Soft Economy Means Hard Savings

Good news for domestic shippers in a bad economy.


Steve Van Kirk, vice president of commercial development, intermodal, at Schneider National, Green Bay, WI, agrees that the best value has traditionally been on the longer haul movement of transcontinental freight. However, he points out that his company has begun to focus on the shorter length hauls as well. Schneider's eastern network growth strategy involves moving into Florida from both Chicago and the Northeast and the "triangle point" between the Northeast and Chicago.

"Those buy-ins have historically been for truckload, but the CSX railroad has been offering some very competitive advantages in terms of how its network supports those loads--including an offering in fuel savings, line haul discounts and service in transit very close to what you would get from a solo truck driver," says Van Kirk.

Another reason experts point to is the fact that the overall reliability of the intermodal suppliers has been rising.

"We're running in the high 90 percentile bracket for on time, for a door-to-door basis," says CSX's Weber. "We also have a proactive customer service group that provides alerts for equipment that is out of schedule and also does rescheduling and recovery work."

Many companies are now more willing to have the railroads take their custom freight and, in addition to moving them interplant, they are now willing to allow them to deliver the goods to end customers as well.

"That's really where a lot of the intermodal growth is coming from," says Schneider's Van Kirk. "They used to say 'just move it to the warehouse and from there I'll load it onto a truck, instead of the rail.'" Now, he says, customers are willing to let them ship it directly to a customer. "It will be cheaper and on time."

Exports Up

As with domestic intermodal shipping, the soft economy seems to be having a positive effect on domestic food companies that interact with the nation's seaports--in a different sense, however.

"What's going on at the Port of Long Beach is just a snapshot of the economy. For the fiscal year-to-date, we're down quite a bit compared to last year in terms of imports," notes Ken Uriu, marketing manager for the Port, located in Long Beach, CA.

Long Beach is one of the country's largest port complexes. Nearly 20 percent of the nation's inbound goods pass through it. This year, however, that business is off by 10.8 percent. Uriu says that food exports are up though, by an impressive 21.1 percent, which is attributable to the devaluation of the dollar.

Similarly, the Port of Galveston is seeing that exports of grain are up substantially over last year. Through the end of August, total grain exports were up an amazing 72 percent. Overall, 21 million tons were exported, as opposed to 3.7 million tons in 2007.

Todd Biscan, spokesman for the Florida East Coast Railroad, Jacksonville, FL, agrees. His short line has seen an overall increase in the amount of food--items such as poultry--that it moves to the Port of Palm Beach, as well as to Port Everglade and to the Port of Miami. "There's been a tremendous amount of food product that the FEC railway moves down there to our steamship customers, which is ultimately exported."

This story is not the same for all U.S. ports, however. Some are struggling with exterior forces, beyond the economy, that are making times difficult for them. The Port of Corpus Christi, on the Texas Gulf, is facing a steep drop-off in both imports and exports. It had been moving honey dew melons and cantaloupes from Guatemala through its facilities on a regular basis, but that business has instead been shifted to Florida ports.

"We're thinking this is due to shifting trade routes," explains John Valls, marketing manager for the port. "If a shipper has a well-established trade route from the Panama Canal straight into Florida, then it already has the infrastructure on the other end waiting for it--stevedores, truckers and rail lines. It's already built-in where the company is comfortable."

In addition, the port has seen its poultry exports to countries such as Russia dry up. "You would think they would be buying it. Chicken is cheap."

He attributes this to the fact that there have been a lot of issues with poultry worldwide, such as the outbreak of bird flu in China, as well as the quarantining of chicken in Texas not too long ago.

"Things like this hit the industry hard and it takes a long time to recover from something like that," says Valls.

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