Driver availability impacts truckload motor carrier capacity even as carriers work to maintain discipline in that regard. Carriers face the dual challenge of constraining capacity to maintain reasonable operating margins and of providing adequate capacity to meet the demands of major shippers. An uncertain driver supply compounds both problems.
Three representatives from major railroads suggest intermodal transportation as a solution to the capacity problem without compounding the driver problem. They made their presentations during the annual meeting of the Refrigerated Division of the Truckload Carriers Association in Dana Point, California, July 13 to 15, 2005.
Representing the rail lines were Todd Biscan, assistant vice-president — intermodal for the Florida East Coast Railway; Cal Reynolds, assistant vice-president — food & consumer goods for the BNSF Railway Company; and James Hertwig, president of CSX Intermodal.
Atlantic to Miami
The Florida East Coast Railway specializes in providing rail service along the east coast of Florida from Jacksonville to Miami, a 350-mile haul along the Interstate 95 corridor. Marketing agree-ments with other lines provide additional service to Atlanta and Savannah, Georgia, and Charleston, South Carolina. Multiple departures from Jacksonville and Miami offer overnight service on a daily basis. Service between Miami and Atlanta has a second day delivery schedule.
The BNSF (Burlington Northern Santa Fe) covers 28 states in the West and Midwest, about two-thirds of the country, plus two provinces of Canada with 32,000 miles of track. Alliances with other carriers allow coast-to-coast service. Basic service provides rail linehaul between points in California, Oregon, and Washington and Chicago, Memphis, and Dallas.
CSX has 35,000 miles of track covering every major market west of the Mississippi. The intermodal service is built around a triangle bounded by Chicago on the west, Florida on the south, and into the northeast through New York. The rail line says that using intermodal trailers allows carriers to assign drivers to high priority loads and provide more predictable trips.
South Florida is a consumption market that is growing about twice as fast as the national average, Biscan said. This offers a big potential for motor carriers to serve Miami by terminating their linehaul in Jacksonville and using rail for that heavy inbound market that does not offer a wide variety of outbound freight. At present, about 3% of intermodal traffic on Florida East Coast is temperature controlled, he said. “The refrigerated market is a virtually untapped segment of business into South Florida, because a high percentage of freight into the area is for the grocery warehouses serving Broward and Dade counties,” Biscan said. “Most of our freight to those warehouses is for the dry side of the business, but we understand that fully half of the freight inbound to those distribution centers is refrigerated.”
Moving 750 miles daily
Intermodal is a viable solution for refrigerated motor carriers, because BNSF can move a trailer about 750 miles a day across its long lanes, compared to about 500 miles for a solo highway driver, Reynolds said. A one-way trip from the west coast to Chicago takes three days by rail. BNSF moves about two million intermodal shipments in trailers or domestic containers per year; of those, about 97,000 are refrigerated trailers, about 5% of the company's total intermodal volume, he said. Small, refrigerated intermodal is the fastest growing business segment at BNSF, rising about 31% in 2004 and projected to grow 30% this year, Reynolds said.
Rail intermodal is a good linehaul for refrigerated motor carriers as long as they are extremely selective about the points served, Hertwig said. Some traffic corridors are great intermodal lanes for highway carriers. CSX Intermodal handles about 200 refrigerated loads a day throughout its growing network. “Truck lines should look at railroads as a big owner-operator across high volume traffic lanes,” he said.
The Association of American Railroads has two equipment standards for two different groups of users. Standard M931 is for the regular, high-volume users of rail intermodal service, while standard M9931 applies to occasional users. In general, these standards require lift pads for trailers, bumpers to protect refrigeration units, and fuel tanks that allow a refrigeration unit to run unattended for an extended period.
“Structurally, refrigerated trailers are built more solidly than typical dry vans, so while the AAR standards speak to structural issues, carriers should not worry too much about which standard their trailers meet,” Reynolds said.
Targeted capacity increases
Although some people think of rail intermodal as a relief valve for large carriers that seek targeted capacity increases, it can actually be useful to highway carriers of all sizes, Hertwig said. For instance, CSX has a truckload train that leaves Chicago at 6 pm on Monday and arrives in New Jersey so that trailers are available for final delivery at 5 am Wednesday. “A lot of smaller carriers put trailers on that particular train,” he said. “Smaller carriers look at that service as a way to increase business without using a driver on that lane.”
Carriers of all sizes can use intermodal service with the decision being made solely on their needs and opportunities, Biscan said.
Domestic containers on double-stack cars provide rail lines with the opportunity to move twice as much freight with a given train than can be moved with a corresponding train of intermodal trailers. The decision to invest in domestic containers must remain with carriers, Reynolds said. The BNSF says that intermodal trailers remain a good tool for freight movement. The company is developing plans for moving containers as well as trailers. If capacity is critical, containers could be the best option, but the trailer service will be expedited and will probably run a day faster than the container service, he said.
Refrigerated truckload carriers operate with relatively small trailer fleets in relation to their number of tractors, so utilization and turnaround time for those trailers becomes critical. Because it has a rather short haul, the Florida East Coast can offer a high utilization rate, Biscan said. A trailer tendered to the rail line in Atlanta for delivery in Miami can be back in Atlanta four days later. On trips from Jacksonville to Miami, trailers are available at origin for another load two days later, he said.
The BNSF runs much longer lanes with correspondingly longer transit times. Rail time from Southern California to Chicago averages 64 hours and extends to about 80 hours for freight originating in Northern California, Reynolds said. Rail performance is consistent, so the key to high utilization is managing pick-up and delivery at each end of the rail leg effectively. If motor carriers plan carefully to meet the railroads cutoff times — getting a trailer to the railhead for departure — and if they show up promptly when a trailer is available at the other end, utilization can improve dramatically, he said.
Historically, refrigerated intermodal has the highest on-time performance of all BNSF service, Reynolds said. That service performs in the mid to high 90 percent range and has been improving. Delays generally result from congestion at either end of the lane. More train personnel can help prevent delays, so BNSF will hire more than 2,000 new crews in 2005, he said. “New locomotives help also, and BNSF is spending about $2 billion in capital investment this year,” Reynolds said.
Reposition empty trailers
Transit time on CSX can range from 36 to 48 hours depending on origin and destination, Hertwig said. With the triangular route structure of the CSX, carriers that have loads from Chicago to New York and from New York to Florida might be well advised to reposition an empty trailer back to Chicago rather than waiting for a northbound load, he said. Getting a trailer back to Chicago for another revenue-producing load probably outweighs the cost of moving it empty, Hertwig said.
On-time performance depends on keeping the trains rolling, Hertwig said. To accomplish that, CSX has turned down more than 80,000 loads in the past year to avoid stops in route. “Every time we stop a train, we are providing an opportunity for something to slow us down,” he said.
In addition to high utilization on the CSX network, motor carriers can expect good utilization when connecting between railroads. “We have good connections and carriers can expect a seamless process if their equipment needs to change railroads,” Hertwig said.
Ground transit between rail terminals is the responsibility of motor carriers, Reynolds said. “We will make trailers available at the published time,” he said. “The carrier has to arrange for movement across town to CSX.”
Florida East Coast speeds the delivery process and improves equipment utilization, because it runs its own drayage operation in South Florida, Biscan said. “Including drayage, we are running at 98.62% on time,” he said.
Many motor carriers worry about product damage when putting trailers on rails, but they shouldn't, Biscan said, because fewer than 2% of loads suffer any damage.
Damage is often cosmetic rather than serious, Reynolds said. On the 97,000 refrigerated loads handled by BNSF in 2004, only 500 suffered damage resulting in a claim. “That's a claims ratio of less than one-half of one percent,” he said.
Nearly all damage is preventable, Hertwig said. The first step in using rail for linehaul is to learn how to load trailers to prevent damage, he said.
The one thing railroads cannot do is depend on third parties to keep the lines open. “Those tracks belong to the railroad and if something happens, we have to fix them,” Hertwig said. “We can't get off the Interstate and take a different highway around the problem.”
The BNSF works hard to notify carriers of delays brought on by track maintenance, but those delays can sometimes take 12 to 24 hours, Reynolds said. “We can usually recover from weather delays within a few hours,” he said. “The most serious delays are caused by bridge damage, and, still, we typically repair bridges faster than highway bridges get fixed.”