Storage In Transit (SIT)
What is it?
What’s its history?
I did find this on line: http://www.transflo.net/index.cfm/services/logistics-management/storage-in-transit/
Thanks
This:
Overview -
Detail -
It is basically a warehouse on wheels. Very common in the plastics industry. A plastics manufacturer makes 25 grades of plastic. They have to make them in runs, so they figure how much they can sell a year (lets say 100 cars of each type). They make 100 carloads of type 1, then change the chemistry to make 100 cars of type 2, then change the chemistry to make 100 cars of type 3, etc.
They ship the cars to SIT yards which are leased tracks, the chemical producer leases the tracks from the railroad or 3 party switching service. When Athearn needs a carload of plastic to make model cars they call the plastic maker and order a car of type 17 plastic. The chemical company looks in its recods and sees that car CCBX 123456 is loaded with type 17 plastic, so they bill the car to Athearn. The railroad or 3rd party switcher gets the billing and then switches out the car out of the storage yard and ships it to Athearn.
THe shipper pays a revenue movement to get the car to the SIT yard, then they pay a switching charge to switch the car out of the yard, and finally they or the consignee pay a revenue move from the SIT yard to the consignee.
dave gave a good explanation of the practice and since his example involved only private owner cars the car hire charges or demurrage was not an issue.
shippers have been playing a similar game with other commodities for years. i always got a chuckle out of how a car load of lumber would come out of the pacific northwest heading for new york with a shipper specified route involving as many railroads as they could possibly come up with. the car was usually consigned to the shipper in care of the railroad freight agent. the whole idea was to insure a leisurely trip across the country, involving as many time consuming interchanges as possible. all this to give the lumber company’s sales department time to find a buyer for the load. once they had a buyer, they would divert or re-consign the load via the fastest route possible to the buyer’s designated destination.
the same practice occured with produce but without the intentional slow route.
grizlump
Is that driven by the economics that the manufactures do not want to build their own storage facilities that would require investment and have negative impact on return on asset while SIT is “cost only”. The RR might have still surplus trackage that could be used to generate additional revenue with very little cost.
That story would make it wise to use a high tech transportation system instead of a simple storage.
Having non perishable product pre staged close to eventual destinations enables fast shipping to the customer when ordered. It is particularly useful when shippers, like the railroads, run at 45 MPH and have to interchange with other railroads or ships and the customer and manufacturer are on opposite coasts or even different continents.
Think of it as a much larger version of a regional distribution warehouse.
It doesn’t have to be close to the useage point. The SIT yard pictured is in Spring, TX, just north of Houston and it serves consignees nationwide. Most of the SIT yards are closer to the shipper than the consignee. Most of the SIT yards are warehouses for the shippers, not the consignees.
This is a diversion enroute, which is not the same as a SIT yard. “Storage” implies leasing of track to put cars in storage while the diversion is essentially the polar opposite. With SIT you intentionally hold the cars until somebody buys the product, with a diversion you intentionally keep the cars moving until somebody buys it. SIT assumes the car won’t be sold for months or maybe a year, diversion assumes the car will be sold in days or weeks.
Would this also be the reason carloads of news print paper and other paper goods be sitting in yards for weeks at a time in the forties and fifties? I also remember auto racks sitting full for awhile also. How common is it for a shipper to ship a carload of product with no consignee?
Pete
Maybe, maybe not. It could also be that “just in time” shipments weren’t used outside the perishable and mail worlds.
Never happens. Ever.
But don’t confuse the person who is the consignee for the car and the person who has bought what’s inside the car. The waybill is a bill for the MOVEMENT of the goods in the car, its not a bill of sale on the CONTENTS of the car. Every waybill has a destination and a consignee, even if its in care of an agent.
That doesn’t mean that the consignee has bought what is in the car. What the diversions are doing is changing the consignee, as opposed to providing one. They bill the car to a consignee, typically in care of an agent then sell the contents of the car while its enroute, then divert the car to a new consignee.
Two considerations for putting a car load into a SIT situation.
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Peaks of demand for a specific product. (I’m not certain that you would call this SIT - but…) an example would be lining up great strings of ore hoppers ready to load a Laker when it docked. The ship costs far more than freight cars so it is cheaper to have the ore sitting ready in the cars to load quickly than to have the ship sitting around and tieing up the dock waiting for trains to arrive. (This is rather the other end of the system from Dave’s Plastic pellet loads waiting to be bought and then directed to the buyer).
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The cost - which may include losses - of transhipping car loads from the cars into storage and back out into (possibly the same) cars. Why incur these costs if you can leave the product in the cars? Answer to that question is the value or fragility of the product. You can leave Plastic pellets sitting around because relatively few people have the equipment to handle or use them but you don’t leave car loads of Bourbon sitting around…
A variation of sending timber the scenic route is practiced with coffee beans in containers. Crazy as it seems it is cheaper for the containers to float around the oceans on a string of ships than to keep the beans in a warehouse. The system is arranged so that each container should arrive at the factory just as the beans have matured (or whatever they do) to the point where they are ready for use.
One of the enormous changes that has come about around the whole world in the last fifty yeasr is the virtual disappearance of warehouses for storage. There are some but a lot are now re-distribution facilities. Up to about the Vietnam war a vast variety of products were made ahead of requirement and put into storage until wanted. This did mean handling costs and losses. It also meant that a huge amount of storage - which had to be kep
Absolutely not SIT. Sit is storage where the railroad is paid to store a loaded car. The above situation fits none of those criteria.
I don’t get this. What’s the difference between a loaded car of plastic pellets or newsprint and a loaded car of iron ore or coal?
The examples I am more familiar with are the South Wales coalfield where exactly the same thing happened as happened on the Great Lakes. Coal - of different types and grades - was moved forward from the collieries to be held ready for whatever ship came in. As soon as a ship docked the wagons were moved forward to make the fastest loading possible, The different railway companies - later amalgamated into the Great Western - were paid
SIT is a realtively new idea, most of the SIT yards are 1970’s or 1980’s or later. The difference is that in Storage in Transit, a company leases track from a railroad to store cars on that track to be billed out later. In every case I’ve seen it has involved private equipment.
Cars can be stored.
Cars can be held.
Cars can be delayed.
Cars can be rebilled.
But that doesn’t mean they are stored in transit.
One caveat is trying to translate UK business practice to US business practice. The laws are different, the organization of the railroads is different . In the US what you have described with coal or ore would NOT be considered SIT.
In US practice the tracks would not be leased nor would the cars be rebilled. In US parlance loaded cars are not “stored”, which is why SIT is different because it does involve loads. In the US those cars would be subject to demurrage since they are railroad owned cars on railroad owned track.
[tup][:)][tup] Thanks
[8D]
I remember reading long ago that one of the first things the Interstate Commerce Commission (ICC) did when it began to regulate the railroads was to prohibit freight cars from being used as warehouse space.
For me, the questions it raises are:
Did I correctly understand what I had read long ago?
Was the ICC rule changed? Perhaps under the Staggers Act?
And if the ICC rule is still in effect, does SIT skirt those rules in some way?
Railroad owned cars are still subject to demurrage.
Private owned cars are not. Since they are privately owned, the owner has the right to do whatever they want with their cars. That’s why Dave-the-Train’s example of the ore cars or the paper products isn’t storage in transit, because they would typically be in railroad owned cars, and thus subject to demurrage. SIT cars are private cars on private track (leased by a company).
Thanks for the information and discussion. Very informative.