Insofar as the BN is concerned, the revenue received (2007) per ton-mile for automotive is by far the highest of any general category of freight, at $79.23 per thousand ton-miles. This compares to $31.15 per thousand ton-miles for international intermodal and $11.44 for coal.
What is a forwarder? Can you explain what you mean by LTL and TL shippers? Thanks
Thanks, Murph. I was wondering that myself. - al
LTL = Less Than Trailerload. These are trucking companies that consolidate many small shipments into trailers, using a network of city trucks to gather the freight from the shipper and bring it to a freight house, the freight house to sort shipments for like destinations and consolidate them into trailers, and line-haul trucks (often double or triple pups) to move the consolidated freight to freight houses in other cities, where it is broken down and distributed to city trucks for delivery to consignees. LTL truckers include Yellow, FedEx Ground, and UPS. Cost of entry is very high and cost of operation is very high, meaning there are very few players with the cash and market position to be in this business.
TL = Trailerload. Trucking companies that carry trailers loaded with one shipper’s goods only from dock to dock. Often these are regular, contract services for large shippers such as Proctor & Gamble. TL truckers include J.B. Hunt, Schneider International, Werner, and many many more. Cost of entry is very low and there are many small firms with a few dozen trucks.
Forwarder – a company who arranges dock-to-dock shipments for the shipper, in effect acting as the shipper’s transportation manager. The forwarder arranges for the truck, the container, the dray, the paperwork, the insurance, the train, the export-import documents, the taxes, the fees, and so forth, using whatever combination of modes and transportation companies necessary to meet the price and service requirement of the shipper. Forwarders usually provide their own trailers or containers if they are engaging in intermodal service. Examples of forwarders include Hub Group and Pacer.
RWM
Thanks!
Couple of notes:
ADM has over 15000 cars which they either own or lease. They have their own railcar repair shop in Decatur, Il.
Only a guess, but BNSF’s high revenue per tonmile for automotive is probably based on the light density nature of automotive. Low weight per carload will move those numbers to the high side. What is the tonnage for a autorack compared to grain or coal?
ed
One more thing…and we have discussed this previously. Are most interchanged movements moving on joint line rates or proportional rates these days? Is there a movement to the joint line (revenue sharing) rates?
ed
Ed,
I can answer your question about CSX unit grain trains. Most of the unit trains are 65 cars due to the limitations of the elevators. Track space and loading time are issues. I work the Great Lakes Division and Grain is HUGE! There are a few elevators that pay a little more for what we call an express loader. These trains are usually spotted, loaded, and then pulled within 24 hours. The power also stays with the train at the customer site.
Lately, there have been upgrades to some of the elevators and they have the capacity to handle larger grain trains. The ADM plant in Beech Grove, IN lately had a lot of upgrades and we have been running huge BNSF wheat trains into there. I’ve seen 112 loads go in before.
Most interchanged cars Class I to Class I are moving on through rates. Most interchanged cars with a short line as part of the route are moving on a handling-charge basis on the short line. There are no mileage-based rates or proportional rates per se.
Most short lines are handling carriers and get a flat fee from the Class I carrier based on the commodity and car type. These are negotiated and contained in a contract between the Class I and the short line. The Class I quotes whatever it wants to the shipper for a contract rate, or the shipper accepts the public tariff rate, and when the car moves, it moves on a single waybill, the shipper pays the Class I, and the Class I pays the short line the agreed-upon handling charge.
Cars moving between Class Is may move either on a through rate that is negotiated between the Class Is, or two local rates, or two public tariffs. If it’s a through rate usually one of the Class Is takes the lead in negotiating with the shipper, and the shipper just sees the total charge on a single waybill. The shipper pays one of the Class Is and that Class I settles with the other Class I. It the car is moving on two local rates or two public tariffs, then the shipper sees two waybills and settles with each Class I individually.
For example, if the car originates on a short line, moves over two Class Is, and terminates on another short line, the car most likely is moving on a through rate negotiated between the two Class Is, and each short line collects a handling charge fee which is a separate negotiation between each of the short lines and the Class I it interchanges with.
Railroads are pushing
?
Maximum net load on a trilevel autorack is 79,000 lbs. For 1000 ton-miles, the average rate per carload, BN, would be $3,130. To ship the same net tonnage as a 120 ton car, it would cost $4,740.
For grain (“Ag”), a 120 ton hopper travels 1000 miles at $2,620 (unless you ship from Montana and then it will cost you about $3,500). For International intermodal, the max loaded container weight is 67,200 lbs. A container travels at $1,041 to cover 1,000 miles. For coal, a 120 ton carload at 1000 miles travels at an average rate of $1,373.
As well as a very high empty return rate, expensive equipment costs born by the railroad, high operating costs to meet service guarantees, volume rebates that are paid even when the volume targets aren’t met, high costs for terminals, and high payments for damaged lading.
RWM
Compared to what?
The 50% empty return rate for coal and ag – much of that unit trains? These constitute nearly 70% of all railroad shipments. What is “very high” compared to that? Intermodal has operated at as high as a 56% empty rate. Between domestic and imports going in opposite directions, the railroad I am most familiar with had about a 28% empty rate on autoracks: utilization was very good, it was very profitable traffic.
“The damage measurement used by the automotive industry is the ratio of claims to vehicles shipped. Back in the early '90s, that ratio was 3% to 4%. … Today the ratio of damage claims to vehicles shipped has fallen below one-half of 1% on an industry-wide basis, and on Norfolk Southern … damage claims ratio with Toyota and General Motors is close to two-tenths of 1%.” Railway Age, November, 2006.
In 1994, damage claims for automotive traffic were 19% of all railroad damage claims; today the ratio of damage claims is nearly the same as for all other classes of traffic.
The contribution to cost of operation, of claims, on a $3,130 carload is $6.26, and if it wasn’t for that, BN could charge $3,123, instead of $3,130, for a loaded autorack travelling 1,000 miles.
This is why FEC refers to anything other than COFC’s, TOFC’s and rock as “dead loads”.
Is it safe to say, that revenue per tonmile for automotive is higher, because the shipper is buying more service, than say, a coal or grain shipper?
It’s my impression the railroads supply the cars for auto shippers where in bulk unit train movements or loose car chemicals the cars are supplied by the shippers. The tri-levels can be very specialized for use by only one shippers autos.
And that is the single biggest cost associated with the use of tri-level autoracks. At $160,000 a unit (non-aluminum), with the current 16 day cycle time, each carload costs $823 to service the equipment financing charges.
If another railroad takes away the auto shipper’s business, would the railroad who lost it have some specialized equipment sitting idle? What then? Lease it to the railroad who stole your auto business?
Autoracks are an interesting situation. The racks are owned by the railroads but the majority of the flatcars are owned by Trailer Train. I would assume that in the situation described above, the racks would be leased or sold.
TTX is owned by the railroads, so there’s no one to sell or lease the racks to but each other. Murphy, I like your last sentence, but for the word “stole” we could substitute “needed to fill its capacity in the worst way.”
RWM