newsworthy
Intermodal shoots itself in the foot as it
tries to grab market share from truckers
RAIL INTERMODAL FOLK DON’T KNOW IF THESE
are the best of times or the worst of times.
Judging by the numbers, the outlook for their business appears bright. Total annual volumes—domestic and
international—are expected to grow somewhere between
3. 6 and a little over 5 percent through 2017, according to
an analysis by the consultancy FTR Associates. Domestic
intermodal volumes rose 8 percent in May, 7 percent in
June, and 5 percent in July over
the comparable periods in 2013,
according to the Association of
American Railroads.
Intermodal has much going for
it compared with truck: superior economies of scale, better fuel
economy, and a smaller carbon
footprint. As a result, a good portion of intermodal’s growth has
come at the expense of over-the-road truckers that confront a myriad of operational challenges that increasingly render them
uncompetitive on many lanes.
But as events of the past nine months have shown, what
intermodal doesn’t currently have are the consistent service
levels that shippers had come to expect from motor carriers, albeit at a higher price.
Perhaps that was never clearer than in August, when Cold
Train—a double-stack service moving fresh and frozen
produce from Quincy, Wash., and Portland, Ore., to 20
U.S. markets and Toronto—suspended operations after a
little more than four years. Overland Park, Kan.-based Cold
Train, which ran on BNSF Railway’s northern corridor, said
its customers couldn’t tolerate the poor reliability, slow-er-than-normal transit times, and chronic absence of BNSF
locomotives. Miserable congestion on BNSF’s lines turned
normal four-day transit times from the Pacific Northwest
to Chicago into seven days, wreaking havoc on deliveries of
perishable cargo. BNSF, hammered by a terrible winter in
its northern geographies and inundated with record crude
oil and grain volumes, couldn’t free up enough equipment
to give Cold Train the service it needed. At this point, it is
uncertain when, or if, the service will resume.
Ironically, the suspension came just five months after
Cold Train’s new owner, Michigan-based Federated
Railways Inc., said it planned to add at least 1,000 53-foot
containers to the Cold Train fleet during the next five years.
Despite Cold Train’s decision, other temperature-con-
trolled shippers continue to use rail. However, they, too,
are experiencing service issues, especially along the corri-
dor linking the Pacific Northwest and Chicago. As a result,
some perishables shippers who had converted to rail have
migrated back to truck, though
that evidence is anecdotal and not
empirical.
SERVICE WOES
The Cold Train experience may
have been the most visible setback
for rail interests, but the service
issues extend well beyond just one
user. Ever since last year’s fourth
quarter, service metrics have deteriorated. Train speeds have slowed,
Nor, it seems, has the rest of the industry. Eastern
railroad Norfolk Southern Corp. has told its customers
not to expect tangible network improvements until late
November. For some railroads, that timetable may be too
optimistic. Thomas Albrecht, transport analyst at BB&T
Capital Markets, said rail networks might not return to
2013 levels until the fall of 2015. That could be pushed back
into 2016 if winter storms disrupt traffic again early next
year, Albrecht warned in a mid-September research note.
Larry Gross, an intermodal analyst for FTR, told attendees at the Intermodal Association of North America’s
(IANA) annual Intermodal Expo in late September that
train speeds, on average, have declined 8 to 9 percent year
over year and that there are “no real signs” of p. 16 P H O
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