Executives: short-haul intermodal gains ground
| Matheson |
Improvements in railroad service and changing freight economics have made regional intermodal service a viable option for shippers in certain lanes, according to two intermodal industry executives.
Railroads have generally held a cost advantage moving international and domestic shipments of consumer goods more than 1,000 miles, but the breakeven point where it makes sense to convert from over-the-road truck to rail is now in the 550-mile range despite the narrowing gap in rail and truck rates, Bill Matheson, president of intermodal services for Schneider National, said Wednesday in a webinar hosted by American Shipper.
Truck rates have plummeted during the past two years in line with the economic downturn, but a substantial amount of truck supply has left the market and will not be available when the economy begins to recover late this year. Many large fleets have exited the long-haul market, thousands of used trucks have been exported, motor carrier bankruptcies are expected to increase in the second half of the year and fuel costs are beginning to rise again.
‘So inflationary costs for truck will increase at an accelerated rate relative to intermodal costs,’ driving down the distance where it makes sense to convert, Matheson said.
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| Hertwig |
The key factors in determining whether a short-haul rail intermodal move is viable are the drayage distance between the shipper’s dock and the rail ramp and the out-of-route miles traveled on the rail network, Matheson said.
An intermodal move from Rockford, Ill., to Wooster, Mass., for example, adds only one hour in transit time and 20 miles in distance compared to the 44 hours and 1,049 length of haul by truck, but at a saving of $460 in rate and fuel costs, Matheson said.
Jim Hertwig, president of CSX Intermodal, said CSX trains have improved their speed to an average of 29 mph or more and intermodal terminals have increased efficiency by 50 percent during the past three years. ‘ Eric Kulisch