DC Velocity - IdeaBook 2015

Logistics, located in Fowler, Calif., 11 miles from Fresno, will run the Selma facility. McKay said the goal is to offer a full-service operation at both facilities.

LONG LEADTIME

The project took about three years to consummate, McKay said. BNSF had to be convinced there was enough market enthusiasm for the service to commit a lane in its core Los Angeles-Chicago corridor. Truck services had to be scrutinized to ensure their availability and reliability in light of new and more stringent federal regulations governing their operations. Potential customers had to be sounded out to gauge their interest in an unfamiliar project that was neither truck nor intermodal, he said.

McKay said in mid-January that several anchor customers were “ready to sign contracts,” but that the company wanted to wait until the launch date grew nearer before it committed.

There are risks that will remain once the service starts.

Volume density is critical to the success of any bidirectional operation. Yet there has always been a pronounced directional imbalance favoring goods from the West Coast. McKay executives acknowledge they will have to make a strong sales push on the westbound leg to narrow the gap.

Though a multitude of produce comes out of California’s verdant Central Valley, the pipeline generally runs dry for about two months out of the year. McKay executives said they hope to pick up the slack by booking other types of temperature-sensitive goods.

C. Thomas Barnes, president of Con-way Multimodal, a mode-agnostic unit of trucking and logistics giant Con-way Inc., said the nascent service will get a boost by using BNSF’s Los Angeles-Chicago lane. Barnes said the trains on the corridor run “like clockwork” with rapid velocity and short dwell times, both important attributes in hauling perishables.

Truckers involved in the operation should also gain efficiencies through better equipment utilization, a result of driving longer distances than the typical dray, he said.

Barnes said the key would be the speed at which cargo is transloaded at destination from the boxcars to the trailers. Transloading can be time-consuming and labor-intensive, adding to the cost and risk of product spoilage, he said.

The McKay service is not the only rail initiative slated to start this year that focuses on the produce market. Also this spring, a company called Tiger Cool Express LLC, founded by intermodal veterans Ted Prince, Tom Finkbiner, and Tom Shurstad, is expected to get rolling. Like McKay TransCold, the Tiger Cool folks spent several years trying to get growers, retailers, railroads, and financiers seriously interested in a service that, up until now, has been off the beaten path.

Little wonder. Trucks come with higher costs relative to rail. However, trucks promise faster, direct transit times and fewer hand-offs, must-haves for perishables shippers and their customers. As such, no one expects the produce business to radically flip to intermodal or boxcars any time soon.

McKay said his goal is not necessarily to take share from truckers but to offer an interesting alternative to stakeholders in the reefer supply chain. Those stakeholders, he said, include truckers.