DRIVERS OF INTERMODAL RAIL FREIGHT GROWTH IN NORTH AMERICA

European Transport Conference 2007Noordwijkerhout, Netherlands

Session IInternational Rail Freight Efficiency I

17 October 2007

John SpychalskiEvelyn Thomchick

The Pennsylvania State University

The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania

State University

Rail Intermodal Traffic Growth Rail Intermodal Traffic Growth in North Americain North America

• 1990: 6.2 million trailers and 1990: 6.2 million trailers and containers containers

  • 2005: 11.7 million trailers and 2005: 11.7 million trailers and

containerscontainers

  • 88.7 % increase 88.7 % increase

The Pennsylvania Transportation Institute and the Smeal College of Business , The

Pennsylvania State University

The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State

University

Growth – Why and How?

Government Policy Makers Government Policy Makers

• Deregulation – 1976-1981Deregulation – 1976-1981

– Downsizing of rail economic regulation to a vestigeDownsizing of rail economic regulation to a vestige  – Repeal of all economic regulation of rail intermodal Repeal of all economic regulation of rail intermodal   – Total elimination of trucking economic regulation Total elimination of trucking economic regulation   

• Massive funding of road Massive funding of road infrastructureinfrastructure

  – 46,508-mile National Interstate Highway System46,508-mile National Interstate Highway System  – Increased truck size and weight limitsIncreased truck size and weight limitsThe Pennsylvania Transportation Institute and the

Smeal College of Business , The Pennsylvania State University

Business Incentives for Business Incentives for Intermodal – RailwaysIntermodal – Railways

• Recapture traffic lost to truckRecapture traffic lost to truck  • Serve shippers lacking direct rail line Serve shippers lacking direct rail line

accessaccess  • Haul international ocean containersHaul international ocean containers  

– LandbridgeLandbridge  – MinibridgeMinibridge  – MicrobridgeMicrobridge

The Pennsylvania Transportation Institute and the Smeal College of Business, The

Pennsylvania State University

Business Incentives for Business Incentives for Intermodal – Truckers Intermodal – Truckers

• Lower line-haul operating and capital Lower line-haul operating and capital costscosts

  – Rising fuel prices – reduced diesel fuel usage Rising fuel prices – reduced diesel fuel usage   – Wage savings – line-haul driversWage savings – line-haul drivers  – Fewer line-haul truck tractorsFewer line-haul truck tractors

• Driver shortages Driver shortages   • Growth in highway congestion Growth in highway congestion   

The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania

State University

Technological “Enablers”Technological “Enablers”

• Intermodal cars (wagons) –greater Intermodal cars (wagons) –greater capacity, lower tarecapacity, lower tare– Doublestack Doublestack – ““Spine cars”Spine cars”

• Locomotives – higher horsepower, more Locomotives – higher horsepower, more fuel efficient fuel efficient

• Track capacity and quality upgrades Track capacity and quality upgrades • Side/top-lift trailer and container Side/top-lift trailer and container

transfer transfer • ““Car-less” load-carrying units – e.g., Car-less” load-carrying units – e.g.,

RoadRailerRoadRailerThe Pennsylvania Transportation Institute and the Smeal College of Business, The

Pennsylvania State University

Operational and Business Operational and Business Process “Enablers”Process “Enablers”

• Fixed-schedule, dedicated intermodal trainsFixed-schedule, dedicated intermodal trains  • ““Anchor” customers – high-volume, consistent Anchor” customers – high-volume, consistent

base loadsbase loads  • Differential pricing Differential pricing   • Fewer, higher-volume intermodal terminalsFewer, higher-volume intermodal terminals  • Third-party marketing firms – railway as Third-party marketing firms – railway as

wholesaler wholesaler   • Information technology applicationsInformation technology applications

The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

Shippers Shippers

• Supply chain globalisationSupply chain globalisation

– ““Off-shoring” of manufacturingOff-shoring” of manufacturing– Longer factory-to-market hauls Longer factory-to-market hauls

  

• More rigorous supply chain More rigorous supply chain management management

  

– Inventory efficiency, JITInventory efficiency, JIT– Demand for greater transport reliability Demand for greater transport reliability – Cost savings – intermodal vs. over-the-road Cost savings – intermodal vs. over-the-road

truckingtrucking

  The Pennsylvania Transportation Institute and

the Smeal College of Business, The Pennsylvania State University

Expert Panel RankingsExpert Panel Rankings

• Ranking order of importanceRanking order of importance– GlobalizationGlobalization– Technological developmentsTechnological developments– Transportation economic deregulationTransportation economic deregulation– Evolution of supply chain managementEvolution of supply chain management– Changes in trade flowsChanges in trade flows– Government policyGovernment policy

The Pennsylvania Transportation Institute and the Smeal College of Business, The

Pennsylvania State University

ConclusionsConclusions

• Panel of experts – conceptual Panel of experts – conceptual framework components have framework components have complex interrelationshipscomplex interrelationships

• Cause-and-effect relationships Cause-and-effect relationships between components cannot be between components cannot be reduced to simple proofsreduced to simple proofs

The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania

State University