
Lettuce, for example, is a very perishable commodity. For the week ending 5/29/2008 the USDA reports that the Salinas-Watsonville District in California shipped around 354 truckloads of lettuce. 43 of those truckloads went on intermodal Z trains. That's a little less than one out of eight loads, but remember, the railroads aren't even trying (yet) to get the lettuce going to Seattle, Los Angeles, Minneapolis, etc.
On lanes where they are trying, they are being competitive with over the road trucking. And the railroads' competitive position vs trucking is only going to get better for the forseable future. I'm reasonably confident that the rail market share of this perishable business will increase dramatically sooner rather than latter.
I think that perhaps if we slowed things down just a little bit in places like the Meat Country and other parts of the shipping/Recieving it will be much better. The truly important cargos can speed to thier recievers and be unloaded within a few minutes to half a day max.
I used to be content ordering stuff online and allowing UPS Buster Brown to truck it from the west coast to where I am for a week across that hard hot southwest USA. Now I prefer to spend a few more dollars and order it flown by USPO or UPS. Small stuff, nothing big.
Trains seem to be doing good business these days. I think I remember a Sysco back east that tried to get railcars of food to get out from under the trucking thumb. The Sysco discovered that the railcars showed up whenever they showed up and then they got charged perdiem if they did not get railcar unloaded quickly. Now I think they allowed that siding and dock to be buried in HVAC equiptment, not sure.
I have not forgotten the Railex train from the West to Albany NY. There ought to be more trains with a priority schedule. This will take the pressure off truckers from sitting for days waiting for Produce to be blast chilled. Perhaps they can then go to Albany, base there and run regional sleeper and make a good living that way.
The last time I picked up a Produce load out of Americold in Salinas CA, or a location VERY much in that coastal area, I had 5 inportant bosses and brokers panting into the telephone... PLEASE Team Driver PLEASE!! THEY ARE READY AND WAITING FOR YOU. We proceeded to horsewhip the rig across the hills and through California rush hour to get to the dock asap.
We sit 20 feet from thier shipping office watching Satellite TV and cooking meals in the cab for the next 46 hours chugging away the entire time. Income for two people? ONE BIG FAT ZERO.
Never again. No cargo is that important... except wartime freight.
A couple of points that no one else has addressed yet.
First, there are existing produce moves from the west coast to the east that are rapidly gaining share. Railex which operates a twice weekly unit train of reefers from Washington State to Rotterdam, NY between specially constructed warehouses with trackage inside and otherwise specially equipped to handle produce.
Second, one reason many railroads have de-marketed produce is the extreme time and dmage claim exposures. There are a number of reasons for the excessive claims, old equipment, poor maintenance, disputes over fueling of reefers and lack of facilities at various locations, poor car management and others. These factors which can cause mass spoilage of produce or meats can result in very large claims far outweighing the transportation revenue.
Also, as has been mentioned trucks are faster and the public's expectations about the freshness of produce that is acceptable at markets has risen significantly since the end of World War II. Although our existing energy crisis which is wreaking havoc on the truckers may force a reduction in some of those expectations even as prices rise making rail a more acceptable and customary produce transportation alternative.
LC
bobwilcox wrote: If oil stays high their will be a shift from distribution systems that rely on trucks to systems that rely on rail. However, it will take a generation. When I earned my living improving the C&NW chemical business I saw a lot of traffic flows that made more sense moving by truck vs. rail. However, we continued to handle the traffic because the people paying the freight bills had started out working for railroads and were not comfortable with trucks. Just after I left the C&NW for the Espee in 1982 these people pulled the pin and were replaced by people that came out of the trucking business. Only then did much of this obvious truck traffic start to move by truck. Another reason to move from Chicago to San Francisco :).The same thing comes up with ethanol in today's market. The oil industry doesn't understand refinery inputs moving in anything other than a pipe line or tanker. We discovered this when we were putting together Shell's TankTrain from the Bakersfield field to Wilmington, CA. The critical part of the project was having the transportation people at Shell selling rail to their peers running the refinery.I think change will come in time and when it comes is will be a very deep change.
If oil stays high their will be a shift from distribution systems that rely on trucks to systems that rely on rail. However, it will take a generation.
When I earned my living improving the C&NW chemical business I saw a lot of traffic flows that made more sense moving by truck vs. rail. However, we continued to handle the traffic because the people paying the freight bills had started out working for railroads and were not comfortable with trucks. Just after I left the C&NW for the Espee in 1982 these people pulled the pin and were replaced by people that came out of the trucking business. Only then did much of this obvious truck traffic start to move by truck. Another reason to move from Chicago to San Francisco :).
The same thing comes up with ethanol in today's market. The oil industry doesn't understand refinery inputs moving in anything other than a pipe line or tanker. We discovered this when we were putting together Shell's TankTrain from the Bakersfield field to Wilmington, CA. The critical part of the project was having the transportation people at Shell selling rail to their peers running the refinery.
I think change will come in time and when it comes is will be a very deep change.
I think there's a factor here in the perishable market that didn't exist in the chemical business. This factor will speed up the change from truck to rail. (Although I do agree that getting people to change is the hardest part.)
Companies that ship perishables, such as Tyson, are back on their heels. The information I have is they're averaging a loss of $45 per bovine they dispatch. Smithfield just dumped its beef business. Swift has been sold so many times it'll make your head spin.
Pilgrim's Pride, the #1 poultry producer, is closing plants. Hog producers have been described as "Being in a state of shock" and not knowing what to do. They can't pass their increased costs along and they're bleeding money.
Now a smart railroad marketing person can make someone at Tyson, Swift, Pilgrim's Pride, etc. a hero and get him/her a promotion by showing them how they can save their employer significant money by shifting to intermodal. That will be the incentive for someone at the shipper to champion change.
Because of this, I think the "Change to Rail Intermodal" will come sooner rather than latter.
2600 miles between LA and Boston give or take a few miles.
Diesal 5.00 a gallon. Truck = 300 gallon fillup.
One Thousand Five Hundred Dollars to get 300 gallons of gas.
Figure in 6.0 Miles per gallon to move it. That comes out to 440 gallons. Idle time is 8 hours per day.. call it 10 for singles, almost none for teams. That's another3 gallons or so gone sitting still. (Remember, no APU's or assisted power/Hotel support)
Singles do it in about 6 days. (ALOT less than that but let's not go there today)
Teams do it in 72 hours.
Freight rate. Per mile. Need about 1.40-2.20 to break even and make a profit on that move.
Company driver pay is approaching .50 per mile. That works out to 1300.00
Already you have fuel at $2200.00
Add the two together and it works out to 3500 dollars in basic cost to truck that stuff LA to Boston.
You also are going to carry other costs on that truck. It does not turn a wheel without permits, taxes, weight fees, consumables, food, water etc etc etc
Call it roughly 4500 dollars basic cost to run one load in three days team between LA to Boston. That works out to about a rate of 1.73 per mile.
You, me, family, friends will have to pay that at the Grocery store. I think Apples now are about 1.60 per pound.
46,000 pounds of apples in the box will be valued at roughly 75 thousand dollars to somebody. It isnt hard to raise the price from 1.60 to 1.70. That ten cents will pay the 4600 dollars or so freighting charges from LA to Bos.
If Desiel os 10 dollars per gallon, those apples will be two bucks a pound or more and someone somewhere will haul it. Otherwise it all will rot in the grower's lands to waste.
Railway Man wrote: Thirty years ago we all thought intermodal was in most cases a method of making a profitable boxcar business into an unprofitable piggyback business and hoping to make it up on volume ... and now look what's happened.RWM
Thirty years ago we all thought intermodal was in most cases a method of making a profitable boxcar business into an unprofitable piggyback business and hoping to make it up on volume ... and now look what's happened.
RWM
Well, we didn't ALL think that.
But this isn't the place to go into a carbox vs. TOFC discussion.
Rail perishable business has been an absolute hot button for me since I worked to get bananas back on the IC(G). Chiquita and Dole would bring shiploads of bananas into Gulfport, MS and the railroad would look the other way like they didn't exist. I did get some of 'em back on the railroad. I had to fight the operating department ("bananas, we don't want to haul no stinking bananas") and the freight claims folks who dreamed of the day they would achieve their ultimate goal of never paying a claim for damaged freight the day the railroad handled no freight. But bananas rode the rails north. And I loaded the boxes with revenue freight both ways. UPS and LTL went just fine in a Chiquita container southbound. Money in the bank.
The perishable market is absolutely huge, and it's long haul. The meat market is very concentrated in large production facilities located far away from coastal population centers. It's steady, long haul business custom made for rail transport.
California produces almost half of the freish fruit and vegetables for North America. Also a huge market, something like 500,000 loads per year. Government regulation drove it from the rails. It'll come back. Trucking is becomming non economic.
It's only a matter of time.
I think you're way too pessimistic.
1. It's all about money. No one will shed any tears over walking away from a truck-centric transportation system if they can save a penny a pound by rail. They walked away from rail, didn't they? They can walk away from truck, too. The Class I railroads themselves may not be organizationally or culturally equipped to handle the retail-level trade that it may take to capture this business, but there are plenty of short lines, 3PLs, and ambitious ex-railroaders that understand how to make it work.
2. General growth in the economy will greatly favor railroads regardless of oil price increases. Ton-miles are expected to double in the next 25 years in the U.S. If market share between truck and rail is to stay the same, then trucking has to not just retain its current driver workforce but attract a new one, cover the rise in cost in diesel fuel, cope with the snarl of traffic congestion in cities (which will likely seek temporal and route restrictions), re-equip with EPA compliant engines, and maintain the same price/service ratio it has relative to railroads. How's it going to do that? I don't think anyone in transportation thinks it can.
3. Multiple transloads are not out of the question. Think about a UPS package -- city truck to dock, dock to pup, pup to intermodal ramp, deramp at the other end, pup to dock, dock to city truck. The package has switched modes or boxes eight times. That's an egregious example but even in bulk commodities we're moving grain by truck to covered hopper, covered hopper to steamship container, steamship container onto well car, well car to a port, container off the well car, container onto the ship (with probably a stop on the dock on the way), off the ship, onto a truck, and to a customer's feedlot. That's also eight handlings.
The existing rail perishables business might not have shown much growth in the past few years but that doesn't necessarily indicate it won't in the future. It might just not have quite reached its threshold yet. Thirty years ago we all thought intermodal was in most cases a method of making a profitable boxcar business into an unprofitable piggyback business and hoping to make it up on volume ... and now look what's happened.
I have assumed that no significant percent of perishables will ship by rail within the next few decades. When UP and CSXT started the Express Lane, I hoped that they would get more perishables to move by rail. However, the trains I have seen lately do appear to be have any more cars carrying perishables than those I saw back in 2001.
Also, it appears that shipping by truck is ingrained into the ag industry. Even though transportation costs have increased by 50% within the last year, there is no mention of looking into shipping by rail. The thing that stuck me was the guy was just hoping that prices would come down instead of looking at reducing them (shipping by rail). It looks like railroads have a very long way to go to get a significant percent of the perishables business.
You are right about the packing house being a transload point (along with sorting, grading, perhaps waxing, and packing). However, to ship by rail, most produce would require a second transload, perhaps a third at the other end.
"No soup for you!" - Yev Kassem (from Seinfeld)
Could perishables take priority over passenger trains? Certainly. In some corridors Z trains already do. Amtrak long-distance trains simply don't pay enough in track rental and time-keeping incentives to make them economically attractive. Corridor passenger trains are a different matter; many of the corridor operators are paying enough to obtain priority handling, often in the form of expensive capital improvements.
I am no expert on the "grow local" movement though I've read quite a few articles about it. I find it hard to believe that a majority of consumers will ever give a hoot. Cost of transportation will have to climb enormously to render hauling tap water half-way around the world so expensive that consumers will find it too pricy. There's a breaking point, of course -- we're discovering that $4/gallon gasoline seems to be one -- but who knows where it is. No one was sure where the breaking point was in gasoline prices and we blew right through $3/gallon with almost no effect on consumption.
I don't see the rising cost of transportation having anything but a positive effect on North American railroads until it becomes so high it forces the economy to contract severely. Certain business groups and lanes will be favored or harmed. One major reason railroads sought to grow in size through merger was to insulate themselves more heavily from economic fluctuations of this type. A year ago, we knew that Asian imports were showing signs of weakness. We also knew U.S. exports of raw materials would rise somewhat and offset some of this loss, but I think most of us have been surprised not only by the sheer volume of U.S. exports of raw materials, but by the strength of the carload business in general and also by the rapid growth of exported U.S. manufactured goods. Net for railroads overall is a very satisfying gain.
A couple of observations which I wonder may have some import with the topic:
Perhaps 60 years ago, maybe closer to 70, about the only thing that could sideline a passenger train when push came to shove was a meat train. Meat is heavy in shipping quantities, and certainly perishible in the wrong circumstances. So, such freights were hastened to their destinations. More than that, and certainly any specifics, I can't say. But could this happen again?
Secondly, there seems to be a stiff breeze behind the movement to consume locally produced foodstuffs of every kind. It is so costly the way we have lived, drinking Perrier and other imported waters, eating fruit produced several thousands of km away, and the like. If this notion were to gain a lot more currency and become a new way of thinking, what impact might it have on trucking and/or the railway?
-Crandell
Many of the shippers were not located on branch lines, but so what. What your question really gets at is if the abandonment of the ship-by-rail infrastructure, organization, knowledge, and practice is so great that the railroad has no reasonable chance of re-emerging as a significant transporter of perishables at any time in the near future.
The answer is of course, no, but again, so what. Seventy years ago the transportation of perishables was centered around the railroad, yet the truck gradually crept in and took market share bit by bit until all that is left is a fraction of the hard vegetables. If one had looked at perishables from the perspective of a trucker 70 years ago, one could have been daunted by the power and scope of the railroad operation, and been reasonable in deciding to seek a different line of business. But truckers did not quail. They chipped away at niches here and there and in a matter of 30 years -- less than a man's career length -- rendered moot the vast investment of perishables infrastucture, organization, and culture centered on the railroad.
If the railroad has value, railroads and shippers will find it creatively, at first in niches and then in broad swaths if the economics are there. The fact that the old infrastructure is gone is a good thing as no one will be tempted to return to use what is in all likelihood obsolete, worn-out, improper, or in the wrong place.
Remember that back before the invention of the truck, every orange and grape started its journey to the packing house in a wagon. The truck merely mechanized that. The railroad never reached into the field: the packing house always WAS a transload operation.
On my way home from work, I heard a story on the radio about how the average (if I remember correctly) cost to ship fruit from California to the east coast has gone from $6000 to $9000, via truck. They interviewed a guy from some type of ag organization, I do not remember what, who said hopefully the price will come down. Using trains was not mentioned. I wonder if that is because with almost all of the perishable shipments now moving by trucks much of the branchlines around here have been ripped out. Now almost all packing houses would have to transload.
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