The hooplah that rail-based intermodal shipping will outpace trucking may be “the flavor of the month”, but the train industry’s limitations and “shoddy service” won’t let it replace trucking as the main course, says industry expert John Schulz.
An independent analyst, Schulz is a contributing editor to Logistics Management Magazine and member of Gerson Lehrman Group’s council on transportation. With nearly two decades of expertise in the U.S. trucking industry, he provides consulting, research and reports for a range of surface transport niches, including intermodal.
Schulz says the “dirty dark little secret” of intermodalism is that rail transport won’t, or more to the point, can’t replace trucking as the more attractive freight-moving option. Intermodal shipping has gained favor, with railway corporations and their trucking partners touting ‘green’ benefits in fuel-cost savings and a supposed eco-friendliness. What they don’t mention, says Schulz, is that up to 90 percent who ship by truck exclusively don’t have viable rail options.
Railway shipping can work for freight moving longer distances. And in cities like Chicago, Dallas and Los Angeles. However, for factories and distribution centers in other areas of the country, and shipments with shorter miles, rail can’t compete with the flexibility and service of shipping by truck, the analyst says.
Though railroad corporations claim superiority in tons-moved-per-gallon, fuel prices dictate when shippers feel it’s worth it to switch to rail. And when they’ll switch back. During the current recession, freight shippers hopped to rail transport when diesel soared over $3 per gallon. But when diesel prices dropped below $2 per gallon, they quickly jumped from railcars to the flexible reliability and timeliness of trucks.
Currently, intermodal rail carries less than 1 percent of the $680 billion freight market. While the sector is gaining steam, it’s not by much, Schulz says. And like the rival trucking sector, the down economy has taken a toll on intermodal and rail shipments. The Association of American Railroads reported September’s rail intermodal traffic lost 14.6 percent from September 2008, following a 16.4 percent loss for August 2009 as compared to August 2008.
Intermodalism has been hailed as transportation’s future. The message should have had plenty of time to sink in, since it’s been sung for “some 30 years now,” says Schulz. “During that span, all trucking has done is expand its market share.”
That’s the trend the independent analyst expects to continue, he said, due to rail’s limitations for the majority of freight shippers.
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