BY CLIFFORD F. LYNCH
fastlane
Keep on trucking (by rail)
ARGUABLY, THE MOST EXCITING DEVELOPMENT FOR
the railroads since the invention of the diesel engine has been
the growth in intermodal freight movements. The intermodal
concept is an old one and actually originated when the Chicago
Great Western Railway put the first trailer on a flatcar in 1936.
It wasn’t until 1952, however, that a major carrier, the
Canadian Pacific Railway, introduced intermodal as a regular,
ongoing service.
While this option gained popularity over the years, the
momentum was slow to build. It took until 1993 before we
began to see significant growth in intermodal
traffic, particularly containers on flatcars.
This resulted primarily from the dramatic
increase in imports, mostly from Asia, arriving at U.S. ports in containers, as well as the
diversion of freight from the highways to the
rails. Through the third quarter of 2012,
about 58 percent of the containers moved
originated offshore, with the remainder originating domestically.
It’s not hard to understand intermodal’s
appeal. The main attraction, of course, is efficiency—fuel and otherwise. A typical intermodal train hauls the equivalent of about 280 truckloads of
freight and can move one ton 480 miles on a single gallon of
fuel. This, obviously, reduces both carbon emissions and highway traffic.
That hasn’t gone unnoticed by the motor carriers. Faced with
rising fuel costs and driver shortages (and encouraged by
greatly improved intermodal service), truckers have increasingly diverted highway traffic to the rails. J.B. Hunt is a case in
point. The J.B. Hunt Intermodal business segment was formed
in 1989, when Hunt entered into an agreement with BNSF
Railway to jointly market intermodal service. By 2012, J.B.
Hunt had over 50,000 53-foot trailers in service, one of the
largest fleets of company-owned equipment in North America.
On 10 different occasions, JBH has been chosen as Wal-Mart’s
Intermodal Carrier of the Year, an interesting distinction for a
motor carrier.
Rail service has improved greatly over the years, and if current trends continue, intermodal will be an ongoing significant
factor in rail revenues and growth. The rail carriers obviously
are committed to making this happen.
Most of the Class I carriers have spent hundreds of millions of dollars on state-of-the-art intermodal yards. For example, the
BNSF Railway, which has already invested
in a significant network of intermodal
yards, recently announced the construction
of still another facility in Edgerton, Kan., at
a cost of $250 million. On Jan. 25, CSX
announced a new intermodal terminal in
Quebec. This 89-acre,
$100 million facility will
handle 100,000 lifts per
year and will connect
this region of Canada
with NAFTA trading
partners in the U.S.
Recently, I had an
opportunity to tour the
newly opened, $129 million Norfolk Southern
intermodal terminal in
Rossville, Tenn. This
570-acre site will have a capacity of 327,000
lifts and will be an important part of the NS
“Crescent Corridor.” This will make the
fifth intermodal terminal in the Memphis
area alone.
With the significant commitment of the
shipping public and both rail and motor
carriers, intermodal should continue to
increase. Even if imports slow down somewhat, as many think they will, there is little
doubt that intermodal service is mature
enough to maintain its important and ever
increasing role in the supply chain. ;
Clifford F. Lynch is principal of C.F. Lynch & Associates, a
provider of logistics management advisory services, and
author of Logistics Outsourcing – A Management Guide and co-author of The Role of Transportation in the Supply Chain. He can
be reached at cliff@cflynch.com.
