Some people in the mass are predicting that manufacturing will return to the US because of cheap energy coming from the new hydraulice fracturing process. If that does happen, will railroads get a significant part of the transport business associated with it? Will most of it go to trucks because of the JIT doctrine embraced by alot of logistics and supply chain men? Will there be a significant share for intermodal?Inquiring minds want to know.
George
George,
First believe nothing you see in the mass media for two reasons. Virtually all of them are shills for the Democratic Party so they have in inbred bias. Secondly, most reporters know nothing about almost everything. This makes them easy conduits for anyone wanting to get a story out.
That said, there are forces working to shift some manufacturing back to the US. There are also forces driving business out of the US. To the extent manufacturing comes back to the US, it is difficult to make accurate and sweeping assesments of the transportation impact.
Each factory will arrange its transportation to achieve its business objectives. On the input side that will tend to favor low cost carriers such as the railroads. This would be new business to the railroads. On the output side they are likely to be more service sensative, since shorter lead times is one of their competitive advantages vs. a factory in China. That will tend to favor truck distribution, especially within a 500 mile radius. If they are shipping 1000 miles or more they may use intermodal. To the extent the finished goods are now moving by intermodal, there would probably be a net loss to the railroads, but it would all be transaction specific.
There is some excitement about a wider Panama Canal that will allow bigger container ships. Some believe that will encourage shipments to Gulf and Atlantic coast ports from Asia rather than the current norm of West Coast ports, then intermodal to eastern US. Some shift will probably occur. The big question is how much.
That can be got at by thinking of the value of the goods in the box. Someone has their money tied up in that inventory. For expensive items the West Coast/Intermodal route will hold up because the savings in freight rates via the canal will be more than eaten up by the additional carrying costs associated with the longer transit times. For cheap stuff the long and slow route to Atlantic ports may well make sense. Once at the port figure truck a
Both, I think. The railroads will get traffic where there are significant carload volumes to be handled, typically inbound material, like sheet steel. Finished goods, which tend to go out by truck, will be handled by intermodal trains when the trip length is long enough to justify the extra handling.
But, I wouldn’t hold my breath.
Caterpillar’s new hydraulic excavator (HEX) plant at Victoria, Texas plant (which opens soon, if it has not already) is taking work now done at Aurora, Illinois and in Japan, tripling N. American HEX production. The plant will be served by KCS and a recent issue of TRAINS noted a unit train movement Monterey, Mexico will supply the plant with large components. Plus, I expect some machines to leave the plant by rail.
While still on the subject of Caterpillar, criteria for re-locating small track-type tractor and mini-hydraulic excavator facility from Japan to N. America included rail access. The plant is being built at Athens, Ga. close to CSXT’s former SAL line. Some outbound shipments are possible.
Economic as well as environmetal considerations favor the railroads going forward. Trucking is becoming more expensive every day, and that will make intermodal transportation more attractive for shorter hauls as well. About JIT, I don’t see that as being as important as it once was. Most of the business that I see is classifed as “day definite”, which means that receivers want the loads on specific days. Time definite and JIT is very risky from the carriers’ perspective…if anything goes wrong the costs and the fines become astronomical. I deal with alot of automotive related business, and I just don’t get those late night calls from hysterical traffic managers anymore… fewer now expect their loads at a specific hour verses on a specific day.
Thanks to better computers and technology, the entire supply chain is so much better today than it was even five years ago. This means that shippers can plan their loads better and carriers can look farther out to see what loads are available so that they too can plan better. So now there’s much less panic freight that needs to get out today for delivery yesterday, and even transit times in general are now less important than they once were…because people can plan better.
Seesmart Inc, a small California lighting company, used to make all of its LED products in China, but last year that started to change.
Frustrated by expensive and slow shipping and wanting more control over the manufacturing process, the 15-year-old company started building factories in Simi Valley, California, and Crystal Lake, Illinois…
Prime candidates for return are bulky, heavy items. GE has shifted production of appliances from Mexico and China to Louisville, Kentucky, partly due to rising shipping costs. The new plant that Caterpillar is building near Athens, Georgia, will employ about 1,400 and make small bulldozers and excavators.
http://english.peopledaily.com.cn/90778/7887455.html
China’s single political party house organ reports on the trend.
There is no such thing as a Liberal press or media…it is not a shill for the Democrat Party. Ninety percent of the media is owned and operatied by big business conglamorates which are more wed to Wall St. than news. The concept of a Liberal media and shill of the Demcratic party is a myth promulgated by the Republican and other right wing citadels because a real free and open press will question what is and seek truths in what is happening; and those in power don’t like to be contradicted or found out. Media is no longer the local businessman broadcaster or newspaper publisher but rather more often a glorified executive secretary to some Wall St. or wherever Muckaluk who makes all the decisions for the whole country. Thus reporters don’t know anything about anything because the owners don’t hire journalists but those who can’t think beyond what they get from emails and faxes and aren’t allowed to question that iformation even if they were smart enough to…
As for fracking…railroads are doing very well bringing pipe and fracking sand and other hardware into the fileds. How long fracking will last is anyone’s guess right now as the chemical process is in question, enironmental impact is in question, evernormental and all other safety is in question (many accidents from human error…we just had a comppressor hit by lightening as test gas was being vented during a storm; the question being why was this being done in a storm when they know the consequence of lighting), there is a lot of political haggling, economic mumbo jumbo, deceptions, and othe misinformation coming from the gas industry on this matter, oversight regulations were eliminated by the Bush administration giving gas companies carte blanc to do as they please, there is no resposniblity assigned for exisiting or furture infrastructure, etc. The gas companies have not been forthcoming with purchasing of land in terms of price and telling what will happen to that land, won’t reveal secret chemical compounds in
I think we can be cautiously optomistic about this. At age 57, it probably will not affect me, but perhaps the kids just out of school will see more opportunities.
There are reports out there that we are on the verge of our next industrial revolution, due to several factors including lower energy costs. It makes sense to shift certain products back to USA, particularly as mentioned by Victrola1 the GE appliances. My guess is that low value, easy to ship products will continue to be manufactured in Asia, as will the high value Apple type products in which air transportation is factored into the $500 price tag for a 4 ounce product, but certain things will come home.
Just my 2cents.
ed
Red Trail Energy in Richardton is a new industry. It has two locomotives and four miles of track parallel to the old NP mane lion.
The Gladstone grain elevator runs shuttle trains filled with grain. The blocked a dirt road by building a new dirt road on the other side of the tracks north to a nearby paved road. You can still drive on the old road if there is no train there, but they are now under no obligation to keep the old crossing clear.
In Hebron, and new grain elevator was build not too far from the old NP, it is perpendicular to the tracks and so has its own new tracks serving the plant. It is not open yet, and I have not gone down there to examine the layout yet.
In Dickinson, Thanks to Obama’s veto of the pipeline, the oil fields are now transporting unit oil trains, one or two trains out daily. I have not gone out to see this plant either, but we surely have more train traffic on our line. We are getting more COFCs since there is more oil traffic on the old GN mane.
And BTW: Did you notice that NONE of the new traffic is generated by MANUFACTURING.
Now, where do you get this flaky idea that North Dakota Oil will bring oil prices down. It will do no such thing. Oil Prices are set world wide. PERIOD. Or did you not know that FUEL is now the major export of the United States. If China will pay more for the fuel than the local gas station, guess where it fuel will go. It is true that more oil in the world is more supply, but demand is going up faster as Asia becomes a primary first-world economy.
ROAR
Adidas China said on July 18 that the company will close its last self-owned factory in China – a wholly-owned subsidiary in Suzhou Industrial Park – by the end of the year. Its competitor Nike shut down its only shoe factory in China as early as March 2009.
MNCs close self-owned factories in China amid rising costs
Like Adidas and Nike, many U.S. and European multinational corporations have been relocating their production facilities to Southeast Asian countries, particularly Vietnam and Bangladesh, in recent years. The main reason is that labor costs are much lower in these countries than in China…
http://english.peopledaily.com.cn/90778/7884788.html
Will China’s rail system be upgraded to handle increased trade with S. E. Asia as manufacturing shifts there?
Changes in port management may break the 500 mile intermodal rule. Ports with tracks on the docks find that turn-around time for ships is reduced when all containers can be loaded directly on well cars, because a double-stack well car string can be loaded quicly, pulled to a yard, and re[;aced by a string of empty well cars a lot faster than the number of trucks required to load the containers. It may be possible that intermodal will have an economical position for runs as short as 200 miles.
The same goes, of course, for loading the ships.
That’s a game changer IMO.
As the U.S. grows and creates manufacturing jobs, some of them spill off to China to lower the cost of manufacturing. That has been a natural flow, and it has been happening for a long time.
But that is not what is causing our current economic problem.
Our current problem is that we are not creating jobs because we have a promise of higher taxes and more regulations that will raise the cost of doing business in this country. Investors are afraid to risk their capital when they see such a threatening cloud on the horizon.
Right now, all it would take to reverse this nightmare and make our
There is no such thing as a Liberal press or media…it is not a shill for the Democrat Party. Ninety percent of the media is owned and operatied by big business conglamorates which are more wed to Wall St. than news. The concept of a Liberal media and shill of the Demcratic party is a myth promulgated by the Republican and other right wing citadels because a real free and open press will question what is and seek truths in what is happening; and those in power don’t like to be contradicted or found out. Media is no longer the local businessman broadcaster or newspaper publisher but rather more often a glorified executive secretary to some Wall St. or wherever Muckaluk who makes all the decisions for the whole country. Thus reporters don’t know anything about anything because the owners don’t hire journalists but those who can’t think beyond what they get from emails and faxes and aren’t allowed to question that iformation even if they were smart enough to…
Wow. Where does one start? Liberalism, like conservatism, is a worldview, routinely reflected in the reporting at ABC, CBS, CNN, MSNBC and NBC. Doesn’t matter if they’re “owned and operated by big business conglamorates which are more wed to Wall St. than news.” Even if that’s true, a lot of businessman and Wall Streeters are liberal democrats. News division presidents almost always have connections to Democratic administrations and this tends to color their organization’s reporting. For example, ABC News chief Ben Sherwood has a sister who is special assistant to President Obama.
But back to the issue at hand. I remember reports of a manufacturing renaissance when George W. Bush was still president. This trend came about due to rising fuel prices (specifically bunker fees), the need to dedicate Asian facilities to supply the Asia market, rising wages and the desire to shorten supply lines. The declining value of the US Dollar against foreign currencies is anoth
Given that most manufacturers, especially the smaller ones, are not located on a rail line, trucks will still be needed for final pickup and delivery.Also, trucks will continue to dominate the distribution market…i.e. a truck will load at a shipper and peddle the freight to 3 or more receivers enroute… hard to do that effectively by rail.
On Star-Trek, whenever Captain Kirk needed an item he sent Scotty to a replicator. Matter was rearranged for whatever was needed. We are not there yet, but moving in that direction.
Automation took many high skilled positions from the line. Cheaper, less skilled labor could feed in bar stock and remove precision parts from the other end. Robotics is removing more people from the process period. As the need for and cost of labor decouples, its ability to lure manufacturing great distances from markets decreases.
Until we can turn lead into gold, raw materials should still move long distances. The challenge for rail will be competitively moving finished goods made closer to the market a shorter distance.
Time to get that degree in Alchemy, I suppose.
I’m going to ignore the comments on the liberal media as they are some incredibly biased and disgusting and off topic comments.
I will say this, China largely replaced Just In Time Manufacturing with Manufacturing villages where every component was manufactured within a few miles of the assembly line.
For things like electronics and similar devices, that setup will probably still dominate, but large manufacturing is moving back to the US significantly.
Okay, this is one of the most ignorant things I have ever seen on here (which is saying a lot), and I cannot believe the moderators have let it stand. But because they have (for now), and because I have a background in political ideology and the media (having taught university-level courses involving it for four years) I want to back up what henry6 has already said. It is true that journalists, as individuals, are more liberal as a group than the general population, for a simple reason: they almost always have a university education, and the more education one has, the more liberal one tends to be (adjusting for the fact that most wealthy people go to college, and inherited wealth tends to be associated with conservative beliefs, wanting to keep things the way they are). The reason is that the mission of the university is based upon rationalism, the idea that the world can be understood, and that changes can be made to the world based upon that understanding. Liberalism is an Age of Enlightenment (1650 to 1700 roughly) philosophy based upon a belief in rationalism, rather than the “mysterious” knowledge only the church (at that time) has access to. Conservatives on the other hand reject rationalism: there are things that cannot be known, and there is no way to verify or compare theories based upon how accurately they describe reality, you have your “theories” and I have mine (theories being something different to conservatives than to scientists, really just an opinion, not accepted as proven as by those who believe in rationalism) with the only way of determining which is better being the “character” (meaning personal morality) of the person espousing them. This makes conservative beliefs completely incompatible with the mission of
As a retired geologist dealing with oil and gas, I can tell you (onshore) oil and gas operations are designed to operate continuously in all kinds of weather short of hurricanes. I have seen lightning damage during production operations, but the probability is low that it will happen during the relatively short test periods, and I have never personally seen it happen. Tests may last a few days, and have specific flow and sh