Two Flavors Of Rail-Which One Is Right For You?
By Dwight Price
In recent years, with the capacity and cost challenges that shippers have experienced in truck transportation, more food logistics professionals have sought to diversify their transportation modes by shipping using rail. However, when the subject of "rail" comes up in the truck-centric world of food transportation, people usually mean "intermodal rail."
Not all transportation managers realize that they have two choices when deciding to use "rail" in their transportation mix--intermodal and boxcar. Both modes are viable options and may offer cost savings over trucking and each has different strengths and weaknesses.
Characteristics of intermodal: Intermodal refers to the dedicated trains run by railroads using a truck/rail/truck method of shipping. Also known as piggyback, TOFC (trailer on flatcar), or COFC (container on flatcar), the trailer or container-more containers than trailers these days-is trucked from the loading dock to the origin ramp. The load is placed on a flatcar. The intermodal train is then pulled by locomotive directly to the destination ramp, where the load is de-ramped and drayed to the receiver's dock. The receiver often doesn't even realize that these goods were hauled on a railroad, since it looks and feels just like another truckload.
Rail intermodal is designed to compete with over the road (OTR) trucking, so the delivery schedule is designed to be competitive with the OTR schedule, albeit a little slower. As a rule of thumb, a shipper generally needs to be located within 100 to 150 miles of the origin ramp and the length of haul should be a minimum of 500 miles for intermodal to offer savings to OTR.
Not your father's boxcar: Boxcars have been shipping products on the railroad for a long time, but today's boxcars are bigger, haul more product and are more sophisticated pieces of equipment than the boxcars of previous generations. For example, modern mechanically refrigerated boxcars are equipped with two-way GPS units so that the reefer unit can be operated remotely and temperatures can be monitored remotely.
Due to the greater weight tolerances on the railroad, a boxcar can hold up to four truckloads of product. The most cost-effective use of boxcars is for the shipper to load the car at their origin plant or DC and unload it at the destination plant or DC. Of course, a facility must have an active rail spur for this to happen.
Not rail-served? Many public warehouses across North America have an active rail siding and so your rail shipment can be enabled with the use of an origin and/or destination warehouse partner. Each transload adds cost, so while a shipper generally needs a 500-mile haul for direct rail to pay off, one usually has to hit the 1,000-mile threshold for a carload shipment involving one or two transloads to be cost-effective.
Which Flavor Is Right For You?
The intermodal vs. carload decision process can be summarized by the graphic below, depending on the characteristics of the product being shipped:
When boxcars are best: Shipping by railcar is different than using trucks. Shipment times are much slower; a cross-country trip can take two weeks. And while the railroads' service product these days is better than it has been, transit times are still more variable than OTR. Carload rail is not suitable for JIT-type situations. There are three supply-chain situations in particular that can be ideal for boxcar shipments:
- Inbound ingredients-either in bulk, or packaged-into manufacturing plants;
- Manufacturing plants shipping to a forward DC network. The loaded railcars then become part of the forward inventory and can be considered to be "rolling storage;"
- Direct shipments to large customers, when the customer is receiving large volumes of product and especially if the customer's warehouse is rail-served.
Intermodal Pros And Cons
Shipping intermodally also has its strengths and weaknesses. Among its strengths:
- May provide cost savings compared to OTR trucking;
- Adds equipment capacity to your mix;
- Acts like a truck;
- Can be utilized over most of North America, especially going to and from all major metropolitan areas.
- Somewhat slower than OTR;
- Somewhat less reliable than OTR ;
- May experience equipment shortages in the most popular lanes during peak.
Everybody talks about the rubber meeting the road. Instead, try diversifying your shipments by using the steel wheel on the steel rail. Good things can happen to your transportation budget!
Price is director of sales and marketing at Cryo-Trans Inc., Owings Mills, MD, the largest lessor of temperature-controlled boxcars in North America. Price has spent most of his career in various facets of rail transportation, including a 12-year stint with Class I railroad CSX Transportation. He can be reached at email@example.com.
Go East, Fresh Cheese!
Cheese producer tests boxcar to move product cross country.
Leprino Foods has long been an advocate of railcar transit for shipping its frozen cheese products from the West Coast to the East Coast. "Traditionally, we ship to a forward distribution cold storage facility and from there we truck to the final destination," says Mark Wilkin, traffic manager of the Denver-based company.
The company hopes to find the same level of success using boxcar to transport its fresh cheeses and recently began to develop a rail transportation model for shipping these products east. "It's just too expensive to truck these fresh products all the way across the country-and, to tell the truth, rail is getting expensive these days as well," Wilkin admits.
Leprino has been using Burlington North Santa Fe and Union Pacific for years and is pleased with the new 72-foot-long BNSF cars and the 64-foot-long UP cars for its frozen shipments. "We can load up to 180,000 pounds of gross cargo weight in those cars, which gives us about 1.5 additional truckload equivalents over the older 50-foot-long cars that could handle only 115,000 gross pounds of lading," explains Wilkin. The newer cars monitor and report real-time temperatures and location.
Since BNSF and UP furnish only boxcars and not the racking systems Leprino wants for shipping the fresh cheeses, Leprino is currently discussing the possibility of leasing railcars from Cryo-Trans Inc., Owings Mills, MD, as it offers racking systems unique to customers' requirements.
"We feel the racking system model is the most efficient method to handle our fresh products," Wilkin says. "There is a future for us using this model, which will be an entirely different method of shipping for us. The racking system inside the cars will allow us to separate one pallet from another, helping minimize damage during shipment. The controlled temperature environment and the proper internal handling system will help get our fresh products to market in the best condition possible."
Leprino believes Cryo-Trans will prove to be a good business partner for what they have in mind.
"They've always been a railcar manufacturer and they operate storage facilities," reports Wilkin. "We believe the railroads' cycle times are a lot quicker and consistent now on their deliveries. We think these things have opened the avenue to being able to ship fresh products and get them to market without being concerned with issues of shelf life. This doesn't work on every lane, but certainly there are lanes out there where it is advantageous to do this. This is an efficient model for us because we can move larger quantities of fresh cheeses into position for delivery at a cost that's lower than the trucking model."
In a few pilot projects, it took nine to 10 days to ship fresh cheese products to Florida and Georgia from the company's California manufacturing plants; it took eight to nine days to ship into the Northeast. "We've also run some tests with a company out of Florida, sending our products to Florida from California on their cars," adds Wilkin.
Wilkin notes a word of caution about the future of rail, echoing the concerns of other food shippers. "I think the predicament facing the dairy industry is the production/consumption model in which milk production is located in the West and the large consumption area is located in the Northeast. If we can't control the price of shipping, companies will experience a dramatic impact on West-to-East distribution costs and some companies will be forced to think about locating in the central part of the country to be closer to high consumption regions." -A.T.