Historically, boxcar transportation has been less expensive than either intermodal or truck, but the spread has lessened lately. Although boxcar transit still offers savings, it does not offer the significant savings it once had, says Trentacoste. "Railroads have increased the cost of their boxcar transportation significantly in the last two years."
He adds the overall savings using boxcar over intermodal can be as little as five percent or as much as 25 percent, while the savings over trucking could be 10 to 30 percent.
As milk production shifts to California and the Southwest, the supply chain for the dairy industry is longer than it's ever been. "California is now the biggest producer of cheese, surpassing even Wisconsin," notes Price. "The dairy industry is taking a hard look at using more boxcar in shipping finished dairy products back east, where the major consumer markets are. There are more finished dairy products being shipped by boxcar that hadn't been before."
Price adds confectionery and chocolate manufacturers are considering boxcar, especially since the recent trend in the business has been outsourcing more production to Mexico.
Rail shippers report a rise in requests for sustainable shipping. "Three-dollar-a-gallon diesel gets people's attention and the higher the price of oil, the more the savings gap between rail and truck," says Price. Rail is about three times more efficient than trucks in terms of higher fuel economy and less greenhouse gas emissions.
With long-haul trucking losing favor among truck drivers, trucking companies are collaborating with railroads to produce shorter and more regionalized routes that allow drivers to be home at day's end. "Intermodal refrigerated services accounts for a small percentage, but I see that segment growing in the near future," Newton says.
It's All In The Planning
Effective use of refrigerated boxcar is really all about planning intelligently. Allowing for longer transit times is one adjustment companies can make in their supply chains to make the shift efficiently, Price says. Benefits include economies of scale, sustainability and capacity savings in diversifying transportation modes.
"Boxcars are not as demanding as truck, in that you have time to unload and load again. Whereas, with truck you have about two hours to load in order to escape having to pay detention fees. In an ideal warehouse, you can unload trucks during the day and have your night crew load and unload boxcars at night, thereby creating labor efficiencies."
When Trentacoste was purchasing logistics services, he chose a mix of services. "It's a constant balancing act. I knew that part of my transportation would have to go on truck for emergencies and I also knew there would always be some forecast that would be wrong. I put as much as I could in boxcar to achieve better cost savings."
As a full-service logistics company, Alliance offers customers transportation alternatives, including intermodal and truck; it owns 1,500 intermodal reefer trailers.
Several years back, the move from rail to intermodal and truck was fashionable, as the food industry was dealing with smaller order quantities. "But the pendulum is starting the swing back and more companies are not only looking at boxcar, but they are switching to boxcar," Trentacoste notes.
Companies that kept and maintained their sidings over the years have an additional advantage in that they are in the catbird seat, adds Trentacoste. "If your manufacturing facility has a siding, you can unload a boxcar on it, which saves money because you don't have the extra handling and extra cost of putting it to truck over a cross dock."
New Services Take Hold
The latest boom in the industry is helping shippers cope with constraint challenges. Companies like Railex actually manage the logistics piece from farm to supermarket shelf.
"Companies like Union Pacific Railroad really took charge by packaging services to move products across the country as efficiently as possible," says Paul Esposito, senior vice president of Railex USA, headquartered in Riverhead, NY.
Although the service is new to the industry, Railex's founder-Andy Pollack-is no newcomer. Pollack has been in produce distribution since graduating from Cornell's agricultural program and he is a third-generation potato farmer whose frustration with long boxcar transit led him to start Railex.