Now I don’t nessecarily like UP all that much, but I like the new slogan the’ve come up with in there recent comercial. “Maybe the road to the future isn’t a road at all” I think this truely represents what the rail business is doing now days. I have to award this one to UP and whoever thought up that slogan, Its definately a good one.
Noah
That is clever, and probably quite true.
Will rail business ever catch up with trucking.Went to theTruck Line web site it says Trucking dominates the freight business at nine billion tons in 2003 at $610.billion in revenues.Rail 12.9 Percent . Waterborne 7.7 percent. Pipeline 9.4 percent. Air 0.9 percent. Rail Intermodal 0.9 percent.
Numbers are a funny thing, you can prove anything you want with them. Half the trains I see on the big mainlines are intermodal, so that makes it hard to believe these numbers. According to these Nos. there are 12 times more freights then intermodals, does that make sence to you? How did they come up with these numbers? That must always be asked!
No doubt though the trucks are never gonna go away, just like the railways didn’t go away like was once predicted.
The truckers will have to start raising their rates to cover the increases in fuel costs. For the first time in a long time it’s going to cost more to haul by truck. Railroads will also pay more, but their charges are already pretty low. The RRs can raise a bit for fuel increases and still be attractive. (Now if the RRs could just make their service reliable and CONSISTENT!) Oh, and fuel costs will not be going down any time soon for any of us!
Can someone explain why long haul trucks are chosen over trains? Is it time, cost, or hassle? Can computerization make rail a better choice? Are the railroads too set in their ways to compete? Why aren’t trains used as trunk lines with trucks the local feeder service?
In other words, why haven’t railroads figured out how to compete even though they are mechanically more efficient and they’ve had a hundred years to think about it?
That ‘recent’ commercial has been out for at least a year.
Probably not too far off on the UP main here in Eugene, OR. And I suspect that 12 to 1 ratio includes regionals/short lines and branch lines that don’t have intermodal trains.
This depends a little on the defination of long haul. If one looked at rail vs. truck numbers for 1000 miles or greater, I suspect the rails have a much larger chunk than trucks.
For railroads, the best bang for the buck is what might be called the road train. Once the railroad gets, say, 50 or more trailers or containers on, powered up and ready to go, the economics are pretty good. Getting to that point at competitive cost is the trick.
Here is what a railroad faces with truck competition. The cost of running a truck has almost a direct correlation to distance. To illustrate, if a truck’s cost is $100 for a 100 mile haul, it will likly be about $500 for 500 miles, $1000 for 1000, etc. This is not true for railroad TOFC service, because there is the cost of the handling of the trailer at the origin and destination terminal. I don’t know what those numbers are now, but if, for example, the terminal cost is $50 each side, there is not going to be a money making competitive charge from the railroad for a 100 mile haul.
So here is the deal. Even if a railroad could set up a TOFC/COFC terminal quickly and cheaply, there are still fairly daunting criteria for making a buck on the service. They would be:
The origin market has to generate about 50 loads a day in an area fairly close to the terminal and all these loads need to be going to a fairly compact geographic area so they can go to one destination rail terminal.
There has to be somewhere around 30 to 40 loads going in the reverse direction to cover the cost of getting equipment back.
In order to be cost competitive, the rail haul probably needs to be at least 400 miles. (A “long ago” figure, may be higher now).
The service has to be at least close to straight truck service.
Once these are met, they will come.
Nora and Gary,
Look at it from this point.
Lets say you own and run Ed Bobs widget fabrication, and you make left and right handed widgets.
Now there are only six or seven widget makers in the US, and your the only one that makes left handed widgets.
You sell the widgets to a widget exporter in Chicago, and your business is in
Houston.
You only produce 20 to 25 pallets of widgets a week.
If you shipped by rail, you would need to have someplace to store your widgets, till you had enough to justify shipping by rail, it makes no sense to pay for a boxcar that holds 100 pallets, only to put 25 pallets in it, and your buyer in Chicago, who ships overseas weekly, needs a steady supply of widgets, delivered on a just in time schedule, because he too has no place to store large amounts of stock, yet still needs to keep his business fluid and profitable.
So, you contract with a trucking/shipping company, who makes regular truck runs every day from Houston to Chicago, and when you finish with the order for the left handed export widgets, you pick up the phone, give them a call, they drive up to your loading dock, your forklift operator loads the pallets into the back of the trailer, the rest of which is filled with shippments from other companies in your situation.
Off to Chicago.
At the Chicago end, the truck backs into the dock at the export company, they unload their widgets, the truck leaves, on its way to it’s next delivery, and its all done, in a matter of days.
Their exports stay fluid, your business stays fluid, you can plan your production runs accordingly, because you dont have to worry about two or three types of delivery service, it goes from your dock to theirs in one step.
You dont have to warehouse widgets, and neither does you exporter.
Most of the 18 wheelers you see on the highway are NOT full of one product for one shipper only, they are the LC
I don’t know what site you went to, but right now railroads and trucking are in an even match of 40% vs. 40%, or at least hovering around it. I believe as time goes on the realization will come that we won’t be able to support trucking because A. oil prices and B. roads will become too crowed and people will realize the potential that rails can carry goods faster, safer, and more economically.
I’m not as worried about trucks as all of our businesses moving thier plants to China and Mexico, though. There used to be a time when even the smallest towns had manufacturing all over the place. Coincadentally, that America was powered by rail, times were more carefree, and the world admired the U.S. of A. Also notice that after roads came into widespread use, America went into a steady decline. And look where we are today, everything good I’ve stated is either dead or not it’s former self, and everything bad has just gotten worse.
Thanks for 2 good breakdowns. I asked these questions thinking containers and computerized scheduling would make smaller shipments profitable.
g
Actually they have. You do get smaller shipment sizes in trailers or containers-maybe 20 to 25 tons tops- vs. 40 to 50 tons, maybe more, in a merchandise boxcar. And computers have eliminated the need for the gazillion clerks the had to be employed to keep track of shipments. Without the development of TOFC/COFC service-think highway are crowded now?
Jay
“The road to the future isn’t paved”…my take on their slogan!
~Ra’akone