Is Every Company Going Rail Now???

At Prime we've got a few Reefers for Rail... They have a gps tracking and reefer monitoring...

I know quite a few of them are running frozen waffles leaving out of the memphis area on rail

Question is how fast can they get a technician to the load and fix any reefer problem while enroute on the train.

 

Companies have been Intermodal for decades. Nothing new but electronic tracking and better information systems have made it cheaper and convenient. Government subsidies to the Railroad industry keep the rates low. Simply put, it's cheaper to deliver it to the railyard, send it across country and deliver it from the rail to a customer than it is to drive the truck all the way. If Government subsidies to the Railroads ever end (not likely), it'll be cheaper to drive it to a customer across the country by truck. Just like the old days....

 

Point out a govt. railroad subsidy. They build and maintain their own track and roadbed, buy their own equipment and are unionized to boot. Only subsidy goes to Amtrak. Sorry, you ain't got an argument there pal.

 

When I was a receiver we used conway for shipments from the west coast. It worked like this. Ground 5 days transit time. If time was not an issue 11 days maxium by rail. Rail got you a 30% discount in freight cost. Got a rail shipment in 2 days once but most of the time it was right at 11 days.

 

How about the Heartland Corridor. It is a rail line that runs through Ohio, West Virginia, and Virginia. $95 million dollars of federal money is going to Norfolk Southern to raise clearances along the line so that they will be able to double stack containers.

 

Trucking companies and shippers will always look at the railways in an effort to save money. However, when reliability and speed is a concern, trucks will usually be the shipping mode of choice. A few years back I picked up a piece of a locomotive in Denver and took it to the union pacific yard in Little Rock. When a huge transportation company like UP won't haul their own freight it shows you that even they don't think much of their service.

 

The Heartland Corridor was a regional government initiated program in an attempt to reduce highway congestion and route certain traffic away from metropolitan areas. And even though 95 million is a drop in the bucket these days, if you read the fine print you'll discover even that amount gets paid back through an incremental tax imposed on certain rail miles in those states. And the railroads share of the cost is about 3X the 95 million.

The point here is the rails, since the Staggers Act was passed, are not subsidized nor rate guaranteed. Like the airlines, they are deregulated and thus have to earn their cost of capital since they are responsible for building and maintaining their physical plant. They are heavily unionized, with the average union employee making around $87000 in wages and benefits.

Rails will always be more direct cost efficient than trucks at distances over 750 miles, hence the long haul container and TOFC boom and you're seeing the big trucking company trailers etc. Rails generally can't compete well at shorter distances, in part, because they have to build their own plant and amortize it over as many route miles as possible with as little variable costs as possible. It takes about 6 train crews to take a hotshot UPS train from Chicago to LA and the hottest take about 77 hours. It takes about the same to move, switch and spot a boxcar 500 miles. That where the trucking advantage comes in.

 

You're up on the subject- thanks for setting me straight. I Googled "gov't subsidies for the railroad" and found a lot of articles about small projects around the country. Mostly infrastructure projects. But it doesn't look like the heavy subsidies it used to be.