DC Velocity - February 2010

transportationreport
BY MARK B. SOLOMON, SENIOR EDITOR

sharing the load

They’re still not bosom buddies, but truckers and rails are increasingly finding they benefit more from cooperation than confrontation.

AS TRUCKERS AND RAILROADS MARK THE 30th anniversary of their freedom from government bondage, they find themselves in a position they and the lawmakers who deregulated both industries in 1980 could have scarcely imagined back then.

Partners.

To be sure, the day has not arrived when both can shake off all the vestiges of their traditional rivalry. Truckers chafe at the notion that railroads could receive federal subsidies to modernize privately owned track and rolling stock. The railroads have no problem boasting about how their operations are more fuel-efficient and environmentally friendly than trucking, a tack that doesn’t win the rails many friends among trucking interests, who happen to be their largest customers.

In addition, unless the trucker is tendering freight in very large quantities, it is unlikely to receive more favorable pricing or customized service than any other intermodal customer, according to Thomas Finkbiner, who headed Norfolk Southern Corp.’s intermodal operations in the 1990s and is now executive vice president, sales and marketing for Railex, a provider of refrigerated rail transport, warehousing, and distribution services.

For all the political infighting, however, the two industries are increasingly discovering their respective strengths can be mutually beneficial. Trucks provide railroads with a steady and growing stream of intermodal business, while intermodal helps trucks obtain additional capacity while reducing their operating expenses compared to over-the-road transport.

Shippers also gain from increased service options at lower cost and with enhanced environmental benefits.

If there is a loser in this scenario, it might be the truck driver community, which could see reduced work opportunities should more freight that once moved over the road be converted to rail.

A more passionate tango

The rail-truck intermodal tango is not a new dance— UPS Inc., which many would still consider a trucking company, has been for years the railroad industry’s largest individual customer. But increasing acceptance of the rails’ energy, environmental, and infrastructure advantages, combined with improvements in intermodal reliability and velocity (consultancy FTR Associates today clocks average intermodal train speeds at 33. 5 miles per hour, much higher than the historical averages of 30 mph or lower) is sparking more rail-truck intermodal interest than ever before.

Another plus is that trucking firms bring a depth of sales and marketing expertise to the intermodal table that railroads, for the most part, do not have. Larry Kaufman, a long-time rail executive, consultant, and writer, says rail management is more comfortable working with its traditional base of captive commodity shippers than with businesses using intermodal service to move merchandise traffic. Given that, rails are happy to let the truckers handle the intermodal marketing, Kaufman says.