Can you explain this assessment a little bit more claerly for me?
Thank you.
Moreover, in your calculation, you present revenue. What about cost for the RR? Handling 174 containers vs. 230 might be cheaper and offset a fraction of the extra revenue?
-Al.
Why do you “assume” 5,000 foot trains? And what the “Heck” is “Gross Profit”. Why would the train lengths be the same?
It is just to make a comparison between moving 40’s and 53’s. We assume that both trains have the same lenght (in first approx. RR will operate at maximum lenght constrained by the rail track or other anyway).
Here Gross Profit is just Revenue per container * Nbr of container.
It would be interesting to the difference of cost for the RR in both case:
more containers to handle in the case of 40’s
if you are moving marine containers, the management of empties might be different than for 53’s (someone could give insight on this issue?)
Thank you,
-Al.
Revenue per container * Nbr of containers is not a profit of any kind.
What’s getting left out of this whole calculation is the westbound move. BNSF doesn’t want to drag those cans 2,200 miles back empty. If they can get a wb load in a 53’ but not in a 40’ it would make sense to swing the import loads into domestic 53’s at LA.
The unit of production in transportation is the round trip, and if you put revenue on both parts of the roud trip it will often make the difference between being truck competitive and not being truck competitive. And the trucks don’t go back empty.
LA-Chicago
53’ - $1690; 40’ - $1409
Chicago - LA
53’ - $1535; 40’ - $1352
The wb 40’ is still cheaper than the wb 53’, yet the same revenue comparisons apply, e.g. a wb train of 40’s in 40’ wells will generate more revenue than a similar length wb train of 53’s in 53’ wells.
That only works if you can sell the 40’ with a wb load. 40’ ceased to be the standard for US domestic a long time ago. A shipper whoes unit of sale is a 53’ semi load isn’t going to adjust their operation because you’ve got the wrong size box. A 40’ vs a 53’ has 24% less floor length. The rate differential is only 12%.
And the capacity loss applies on the entire move. The rate savings is only on the rail rate. Origin and destination dray costs are not affected.
Try and go sell that.
And this similar train length thing just doesn’t mean squat.
Depends on if it is strictly a domestic wb or an export wb. If it’s export, it’s probably cheaper to fill a wb 40’ at the inland site than it is to ship wb in 53’s and then restuff into 40’s at the outbound port. Remember, the only reason to restuff import ISO’s into domestic 53’s or boxcars is so those ISO’s are immediately available for the return trip accross the ocean. Otherwise, restuffing is a waste of time and money, and runs counter to the spirit of containerization in the first place.
And not all shippers are only selling a 53’ semi’s load worth of stuff. Some of that is arriving in 2 x 28’s, some in 57’s, some in multiple truckloads of varying size and capacity. How are you going to stuff 2 28’s worth of goods into a single 53’ container? You’re not, so you have some overflow into a second container. Since LCL is not all that prevalent, you’re going to have to pay for two containers for that 2 x 28’s car
Yes but the consignee if Chicago is final destination would take a bill of lading from the steamship line from say Bangkok to Chicago. The steamship line would factor in there costs from USA W/coast unloading port to Chicago & add that into the rate they charge. This procedure makes the steamship line the RR customer from discharge port to destination city as listed on the bill of lading that shipper took from the steamship line at the port of origin. This procedure holds true no matter if the destination is Dallas, Houston, NY, Baltimore, Savannah, Atlanta etc…
[quote user=“futuremodal”]
Restuffing from ISO to boxcar allows the greatest load factor for the railroad, so assuming they can charge by the ton or by the pallet it provides the most profit per consist. Intermodal rates tend to be by the container regardless of contents, so it depends on if the railroad has different rates for domestic containers and ISO containers.
For BNSF LA to Chicago:
The domestic 53’ container rate is $1690 per box
The ISO 40’ container rate is $1409
http://www.bnsf.com/bnsf.was5/iprr/IPRRController
BNSF owns it’s own 5-pack (10 platform) well cars with 40’ wells, at 220’ each. The typical 53’ well car comes in a 3-pack (6 platforms), at 170’ each. Assuming a 5000’ train for each…
5000’ / 220 = 23 5-packs for 230 total containers.
5000’ / 170 = 29 3 packs for 174 total containers.
174 53’s per train = $294,040
230 40’s per same length train = $324,070
In this example, the ISO’s would produce more gross profit, but if there’s a mix and match of 40’ wells, 53’ wells, spine cars, etc. the difference shrinks, and if it’s all on 53’ well cars, the railroad then makes more with the 53
No way.
If there was enough wb export to fill the import 40’s we wouldn’t have enough workers to make all the stuff. The containers need to move both ways in the US under revenue load. There are not enough wb export loads to fill the boxes. So the lane has to be balanced with wb domestic freight. And it is not true that the “only resaon” to swing an import load into a domestic 53’ is to make the 40 “immediately” available to go back on a ship. You’d swing a load if you couldn’t load the 40’s back wb - it’s a trade off between the costs of swinging the load and running empties 2,200 miles.
It doesn’t cost that much to swing a load, one worker for one day (that will move 42,000 pounds of floor loaded coffee beans) at $50/hour would be $400. To make transporting the empty as efficient the costs would have to be only $0.18/mile. And railroads can’t haul containers at $0.18/mile. It will make economic sense to swing the load if there are no backhauls available for the 40’s.
As to the “Spirit of Containerization”. Dollars talk and “The Spirit Walks”.
[quote user=“futuremodal”]
And not all shippers are only selling a 53’ semi’s load worth of stuff. Some of that is arriving in 2 x 28’s, some in 57’s, some in multiple truckloads of varying size and capacity. How are you going to stuff 2 28’s worth of goods into a single
You know as well as anyone that, if not for a need to have 40’s available for outbound cargo at the US port, there would be no need to transload from 40’s to 53’s/boxcars. If there was no need for available 40’s on the West Coast, it’d be cheaper for all to just keep the stuff in the 40’ all the way to Chicago or DC, then just abandon the 40’ somewhere in New Jersey with all the rest, you know, like what is happening now.
[quote]
It doesn’t cost that much to swing a load, one worker for one day (that will move 42,000 pounds of floor loaded coffee beans) at $50/hour would be $400. To make transporting the empty as efficient the costs would have to be only $0.18/mile. And railroads can’t haul containers at $0.18/mile. It
Where restuffing does make sense is where you’re converting one SKU per 40’ to one or more 53’ boxes per destination (which accounts for the large number of wharehouses in the Inland Empire area east of LA). Otherwise it doesn’t make sense to restuff.
Well, you can’t just ‘abandon’ the equipment, even in New Jersey.
What you’re not thinking about this time is the railcars. Or are you going to ‘abandon’ them too. One way, one trip railcars? Now tell me you haven’t thought about the railcars. You can’t be that ‘empty’ youself.
It costs almost as much to move the empty railcars back as it does with them loaded with empty containers. It’s expense without revenue. If you ‘abandoned’ the containers in Jersey, you’d have 3,000 miles of expense moving the empty railcars with no offsetting revenue. Bad Idea Dave.
What you want is revenue in both directions. That means 53’s to carry domestic westbound freight. And that means transloading makes good business sense under the right conditions.
Yes, Dave. Everybody is s
[quote user=“greyhounds”]
Well, you can’t just ‘abandon’ the equipment, even in New Jersey.
What you’re not thinking about this time is the railcars. Or are you going to ‘abandon’ them too. One way, one trip railcars? Now tell me you haven’t thought about the railcars. You can’t be that ‘empty’ youself.
It costs almost as much to move the empty railcars back as it does with them loaded with empty containers. It’s expense without revenue. If you ‘abandoned’ the containers in Jersey, you’d have 3,000 miles of expense moving the empty railcars with no offsetting revenue. Bad Idea Dave.
What you want is revenue in both directions. That means 53’s to carry domestic westbound freight. And that means transloading makes good business sense under the right conditions.
Yes,