Rail transload offers cost effective solutions to truck shortage - May 2018

Due to changing customer demands, like instant product distribution, a low tolerance for damage and the need for largely varied inventory in single railcars, 3PL-coordinated rail shipping is more attractive than ever. In spite of the potential highway infrastructure investment ahead, rail will continue to compete with truck lines in many freight categories.

Similarly, railroads continue to invest significant resources in their own infrastructure to balance the underinvestment by the government in our nation’s highways.

Cost of Congestion per Mile of Interstate by Metro Area 

According to the Association of American Railroads’ 2018 report, capital expenditures by U.S. railroads have been over $110 billion the past four years. While oil industry freight expenditures have dried up, it is possible that decisions made by the current administration could renew activity.

WSI, one of North America’s largest privately owned 3PLs with rail-served facilities encompassing over 15 million square feet, transloads a wide variety of products:

  • Paper, pulp & scrap

  • Fresh & canned vegetables

  • Construction steel

  • Lumber

  • Shingles

  • Drywall

  • Aluminum ingots

  • Bulk chemicals & polymers

WSI works with its customers to provide low-cost solutions, whether rail or truck, to get their product to wherever it is needed, at a low cost. Our sophisticated inventory systems, including a railcar-friendly Warehouse Management System (WMS), allow   our customers visibility down to the unit level, similar to truckload and less-than- truckload shipments. For example, our WMS provides our customers visibility of five individual SKUs of shingles, or exact details of lumber sizes in each railcar. This kind of unit-level detail offers customers peace of mind that their products are being tracked with just as much, if not more, accuracy than they would be on a smaller truck trailer.

State of Intermodal

2018 looks to be a strong year for intermodal. The trucking industry continues to face ongoing difficulties to mitigate high driver turnover: federal hours of service rules, the high average age of the American truck driver, and low wages for long hours.

However, despite the American Trucking Associations’ (ATA) estimate that the U.S. is short 50,000 truckers as December 2017, truckload volumes rose 8.8 percent in January 2017 compared to January 2016, according to a report from the ATA.

According to the ATA, truckload volume will grow 3.5 percent a year through 2019, then 1.2 percent annually from 2020 to 2025. However, truckload carriers will make greater use of intermodal rail for intermediate- and long-distance hauls. During that same time period, according to the ATA, rail intermodal tonnage will grow 5.5 percent annually through 2019 and 5.1 percent a year through 2025.

Simply put, rail and trucking do not exist in their respective vacuums. Shippers frequently need both a truck and a train to get bulk products to market. Intermodal shipping is often the most cost-effective and efficient method of transport, combining the speed of trucks with the fuel-saving economy of rail.

Costs and Savings

Intermodal options can be cost-competitive with trucking-only transport options, especially on certain days of the week. The sheer amount of product that can fit into one railcar is three to four times that which can fit in a truck trailer, and the railcar in question uses four times less fuel than a big rig.

For instance, if a customer is shipping from Chicago to the Inland Empire east of Los Angeles on either a Thursday or Friday, an intermodal train will get there in time for Monday off-loading onto a local delivery or drayage truck.

“Those intermodal trains are treated by the railroads like unit trains,” said Gene Loiselle, a WSI sales manager. “That’s still a point of focus, and that service is still good. You can take one train from Point A to Point B.”

“Those intermodal trains are treated by the railroads like unit trains,” said Gene Loiselle, a WSI sales manager. “That’s still a point of focus, and that service is still good. You can take one train from Point A to Point B.”

That was the appeal of the railroads for Alan Kirkland, the shipping manager for Atlas Roofing in Allentown, PA.

He used to use truck service to move shingles from a manufacturing location in Hampton, GA, to its warehouse operated by WSI in Allentown. Now, with the help of WSI, Kirkland directs those movements onto a Norfolk Southern train for the 800- mile length of haul to its Allentown warehouse. He sends about four carloads a week, but those shipments can double during busier times of year.

“If I were to put that on a truck, my line haul costs would be double,” Kirkland says. “WSI runs it. They do all the unloading and loading of trucks going out of our Allentown warehouse.”

Transload Expertise

A 3PL’s specific expertise in loading and unloading intermodal shipments is essential for mitigating damage to product; railroads used to be notorious for manhandling and marring lumber and other construction materials. WSI material handlers know how to load and unload railcars of all types, including box, center beam, flat and hopper cars. WSI’s rail-served transload facilities also allow for buffer stock, in the case of shortages or damaged product. And, our experience shows in the numbers: WSI rail-served facilities turn upwards of 20,000 cars a year. Our customers can focus on their core business while we take care of the complex transloading, utilizing our deep understanding of industry-standard rail lead times to schedule pick-ups and deliveries.

Both our transload facilities and WSI’s sister company, WSI Freight Solutions, LLC, maintain strong relationships with truckload carriers and local dray operators, to get the best carrier performance at the lowest rates, keeping costs for our customers low.

With or without the current administration’s additional investment in infrastructure, intermodal shipping and rail transport aren’t going away anytime soon. Take advantage of the cost and environmental savings provided by our wide network of rail-served facilities today!