From Railway Gazette International courtesy of the Northwestern Transportation Center.
As a note, several major US railroads have set up retail operations. I don’t think the Canadian roads ever were forced out of retail.
http://www.transportation.northwestern.edu/docs/2011/2011.01.27.Burns_FreightPaper.pdf
I skimmed through it last night. It’s titled “Retail Service is Essential” under the “MARKETING/ FREIGHT” caption - then the subheading: “MARKET SHARE - In the search for profitability, many railways have tended to focus on ‘wholesale’ movements of bulk flows over long distances. But most freight moves over short distances or in small volumes, so to grow market share, railways must develop ‘retail’ marketing skills, argues David Burns.”
Despite being from an international magazine* and mostly in metric units, it’s by an American author - David Burns, an industrial engineering consultant with about 40 years of railroad experience. It’s almost 8 full pages long (about 620 KB in size for the linked 'PDF" format version), and the article is really directed at the US freight railroads all the way through - the European content is pretty much limited to 3 photos. It also has a couple of short but still interesting ‘sidebars’ on the “Canadian Pacific Expressway” service and the use of “Plastic Pellet Cars” as mobile warehouses and the pricing advantage they provide to the railroads (both of which are topics of interest to me).
*Railway Gazette International, Septermber 2010, pgs. 99 - 112 (mostly the even-numbered pages only)
Really, this is a theme that has been expounded on in Trains and elsewhere from time to time since about the 1960’s (e.g., “Railroading’s Missing Men” by Herbert H. Harwood
Excellent article. Of particular interest is that the “retail” specialists are the shortline (and probably regionals).
The mention of Indiana Railroad and their success with transporting limestone is of interest. Each bit of business for a shortline or regional is critical for their success. Hence the attention to opportunities.
Not sure why a new industry would want to locate on a class1 today instead of a shortline, particularly with at least two options for interchange.
Ed
Excellent article, Ken. It is odd though how proposals in line with “retail” railroading that you (and others) have made on here often seem to fall on deaf ears. Many seem to like the status quo of bulk shipping only. What gives?
From the linked article, at page 106 [Page 5 of 8 of the ‘PDF’ version; emphasis added - PDN]:
“Retail railway employees are more likely to be reactive to service requests because they are local and more adaptive. Take the example of an American manufacturer who was looking at two locations for a new factory in the midwest: one next to a large railway, the other next to a short line. Knowing that there would be a regular need to shunt wagons within the factory, the firm asked both railways how often they could do so. The large railway replied ‘the Local comes by twice a week.’ The short line man said ‘I do not understand the question, how often can you pick up a telephone?’ A number of US trans-load companies will now only look at locating their larger facilities on ‘retail’ railways, because they can rely on a shunting locomotive to be available, if needed, several times a day.”
One of our local railroad ‘stars’ is Lehigh Valley Rail Management - Bethlehem Division/ BethIntermodal (the former Bethlehem Steel Co.'s Philadelphia, Bethlehem & New England RR), precisely because it has dual railroad access - NS and CP (vi atrackage rights) - see: http://www.bethintermodal.com/locations/bethlehemfac.shtml . Although, because tho
Doh ! Here’s the most important point from all this:
Why are we reading this article from Railway Gazette International - but not in one of the other US railroad ‘trade publications’ such as Railway Age or Progressive Railroading ? Or even Trains ???
And it’s almost 6 months since it was published, too, before it was mentioned in the Northwestern University’s Transportation Center’s “Hagestad Sandhouse Gang” updates . . .
Perhaps this is symptomatic of the marketing lethargy of US railroads and their trade press ?
I see this first hand. A local shortline handles local customers, even using the class 1’s main to reach some of them, then “bundles” the interchange cars in one location for the class 1 to pick up. And vice versa.
This seems to be the trend over the past couple of decades, even. Shed the scut work and just haul between major yard facilities. The reason, of course, is because it costs money to do that scut work, and the real purpose of any business is to make money, not spend it.
Although, I am unable at this time to recall the specific articles, I seem to recall that it was the issue of responsiveness to local customers has been a very strong point mentioned in articles highlighting efforts of some short line operators. With some short-line operations ( forgotten spurs into industries that once shipped or received by rail and because of one reason or another went away to trucks, were found and reactivated because of local contacts by switch crews, etc)
While living in Southeast Kansas and working in the Redi-Mixed Concrete business, I was aware that in South East Kansas, there were no useable deposits of sand to make concrete with. Sand was trucked in from the Wichita area and from Oklahoma. The company I was with worked with al arge asphalt plant operation in S.E. Kansas and a deal was cut through WATCO to bring in sand in via rail to Pittsburg were it was unloaded and stockpiled for regional distribution.
Rail worked pretty good most of the time. Except when the beans were left in the cars, and sand was dumped in. You’ve never seen a sadder sight that a pretty concrete slab with soy bean sprouts growing out of it.
The major rail corporations have seemed content to let the short lines gather and do their grunt work and run the miles at track speed between terminals. Think of all the small grain elevators that have been bypassed because they could not load unit trains ( eh! BNSF?) I am sure there are example of that all over the country.[2c]
True. Unfortunately, in many areas of business there has been a tendency to shed many revenue streams because the first business didn’t have the know how or persistence make it profitable enough in a world where now and short-term are everything. So they shed or abandoned those lines which were sometimes picked up by a leaner, more aggressive operation that made them profitable.
Railroad terminal operations gobble up revenue dollars faster then ‘The Cookie Monster’. Customers with one and two car a week or a day consume those revenues at warp speed.
Class I carriers are responsive to short hauls where the sustained volume make the operation profitable.
Just in my area of responsibility there are at least 10 daily short haul train (less than 150 miles round trip) operations in urban waste and aggregates. These trains are approximately 30 cars for the urban waste and 60 cars for the various aggregate trains. The operation of these trains are predicated on a daily round trip…empties to the loading point and loads back to the unloading point or vice versa with two sets of equipment being involved. On they system there are also some short haul trains involved in various chemicals.
The name of the game is consistent volume…it works for the shipper & consignee and it works for the carrier.
But sometimes that scut work is where the money really is. Logistics companies flourish because the asset based providers often aren’t interested in retail or dealing directly with customers. I’m in trucking, but I do “sell off” alot of my freight to others…it is really nice to make 500 dollars on a transaction with nothing more involved than a phone call an email…and ten minutes of my time…no equipment or personnel required… but I do own the relationship with the customer…and that’s what counts.