The smaller sources offer better rates as they don't ship as much and therefore any advantages that can be accrued to volume shipping don't come into play. So yes, the smaller shippers (which account for 75% of all shippers) are best suited to freight brokers and forwarders who, in turn, find the best way to move those infrequent loads using whatever is available. Most railroads, though, have their own brokerage divisions... I compete with BNSF Logistics on some of my small stuff.
greyhoundsThe railroads probably cannot sell directly to small customers in an efficient way. But they don't have to. They can go through retailers who will aggregate the small volumes into shipment volumes that the railroads can well deal with.
Amen! I few years ago, I was talking to some NS intermodal folk and I stated that we didn't know who the beneficial owner of the freight. I was quickly corrected. "We do now!" I'm fuzzy on the who, why and where of it all, but it was good news!
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
They have evaluated this type of traffic and they only really want it through a third party. Its kind of like you can't by a car from Honda but only from a Honda dealer who may be selling half a dozen other brands.
The movement of one container/trailer from northern Minnesota to Houston, TX is going to take a lot longer than two days, no matter who handles it.
If it becomes a CP to Chicago - UP routing, the dray alone will burn a day, perhaps more.
Do you think there is a crane operator sitting right next to the trailer when the train is spotted? And what about the dray dork? You think he is parked at the exact spot and pulls the trailer exactly when it hits the ground? Then hauling it across town for two or three hours to UP. Once at Yard Center, do you think the security/check in gate holds everyone else for that trailer to arrive and waves him in? Is the crane operator waiting to grab that trailer as soon as it is unhitched? Better hope you did not miss the cut-off time, the train only runs once every 24 hours. Will the train depart as soon as the wheels hit the flat car? Once CHHOZ departs south, do you really think it will take just one day to get to Houston? Again, once in Houston, will the crane will be waiting exactly when the train stops, and unload that trailer to a waiting dray dork, who will speedball it to the customer?
If you answer yes to any of the above, your not dealing with reality. If you have an expectation that is how transportation works or should work, again, you are not dealing with reality.
Perhaps a box car would fare better? Only if you are a slow sleepy short line like PGR. Not many main line carriers sit waiting by a customer's siding waiting for a box to be loaded so it can be pulled as soon as the seal clicks. Then of course there are multiple switches, and handling from one train to another. From one carrier to another. You are lucky if a unit train makes it from Iowa to S. Texas in two days from release time to time on-spot. Again, that is every day reality, not pie in the sky dreaming.
If it's impossible, how are UPS, et al, doing it?
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tree68 If it's impossible, how are UPS, et al, doing it?
UPS, et al, use hubs and terminals. Everything in a given area goes to a local terminal, then to a regional hub then to a major hub then backwards to local terminals. Local trucks, then highway trucks and truck trains, then trains, then back to highway trucks and truck trains, then local trucks. And maybe with more minor or step up/step down hubs in some places.
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RRKen The movement of one container/trailer from northern Minnesota to Houston, TX is going to take a lot longer than two days, no matter who handles it. If it becomes a CP to Chicago - UP routing, the dray alone will burn a day, perhaps more. Do you think there is a crane operator sitting right next to the trailer when the train is spotted? And what about the dray dork? You think he is parked at the exact spot and pulls the trailer exactly when it hits the ground? Then hauling it across town for two or three hours to UP. Once at Yard Center, do you think the security/check in gate holds everyone else for that trailer to arrive and waves him in? Is the crane operator waiting to grab that trailer as soon as it is unhitched? Better hope you did not miss the cut-off time, the train only runs once every 24 hours. Will the train depart as soon as the wheels hit the flat car? Once CHHOZ departs south, do you really think it will take just one day to get to Houston? Again, once in Houston, will the crane will be waiting exactly when the train stops, and unload that trailer to a waiting dray dork, who will speedball it to the customer? If you answer yes to any of the above, your not dealing with reality. If you have an expectation that is how transportation works or should work, again, you are not dealing with reality. Perhaps a box car would fare better? Only if you are a slow sleepy short line like PGR. Not many main line carriers sit waiting by a customer's siding waiting for a box to be loaded so it can be pulled as soon as the seal clicks. Then of course there are multiple switches, and handling from one train to another. From one carrier to another. You are lucky if a unit train makes it from Iowa to S. Texas in two days from release time to time on-spot. Again, that is every day reality, not pie in the sky dreaming.
Well, there you go. It is absolutely impossible for the railroads to compete with trucks on a 1,200 mile move of ceiling tile from Cloquet, MN to Pearland, TX. Totally impossible, so he says. To prove it he sets up a straw man. Which would be his false claim that anyone ever suggested the railroads could deliver the load in two days. Then he makes absurd assertions about crane operators just waiting for the load, and so forth, and so on.
Neither I, nor anyone else, in this thread ever said the railroads could deliver in two days. What I said is that rail intermodal transit time was competitive. And it is. "Competitive" is not a synonym for "Two Days".
If all the customer was interested in was transit time the truck would have been at least driven by a team. But that would cost more, so the customer didn't bite. It's a service/price package the customer buys. If rail intermodal takes a day more and saves $300 the customer just might choose intermodal.
I'll put the rail transit time from Cloquet to Pealand at 3 - 4 days, depending on the cut off time of the UP Houston train at the Chicago area terminal. Route would be a combination rate over Chicago of BNSF-UP with truck transfer between the Chicago terminals.
It would be competitive with the truck movement.
There are always these people around loudly proclaiming why something can't be done. Well, this one can be done. The railroads just need the marketing organization to do it.
How many straw men can you load into one intermodal car? Actual transit time on the rails might be in the 2-3 day range. Actual time to get my load may be way longer, and generally quite unpredictable. Suppose the railroad doesn't pick up loads every day in Cloquet MN. ? I'm in a city of around 160,000 and, and the service here is 3 times a week. Suppose the car doesn't make the transfer from one railroad to the other the minute it hits the yard? Suppose the guy on the receiving end only gets service 3 times a week? I know, I know, what if, what if, what if... But in reality, service and predictability are big factors in determining shipping modes. The world works on a just in time inventory system. Ordering a rail car that will be here in 3 to 8 days, more or less, maybe, gives a guy a lot more worry factors to consider. We've been bitten a lot this year by the railroad unpredictability bug. I'm not saying this couldn't be done. What am suggesting, is that it would take a lot of time, money, and patience to get this up and rolling to the point where it makes money for the railroads involved, at the rates required to get the business. And, after the railroads develop this business, some fool trucking company will underbid the price anyway. In the long run, I think the railroads can make their money hauling big quantities of material from consistent endpoints on a constant, predictable basis. Once ceiling tile shipments out of Cloquet MN meet that criteria, it's game on. Until then, I really doubt if the railroads could make any money on this type of load, as long as there are hungry truck drivers out there.
greyhounds The load is a long haul of ceiling tile. From Cloquet, MN to Pearland, TX. Over 1,200 miles. It went by truck. The driver estimated it would take him 2 1/2 days. [my emphasis] Come on BNSF/UP. You go there. If your intermodal marketing departments can't get loads such as this on your rails you need to light a fire under 'em.
So it appears the "strawman" of 2 days transit originated within greyhound's initial post, with the 1/2 day dropping out later in the thread.
C&NW, CA&E, MILW, CGW and IC fan
schlimm greyhounds The load is a long haul of ceiling tile. From Cloquet, MN to Pearland, TX. Over 1,200 miles. It went by truck. The driver estimated it would take him 2 1/2 days. [my emphasis] Come on BNSF/UP. You go there. If your intermodal marketing departments can't get loads such as this on your rails you need to light a fire under 'em. So it appears the "strawman" of 2 days transit originated within greyhound's initial post, with the 1/2 day dropping out later in the thread.
Yes, I correctly stated that the truck driver estimated it would take him 2 1/2 days to deliver the load.
What I never said was that the railroads could deliver in 2 days. But that was used as a straw man against what I'm trying to get across.
The rails have to offer a competitive service/price combination. That does not mean equaling the trucker's time. It means that they offer enough cost savings to offset an extra day or two in transit. At 1,200 miles the railroads can well do that.
And, here's some proof that the railroads are, in fact, doing that:
http://www.intermodal.org/about/pressreleases/pr2013mts3q13.php
Murphy Siding How many straw men can you load into one intermodal car? Actual transit time on the rails might be in the 2-3 day range. Actual time to get my load may be way longer, and generally quite unpredictable. Suppose the railroad doesn't pick up loads every day in Cloquet MN. ? I'm in a city of around 160,000 and, and the service here is 3 times a week. Suppose the car doesn't make the transfer from one railroad to the other the minute it hits the yard? Suppose the guy on the receiving end only gets service 3 times a week? I know, I know, what if, what if, what if... But in reality, service and predictability are big factors in determining shipping modes. The world works on a just in time inventory system. Ordering a rail car that will be here in 3 to 8 days, more or less, maybe, gives a guy a lot more worry factors to consider. We've been bitten a lot this year by the railroad unpredictability bug. I'm not saying this couldn't be done. What am suggesting, is that it would take a lot of time, money, and patience to get this up and rolling to the point where it makes money for the railroads involved, at the rates required to get the business. And, after the railroads develop this business, some fool trucking company will underbid the price anyway. In the long run, I think the railroads can make their money hauling big quantities of material from consistent endpoints on a constant, predictable basis. Once ceiling tile shipments out of Cloquet MN meet that criteria, it's game on. Until then, I really doubt if the railroads could make any money on this type of load, as long as there are hungry truck drivers out there.
Nope.
In the first place, the railroad won't do anything in Cloquet, MN. Pick up or otherwise. The shipper, USG, will just load a truck and send it on its way. Just like it does now.
The truck will move to the St. Paul, MN intermodal terminal in lieu of driving all the way to Pearland, TX. At St. Paul the trailer/container will be placed on a flatcar and moved to Cicero, IL on an existing BNSF train (ZSTPCHC9?) There's plenty of time to do this since the cut off in St. Paul is 4:00 AM So a load out of Cloquet won't need any special handling.
At Cicero the load will be removed from the flatcar. It will then be driven over to the UP ramp and loaded on their Houston train. I don't know, and cannot find out, what the cut off is for the UP train. So I don't know if the load will spend a few hours in the Chicago area, or a little more than a day.
But the UP says it's two days from Chicago to Houston. So I make it a 3-4 day consistent transit by rail intermodal vs. a 2 1/2 day transit over the road. That's competitive IF there are enough cost savings At 1,200 miles the cost savings should be there..
At the UP Houston IM terminal the trailer/container is removed from the flatcar and delivered by local trucking. Nothing out of the ordinary here. Such things happen every day.
As to railroads making money from consistent movements, please don't evaluate this as a one off move. That USG factory in Cloquet is consistently pumping out product and it needs to go somewhere. It's reasonable that Houston needs new ceilings on a regular basis. Similar to other large markets.
There are other shippers in the area that can be economically service by the St. Paul IM terminal. Shippers that may, on their own, only produce a few loads. But taken as an aggregate they produce a significant marketing opportunity.
What I've been saying is that the railroads generally currently lack the wherewithal to do this market evaluation. They cannot look at an aggregate of customers and synthesize those customers so as to evaluate the opportunities.
It's not an operating problem. It's a marketing problem. The operations are just fine. All it would take is the establishment of rates out of Cloquet, and other origins, to get the ball rolling.
The railroads were prohibited by inane government regulation from developing marketing. And they're now still playing catch up.
I'm not convinced the first move has to occur by truck. I believe the shipper described in the original post is the Sappi Paper Mill, a USG plant. That plant is served by the Cloquet Terminal Railroad, a short line with about 6 miles of track; but they interconnect with both the BNSF and the CP. Combine that with the team track in Houston, and you have a pretty simple shipment.
Dakguy201 I'm not convinced the first move has to occur by truck. I believe the shipper described in the original post is the Sappi Paper Mill, a USG plant. That plant is served by the Cloquet Terminal Railroad, a short line with about 6 miles of track; but they interconnect with both the BNSF and the CP. Combine that with the team track in Houston, and you have a pretty simple shipment.
Well, there are several ways to approach this. Carload could be one of them. But I would imagine that the Cloquet Terminal has already tried to convert this to carload. At least I would hope they had.
One big factor working against carload, besides the inevitable slow and erratic transit times, would be shipment size. The freight receiver is getting 43,000 pounds of ceiling tile by truck. He has to pay for it when he gets it. But the receiver doesn't get his money until he sells it. So he's got to finance carrying the inventory. He's also got to have space to store it. These things cost him money.
By receiving carload lots he would need to finance maybe four times as much inventory and have four times as much storage space. The added costs of carrying more inventory would work against carload.
With intermodal he can still receive the smaller lots.
greyhounds Dakguy201 I'm not convinced the first move has to occur by truck. I believe the shipper described in the original post is the Sappi Paper Mill, a USG plant. That plant is served by the Cloquet Terminal Railroad, a short line with about 6 miles of track; but they interconnect with both the BNSF and the CP. Combine that with the team track in Houston, and you have a pretty simple shipment. Well, there are several ways to approach this. Carload could be one of them. But I would imagine that the Cloquet Terminal has already tried to convert this to carload. At least I would hope they had. One big factor working against carload, besides the inevitable slow and erratic transit times, would be shipment size. The freight receiver is getting 43,000 pounds of ceiling tile by truck. He has to pay for it when he gets it. But the receiver doesn't get his money until he sells it. So he's got to finance carrying the inventory. He's also got to have space to store it. These things cost him money. By receiving carload lots he would need to finance maybe four times as much inventory and have four times as much storage space. The added costs of carrying more inventory would work against carload. With intermodal he can still receive the smaller lots.
The UP used to get box car loads of cereal out of the Kellogg's plant in Omaha. Kellogg's had their own box cars, old Conrail cars with most still in PC green and a few with "Penn Central" bleeding through patches. That traffic left the rails, at least as box car traffic a few years ago. Supposedly, there was an article in the Omaha paper stating that Kellogg was switching to trucks because the box car loads was too much product at one time for many of the receivers.
While there may be some truth to that, I always figured it was a more "PC" (politically correct, not Penn Central) way of saying UP's service was bad. I can only hope that maybe some of the loads were converted to intermodal. Some of the box car loads used to go east out of Council Bluffs. Those loads were lost to the UP. UP doesn't load intermodal for destinations east of Council Bluffs there, only to points west of there.
Jeff
greyhoundsThe railroads were prohibited by inane government regulation from developing marketing. And they're now still playing catch up.
Ken (greyhounds): You certainly have made some suggestions on this thread and others for new business the rails could try for. One would think the 18 years since the ICC was abolished, the 33 years since the passage of the Staggers Act and the 37 years since the passage of the "4R" would be sufficient time for the railroads to establish modern, aggressive marketing departments and change corporate culture. But judging from the examples and "yes, but" comments here, looks like you are a lone voice crying in the wilderness and the rails only want the low hanging fruit..
schlimm greyhoundsThe railroads were prohibited by inane government regulation from developing marketing. And they're now still playing catch up. Ken (greyhounds): You certainly have made some suggestions on this thread and others for new business the rails could try for. One would think the 18 years since the ICC was abolished, the 33 years since the passage of the Staggers Act and the 37 years since the passage of the "4R" would be sufficient time for the railroads to establish modern, aggressive marketing departments and change corporate culture. But judging from the examples and "yes, but" comments here, looks like you are a lone voice crying in the wilderness and the rails only want the low hanging fruit..
And there is the quesiton of capacity. And as proven by all the legal work BNSF had to do just to double-track Arroya Canyon, adding capacity to handle additional business is not always easy, even if the money is available.
Other questions that needs to be asked: Is this business worth the effort? Will it contribute enough to the bottom line to justify the pursuit?
Murphy,
I think you and I agree that when all private freight railroad companies are observed to have the same practices it is pretty naive to assume they are all incompetent and don't recognize their self interest. So if they do not pursue certain kinds of business we ought to conclude they have found the best way given the environment they operate in.
As I understand Schlimm he simply tries to understand why freight railroads operate as they do. I don't want to be defensive as Schlimm is perfectly capable of speaking for himself. And I don't want to be argumentative either but it does seem to me that the idea that any freight railroad will feel chastised for anything posted here is a bit of a stretch.
Thirty three years is a rather long time to be catching up. Perhaps the freight railroads believe they have caught up and people who suggest otherwise just don't understand them.
John
John WR Perhaps the freight railroads believe they have caught up and people who suggest otherwise just don't understand them.
Perhaps the freight railroads believe they have caught up and people who suggest otherwise just don't understand them.
That includes many railroad employees, me included. But then, I remember when we used to be busy most of the time. Business has been down on the section I work, but they don't seem to be too worried about getting new business to replace what they've lost.
Murphy Siding schlimm greyhoundsThe railroads were prohibited by inane government regulation from developing marketing. And they're now still playing catch up. Ken (greyhounds): You certainly have made some suggestions on this thread and others for new business the rails could try for. One would think the 18 years since the ICC was abolished, the 33 years since the passage of the Staggers Act and the 37 years since the passage of the "4R" would be sufficient time for the railroads to establish modern, aggressive marketing departments and change corporate culture. But judging from the examples and "yes, but" comments here, looks like you are a lone voice crying in the wilderness and the rails only want the low hanging fruit.. Who wouldn't go after the low hanging fruit first? I'd guess that in the 18 years...33 years... 37 years...blah, blah, blah, a lot has changed in the entire economy of our country, not just in the railroad business. Maybe, in your zeal to portray railroaders in a poor light, you are using the wrong ruler? Given all the factors involved, perhaps the railroads should not be chastised for new business that haven't yet got, as much as being praised for the business they managed to hold on to, given the circumstances they were dealt.ps. Aggressive marketing is aggressive. It isn't always good business, and it isn't always successful.
I would think that most marketing in mature industries like railroads leads towards evolutionary, not revolutionary. This make sense, as so many things about a railroad's infrastructure and business is not very agile and quick to follow market trends. They're not internet start-ups that can follow the whims of what's hot today. Being big and inflexible surely has it's drawbacks, but being big, and having 100 years experience in the business certainly must have it's pluses.
schlimm .Ken (greyhounds): You certainly have made some suggestions on this thread and others for new business the rails could try for. One would think the 18 years since the ICC was abolished, the 33 years since the passage of the Staggers Act and the 37 years since the passage of the "4R" would be sufficient time for the railroads to establish modern, aggressive marketing departments and change corporate culture. But judging from the examples and "yes, but" comments here, looks like you are a lone voice crying in the wilderness and the rails only want the low hanging fruit..
.Ken (greyhounds): You certainly have made some suggestions on this thread and others for new business the rails could try for. One would think the 18 years since the ICC was abolished, the 33 years since the passage of the Staggers Act and the 37 years since the passage of the "4R" would be sufficient time for the railroads to establish modern, aggressive marketing departments and change corporate culture. But judging from the examples and "yes, but" comments here, looks like you are a lone voice crying in the wilderness and the rails only want the low hanging fruit..
Well, it's certainly a cold, snow covered, dark, wilderness tonight. But, at least, I don't seem to be alone.
The ball is rolling, and picking up speed, on perishables by rail. More truckers are using intermodal to move perishable loads and new companies, such as Tiger Cool, are starting up to move this business.
Third quarter 2013 domestic intermodal loads were up over 9% from 2012, with the southeast having the greatest growth. A few months ago Fred Frailey had a great article on Norfolk Southern IM. I'd rank them #1 in marketing. They have been able to identify potential business and plan services to get it. Heck, they're even putting in new IM terminals to serve the business,
As for the time it is taking..... This requires a change in corporate culture and such changes don't come quickly or easily. No one can direct such a change in thinking. It has to be developed. And there will be people, important people, resisting the change. The operating departments generally rule the railroad. They naturally want to provide the most efficient service they can for what is moving now. They tend to view running short trains to develop a market as a waste of money. Money that they could use better (in their consideration) elsewhere. They push back. As well they should. It has to be a balance between operations and marketing. The problem today is that the balance is very weighted to operations and the operating folks won't give that up easily.
But it's changing, a lot slower than I'd like, but it's changing. And the honchos aren't much concerned about what I like. I enjoy discussing these things. The most rewarding job I ever had was in intermodal marketing for the ICG. I was young and lived in an apartment in Richton Park, IL. I could walk over to the railroad after work and watch intermodal train #51 go by. I could watch the train, see the loads, and tell myself on some of them, "I put that load on that train." Great way to end a day.
Two things are involved in what 'fruit' carriers go after. What is the capacity of the line over which it is intended that it operate? How can the 'fruit' be priced to maximize the bottom line for the character of the traffic?
The primary routes of the major Class 1 carriers are nearing capacity - the carriers have been undertaking capacity enhancement projects for the to be able to effectively handle the traffic they already have. Would additional track capacity need to be built to handle the additional fruit? Would the additional fruit contribute it's monetary share to the additional capacity?
When it comes to the 'business chops' of rail managers/marketers. Until Staggers rail marketing/pricing/service was heavily regulated and didn't reward innovative marketing/pricing - as a consequence those managers in their rise to senior positions never learned the tactics. The Senior management in place at the time of Staggers had very limited real world unregulated experience to draw from and the overriding fear that something they did would be found 'illegal' as original ideas had in the past. It took time for this level of management to be worked out of their positions - it wasn't until the mid 90's that the old guard was moved out of the executive suites. The pervasive feeling fostered by the legacy management was that railroads were just marking time until their utility was superseded by other technologies, and their job was to conserve resources to return a maximum benefit to the stockholders. The Staggers era managements were far from forward looking.
Never too old to have a happy childhood!
Speaking of fruit, there's still a lot of low hanging fruit available. But it requires a change in mindset in order to grab it. Right around Staggers or shortly before, railroads were diversifying into other businesses, most importantly, into trucking and other modes. Since then we've come full circle, the railroads once again see themselves as railroads when perhaps they should be marketing themselves as diversified transportation conglomerates. A transportation company with a significant stake in both rail and trucking would be much stronger and more flexible than a stand alone trucking co. or railroad. Imagine a combination like CSX and Swift Transportation...wow.. that would be a force to be reckoned with. We go from trying to stick a square peg in a round hole (i.e. trying to make intermodal as flexible as trucking) to offering customers a wide range of services, from cost effective intermodal to truckload team driver service on the other end. No longer would we be wasting energy in trying to make one mode as effective as the other, we would instead be using each mode as effectively as possible.
A railroad trucking combination would also allow the transportation provider to move freight off the highways and on to rail in response to construction, traffic, or a driver shortfall. And conversely, freight could be moved off of rail in the event of a rail bottleneck, strike, shutdown etc. You would also have all kinds of career opportunities open up for people on both sides of the biz. A locomotive engineer might for example buy a couple of trucks to run on the side. A truck driver might decide that life as a switchman or conductor would be more suitable.
jeffhergert That includes many railroad employees, me included. But then, I remember when we used to be busy most of the time. Business has been down on the section I work, but they don't seem to be too worried about getting new business to replace what they've lost.
Jeff,
I have never worked for a railroad so it is hard for me to argue with your direct experience. But it is hard not to notice that freight railroad companies do not do things the way you and others here would advise them to. If you have any insight about why they don't perhaps you could share it with us.
PS, As I read the posts here I see the "low hanging fruit" theory has a lot of support. My father had a small apple orchard. If you have few apple pickers you are going to focus on the low hanging fruit as you can pick it a lot faster than you can if you have to haul and move a ladder. It does make sense to me that a railroad with a limited number of tracks would focus of filling its tracks with freight trains. If it is doing that it is being successful. But getting more freight would involve first constructing a whole new railroad track, a massive investment. Before you do that you would want to be sure you will have the business to pay for it.
As to capacity constraints as an excuse, I would simply point out that the sort of additional business greyhounds has been advocating for would not require building an additional track. But as he says, operations folks do not want change.
Ulrich Speaking of fruit, there's still a lot of low hanging fruit available. But it requires a change in mindset in order to grab it. Right around Staggers or shortly before, railroads were diversifying into other businesses, most importantly, into trucking and other modes. Since then we've come full circle, the railroads once again see themselves as railroads when perhaps they should be marketing themselves as diversified transportation conglomerates. A transportation company with a significant stake in both rail and trucking would be much stronger and more flexible than a stand alone trucking co. or railroad. Imagine a combination like CSX and Swift Transportation...wow.. that would be a force to be reckoned with. We go from trying to stick a square peg in a round hole (i.e. trying to make intermodal as flexible as trucking) to offering customers a wide range of services, from cost effective intermodal to truckload team driver service on the other end. No longer would we be wasting energy in trying to make one mode as effective as the other, we would instead be using each mode as effectively as possible. A railroad trucking combination would also allow the transportation provider to move freight off the highways and on to rail in response to construction, traffic, or a driver shortfall. And conversely, freight could be moved off of rail in the event of a rail bottleneck, strike, shutdown etc. You would also have all kinds of career opportunities open up for people on both sides of the biz. A locomotive engineer might for example buy a couple of trucks to run on the side. A truck driver might decide that life as a switchman or conductor would be more suitable.
Given that many of the US class 1's do provide door-to-door solutions to off rail customers I'm not sure what the appeal of investing capital in acquiring trucking firms would be.
If I am a shipper in the Eastern half of the US I can call CSX and have a domestic 53' container on a chassis spotted at my loading bay when I need it. The tractor pulling the rig will be owned be an owner/operator but will be contracted to CSX.
I can also call NS's Triple Crown service and a roadrailer will show up (although this is a more limited network destination- wise).
The biggest reason why a Class 1 may not want to own an over-the-road line haul trucking firm is that there is a risk of alienating an important customer base; truckload companies such as Schneider National and Swift who do a lot of intermodal TOFC (and increasingly) COFC.
If you are a Class 1 and you buy one of the big truckload outfits do you really think you can capture enough business from the other OTR firms to justify a loss of their trailers and containers on your trains?
There are very good reasons that the US freight railroad industry has chosen to focus on it's "core business".....
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
John, I these are some of the reasons I think they don't go after some of that business.
They are happy with what they have now. Just about every quarter since the economic down turn began it seems my company has been able to report good financial performance, if not record profits, even with less car loadings. While my area is slower than it used to be, other parts of the company are busy. Coal is down, and that's what has affected us the most. Frac sand is booming. From the reports given us by the company, a unit train of sand is worth the profit of three unit coal trains. (FWIW, The claim has been made that the first 5 or 6 cars of a sand train pays for all the costs of the train; fuel, crews, equipment, etc.) Since they are making up the difference plus, no real incentive to grow business elsewhere. But that frac sand boom might not last in it's current form. It might not go away, but what if the volumes drop or they aren't able to charge as much?
They might have to work more to get business. I understand it doesn't make sense to add another job to service an industry 10 or 20 miles out for just one or two cars. What I don't understand is where they already have yard or local jobs they don't try to get business at those locations. It seems like they would rather dry up that work and cut off the jobs. They had an opportunity some time back to add a customer where they have a yard engine or local that could've serviced them. The railroad wasn't interested. Sometimes I think it doesn't matter where the fruit is hanging, they just want some one else to do the picking for them.
Large volume/train mentality. On our grain lines, a large grain processor wanted to run shuttle trains from certain loading points to a centrally located plant. Trouble was the train size they wanted was 50 cars. My company still does 75 car grain trains, but they would rather have 100 or 110 car trains. The company wasn't interested. This ag company has in the past, and may still, own/lease some of their own cars. I've wondered if they would've supplied their own cars? If so, then I really don't understand them turning it down. Even if the railroad provided the cars, I'm sure any rate would be one that they would make money on, but maybe not as much as a car of sand.
During the economic slow down, we've had at times quite a few people cut off or working a retention/training board. Most have been recalled, but some cuts have happened again. (They even have a new hire class going on. Why, no one really knows. They will probably graduate to the cut off board.) I know they couldn't have replaced all of the business (although some has been lost to other carriers because of service issues and/or down right arrogance towards customers) but in contrast the Iowa Interstate during the same time didn't furlough anyone. They actually hired off and on because they were able to add business, possibly some of it at our expense. Like others have observed, smaller railroads are more customer friendly. Still. is there any real reason the larger ones can't be? Especially when it comes to intermodal which is where the larger ones claim that's where the growth is supposed to be.
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