He adds railroads are alerting their shippers to prepare for possible shortages and, if possible, to get hold of their own equipment because this might be the only way shippers and the railroads will get through the fall season.
Meanwhile, trucking companies (with available capacity) perceive this as an opportunity to win back some rail customers by offering better rates and deals in certain geographic areas. So the seesawing balancing act continues.
Collaboration Among Shippers
Although it is still a new concept, collaboration among non-competing shippers has been getting a lot of attention as shippers develop these kinds of initiatives on their own because the rails are not.
The way it works is a shipper from one part of the country contacts a shipper in another part of the country to determine if they have transportation synergies they can use for mutual benefit. "For instance, Tropicana in the Southeast might want to improve their market position in the Pacific Northwest," explains Newton.
They might contact a company like J.R. Simplot so each company can use its own private fleet to get to the new geographic market. "If Tropicana has 10 railcars going to the Pacific Northwest and Simplot has the same number going to the Southeast, each company would need only five cars to meet their demand, thereby having an additional five cars each as they double the size of their fleets."
Using a model like this guarantees equipment availability and costs less because railroads offer better pricing because they don't have the burden of finding and using railroad equipment. "You have to be big enough or diverse enough to set aside personnel assets to implement a program like this," Newton adds. This model would allow private shippers and railroads to achieve 100 percent utilization of their respective equipment.
Cool Technology Improves Service
New reefer car technology offers visibility into real-time car location and temperature, giving shippers that added sense of security. "We are dealing with higher dollar food commodities when customers put four truckloads of product into one railcar," notes Dwight Price, director of sales and marketing for Owings Mills, MD-based Cryo-Trans Inc., a manufacturer and railcar leasor.
The company's fleet doubled in the last year and now numbers nearly 900 refrigerated boxcars. Its merchandise service offers cross-country transit times of 10 to 14 days to a freight-forward warehouse, where products are trucked to their final destinations.
"Our reefer units are equipped with two-way GPS systems, so the cars are satellite-monitored 24/7 and we know their location at any given time," Price says. "We can also control the temperature of the units remotely. Product tracking ensures product quality on arrival."
Reefer temperatures can be set anywhere between –10°F to 80°F, so the reefer can be a cooler, freezer, or heater. For instance, certain confectionery products need to be maintained at an even 60°F and cars carrying these products are heated as needed.
Do The Math
Heavy food products, like jars of mayonnaise, have an advantage over light products when shipping by boxcar. "You reach your maximum weight sooner when you ship by truck and you don't cube out the vehicle," explains Lou Trentacoste, vice president of logistics for Alliance Shippers Inc. in Englewood Cliffs, NJ.
Transportation costs per product unit go down when you can fit more products into a boxcar over truck.
Shippers should consider several elements when considering boxcar, says Trentacoste.
"Companies might look at boxcar as an alternative mode in their transportation mix depending on how they value inventory and inventory carrying costs, how sensitive the product is, how fast to market from their manufacturing facilities they have to ship their products and lastly, how successful they are at forecasting."
Boxcars carry more lading than ever before. The standard for many years was the 50-foot-long boxcar. Cryo-Trans has been among the pioneers in designing and building larger cars, notes Price. "Now our reefer boxcars are 64 feet long and we were the first to introduce the extended-height reefer boxcar into the business. The 72-foot-long reefer boxcar easily holds four truckloads of product. The more lading the car can hold the greater are the economies of scale for our customers."