Investments in Rail Transportation Spur Advantages, Growth
Rail, or intermodal, transport is fast becoming the shipping mode of choice for many businesses – specifically as an alternative to truckload. This is largely in response to many of the current market conditions in the trucking industry, like unstable fuel prices, infrastructure deficiencies, driver shortage, and government policies restricting the number of hours drivers can be on the road.
Over the past few years, the truckload industry in the United States has also seen volatile conditions in terms of rates, scheduling, and volume. The intermodal market sector, however, has been more stable. And, capital spending to upgrade the shipping rail network coupled with upgraded technology has rail freight well positioned for the future. In fact, analysts predict that intermodal freight in North America will grow at a rate of about 5.57 percent from 2017 to 2021.
The Association of American Railroads reports that our country’s freight railroads have spent more than $635 billion since 1980, including record amounts in recent years, to create a freight rail network that is second to none in the world.
These investments include maintenance, expansion, and technology. All modernizations have helped increase rail market share by improving safety, network connectivity, reliability, and overall speed. Union Pacific explains that, “Maintaining a healthy railroad is the foundation of our ability to serve customers and communities.”
Six Advantages of Rail Transportation
This trend pushing more freight volume towards intermodal will continue, especially as truck capacity tightens. For shippers considering intermodal as an alternative to truckload, here are six advantages you may find for your own logistics operation.
Reliability: Intermodal transportation gives shippers more options for transporting goods on time. Since trains run on a set schedules, there is less variability in pick-up and delivery times as compared to the truckload. HOS (hour of service) and driver performance are big variables that affect service reliability. The driver shortage, maybe above anything else, is affecting the trucking industry and has caused more companies to choose rail as a shipping option.
Cost effectiveness: Using intermodal transportation can save money, especially for longer haul loads. This is another main advantage of this mode. And, the efficiencies gained when using double-stacked containers are even greater. One ton of freight can be transported 400 miles on one gallon of fuel; far more miles than trucks, which translates to lower rates for shippers.
Environmental-friendliness: Shippers who are concerned with the environmental impact of their supply chain are attracted to intermodal as well. It produces significantly less carbon dioxide per 100 ton-miles than trucking. In fact, trains are more than ten times energy-efficient as trucks per ton/mile.
Ease of use: Shipping via rail freight transportation can be very convenient for the shipper. Typically, the company providing drayage services (i.e. getting your freight to the railroad’s ramp) is local and will be very accommodating when it comes to picking intermodal containers up and spotting trailers. In other words, they make getting your product out the door easier.
Heavy freight: If you ship heavy and dense freight, rail is the way to go. Whereas trucks have a limited capacity of 45,000 pounds, rail is efficient at moving heavier freight over long distances. With the industry’s continued investment in capacity for moving heavy shipments, this area of rail shipping that will become even more cost-effective.
Ability to ship anything: Rail freight enables companies to ship a full range of products, including cold and frozen goods. Cold chain shippers who are looking to satisfy the intensive requirements of perishable goods with the goal to cut resource consumption have found that rail transportation can do both.
The idea of using intermodal can be intimidating for anyone not familiar with how it works. But, done right, it’s a direct way to reduce logistics costs while getting more reliable service. Start by finding a trusted partner that can help evaluate whether you can successfully integrate rail transportation into your logistics network.
Andrew Lynch is co-founder and president of Zipline Logistics, an Ohio-based 3PL that specializes in providing multimodal transportation services and business intelligence for CPG, retail, and food and beverage customers.