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The Competition

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Posted by Ulrich on Tuesday, December 10, 2013 8:36 AM

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. 

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Posted by BaltACD on Tuesday, December 10, 2013 7:07 AM

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.

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Posted by greyhounds on Monday, December 9, 2013 10:22 PM

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..

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.

  

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by Murphy Siding on Monday, December 9, 2013 9:23 PM

      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.

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Posted by schlimm on Monday, December 9, 2013 8:43 PM

Murphy Siding

schlimm

greyhounds
The 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.

Not much creative thinking is needed to go after the low-hanging fruit.  Nor does being a cheerleader for complaceny ever lead to improvement.  Railroads do a lot of things right, but one wonders how much business they have lost over the years since Staggers, both new business not obtained because it's too hard and old business that was lost for neglect of customers.   Carrying various bulk trainloads is great, as is double-stacks of import containers.   But what happens as natural gas replaces coal at more and more utilities?  Or a widened Panama Canal cuts down containers shipped from the West Coast? Or other contingencies?
Ken was/is a very creative guy when it comes to marketing.  That is the sort of positive direction that needs more recognition.  

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Posted by jeffhergert on Monday, December 9, 2013 11:06 AM

John WR

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.

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Posted by John WR on Monday, December 9, 2013 9:04 AM

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.   

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Posted by CSSHEGEWISCH on Monday, December 9, 2013 8:03 AM

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?

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Posted by daveklepper on Monday, December 9, 2013 4:22 AM

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.

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Posted by Murphy Siding on Sunday, December 8, 2013 10:52 PM

schlimm

greyhounds
The 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.

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Posted by schlimm on Sunday, December 8, 2013 6:23 PM

greyhounds
The 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..

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Posted by jeffhergert on Sunday, December 8, 2013 6:04 PM

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.

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Posted by greyhounds on Sunday, December 8, 2013 12:39 PM

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.

 

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Posted by Dakguy201 on Saturday, December 7, 2013 6:25 AM

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.

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Posted by greyhounds on Friday, December 6, 2013 11:25 PM

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.     

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by greyhounds on Friday, December 6, 2013 10:09 PM

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

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by schlimm on Friday, December 6, 2013 8:53 AM

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.

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Posted by Murphy Siding on Friday, December 6, 2013 7:57 AM

     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.

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Posted by greyhounds on Thursday, December 5, 2013 9:44 PM

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.

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by Murphy Siding on Thursday, December 5, 2013 8:57 AM

tree68

If it's impossible, how are UPS, et al, doing it? 

     UPS isn't shipping just a single car every now and then.  Tell the railroad that you have a large quantity of traffic to move from a certain point A to a certain point B on a regular basis, and the game changes.

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Posted by henry6 on Thursday, December 5, 2013 8:49 AM

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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Posted by tree68 on Wednesday, December 4, 2013 10:46 PM

If it's impossible, how are UPS, et al, doing it? 

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Posted by RRKen on Wednesday, December 4, 2013 10:02 PM

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.

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Posted by bobwilcox on Wednesday, December 4, 2013 3:47 PM

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.

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Posted by oltmannd on Tuesday, December 3, 2013 2:26 PM

greyhounds
The 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!

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Posted by Ulrich on Tuesday, December 3, 2013 12:33 PM

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.

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Posted by CSSHEGEWISCH on Tuesday, December 3, 2013 6:56 AM

The point seems to be that such small traffic sources are probably more important to forwarders and consolidaters than to the railroad itself, especially since railroads have turned into transportation wholesalers and rarely deal directly with such small shippers.

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Posted by greyhounds on Monday, December 2, 2013 9:48 PM

Thank you.

I realized I wasn't getting my point across.  I was struggling with how to express it differently, or to just drop the whole.thing.  

The 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.  

What I'm trying to say is that the railroads need to have a good understanding of what these aggregate volumes, and revenues, are so that they can tailor their services to enable the retailers to succeed.  I am confident that the railroads, in general, do not have the knowledge.  They simply don't know what they don't haul.

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Posted by oltmannd on Monday, December 2, 2013 1:29 PM

greyhounds

And that is where the railroads fall down.  They don't analyze an origin territory's potential.  They develop service plans based on what they have, not on what they could have.

For many decades, as other US companies developed a marketing culture that oriented their services and products to customer demands, the railroads were prevented  from doing so by the idiot government regulators.  So the railroads are playing catch up.  And it's hard to catch up when the other guys are off and running.

I wonder if the bulk of the problem isn't  where this stuff fits in the pecking order.  Domestic intermodal is growing about as fast as the RRs can acquire cars and build terminals.  This "fruit" may not be "hanging low enough".....yet.

To your point of analyzing a territory's potential....I believe that's exactly what got NS going on the Crescent Corridor.  I don't remember the whole story, but they had gotten a hold of truckload OD pair data and found out the true size of the market.

To your point of 

greyhounds
After all, we're not handling it now.  So how could we possibly acquire the business?
I will say that even to this day, there is a lot of disdain for intermodal operation on the transportation side of the house.  I don't know if it's the perception of low margin or that intermodal marketing is so "picky" about their trains arriving on time!  It's interesting to ask "What do you think our traffic mix will look like in 15 or 20 years?"  

The "run the trains to serve the current customers" is EXACTLY the Amtrak LD train marketing scheme, however.....or maybe "run the trains to serve the customers we had 50 years ago"!

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Posted by Ulrich on Sunday, December 1, 2013 11:02 PM

The shippers I deal with value simplicity. They don't really care who or what picks the load up so long as it gets to its destination. You know how I get my business? I answer my phone on the first ring and respond to email rate quotations within 20 minutes. That responsiveness alone gets me a ton of business. The other guy might be cheaper, but what good is that if he takes a week to quote? Conversely, the killer of all business deals is the old "I'll get back to you". Nothing beats "my price is XYZ and your load will be picked up this afternoon". Simple simple simple.

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