Roughstuff

Thought I would cut and paste this article...it focuses on the investment aspect, since it is from Seekingalpha.com, an investment website. But relevant to all raodway users, cyclists, and environmentalists. Seven arguments, no less!

When we talk about moving freight around without incurring hefty costs, normally there are two options, trucks and locomotives. In the old days, thanks to the low energy cost, the advanced highway infrastructure and their point-to-point flexibility, the trucks dominated the shipping market. But now the picture is changing. I believe in the long run, the railroad will become the backbone of the American freight transportation network, while the truck companies will be confined to short distance shipping, operating between railroad stations and the customer locations as a support to the national railroad network.

The above statement is based on the following facts and beliefs.

First, railroad is simply a more efficient way to move freight. According to BNI, one intermodal train removes more than 280 long-haul trucks from the nation’s highways.

Second, based on the type of freight (industrial material, agriculture product, coal, etc) , the rail is 2-8 times more fuel efficient than trucks.

Third, Rail is more environmentally friendly. It emits only 2.6% of the total U.S. green house gas emissions, while trucks, 21%.

Fourth, the progress of information technology helped the railroad companies build more sophisticated train control systems, resulting in increased accuracy, efficiency and flexibility, continuously narrowing the advantage of trucks over railroad.

Fifth, I believe the coming era will be featured by high energy price, which will continue to consolidate rail's cost advantage over the trucks.

Sixth, intensified environment concerns will drive stringent regulations, which will drive up the operation cost for both rail and trucks, but the impact will be a lot more punishing for trucks than for rail, thus the cost advantage of the latter will be further consolidated.

Seventh, under the recession, the cost awareness of the customers makes rail an even more attractive alternative to trucks. This will help rail companies gain market share against trucks, better position themselves to take advantage of opportunities created by the economic upturn, thus further build its dominance over trucks.
=================

For you investor types, the article prefers BNI (burlington northern) over UNP (northern pacific)...


roughstuff

bmclaughlin807

Drat. here I was hoping for a video of a train plowing through a truck.

cudak888 

Eighth: It is more fun to railfan.

-Kurt

StrangeWill

I don't get it, it's pretty much always been the setup, trains are used for large hauls, and trucks regularly pick up at train yards, can't have a train stop at your local Wal-Mart and Performance Bikes.

Nothing really new.

jgedwa

Actually, to some extent today, and much more so in the past, any business that moved a significant amount of product (in and/or out) would be on a rail spur. There is no reason, for example, that a place like a Wallyworld could not be on a spur. I am only guessing, but I would imagine that they move enough volume to warrant it. Or at least a place that moved that much volume would have warranted it in the past.

Until oil becomes enormously more expensive, trucks will always have their place, but more can be down with rail than we often times suppose.

The real issue is not so much the role of trucks as transportation, but rather the role of trucks as rolling warehouses within the model of "just in time" warehousing. That is mighty conveinient, but it is only really feasible when the cost of fuel is low enough to justify keeping your stock moving around the country at all times. As the cost of fuel goes up, fewer businesses (and ultimately customers) will be willing to pay for this nicety. And then, I suspect the relative value of rail will leapfrog over trucking in many applications.

jim

wahoonc

Nope...we have trucks hauling things from coast to coast rather than using the rails. There is no real reason for using trucks to haul anything more than a few hundred miles when rail can do it for less money, other than the "just in time" excuse, which allows companies to not have to warehouse products and in many cases they don't pay for an item until it hits the shelves in the store. And yes you can have a train stop at your business if you have a rail siding. Years ago I worked for a paper dealer, we got rail cars in all the time. FWIW some companies still use rail, Food Lion (a southern US grocery chain) receives a lot of its dry goods via rail, then distributes them to the stores via trucks. I don't know how the volume today compares with what was done in the past, the distribution chain has changed quite a bit since I was last involved with it.

Aaron

ghettocruiser

https://failblog.org/2008/09/24/truck-fail-3/

DPN

What about all the idling vehicles waiting for a lumbering train to pass?
Trains are great if you're not in a hurry to move your freight...

There is no chance in hell of a siding at a Wal-Mart Supercenter...can you imagine what a traffic jam THAT would cause? Plus, who needs railcar quantities of patio furniture, or oil filters, or...?

Most companies have eliminated the old regional warehouse type setup in favor of more local distribution center formats.

You'll notice that the article was certainly slanted towards trains.

Why not bring back canals?

StrangeWill

Then why do most trucking companies have home base at a cargo yard with large train stations, and a lot of openings are for cargo yard management? They seem to use it as much as it's feasible being as they do like their profits.


Maybe out there, here there are no places to get a train to run anywheres near a lot of businesses that need their cargo.

fordmanvt

I work in the industry and ship coast to coast using both trucks and rail. I agree with two through six, but there are also situations they don't address that favor trucks.





The second part of this is true, but depending on what metric you are looking at, either is more efficient.





Rail costs are essentially fixed. Truck cost varies greatly from company to company and driver to driver. Diesel price also varies a significant amount and effects trucks more than trains. Right now, shipping by truck is very cheap due to the down economy. I've got a dozen people a day calling me wanting to get the foot in the door, and our current carriers are also calling me to negotiate lower rates to try and get more freight. The downside is that if this economic downturn continues too long, the best drivers will be the first to leave the industry.


Trucks are always faster, even driven solo. A solo driver can drive 44 hours in 74 hours legally, plus 3 hours a day for fueling, meals, etc. for a total time span of 83 hours. So you can easily drive from the north east to the west coast in 3.5 days legally. The same trip by rail takes 6 days. Put a second driver in the truck and they can hot-seat it all the way, never needing to stop except for fuel. The same trip can be done in two days flat.

Trains are not setup to do multiple deliveries, or what the industry refers to as "multi-drop" loads with any significant distance between them. Often we have nearly full loads out to CA, and can have the truck stop along the way to deliver a pallet or two in IA, WY, UT and/or NV for the northern route. Sending the freight by train is not going to be efficient with this type of delivery. Having a truck make a stop of two along the way is more efficient than shipping a full load to the coast via train and the stop along the way by a "less than load" shipper (think Con-Way, FedEx Freight, etc).

This same idea also hold true for loading. Often one customer will place an order that needs to ship from two (or more) different locations. With a truck, you can simply pick up along the way, but with a train, you'd have to ship all the product to a central location, and then send it to the rail yard. The drayman is not going to do this for you, they generally stay within 4 hours drive of their rail hub.

Multi load and multi drop practices are VERY common, and trucks loading in one location and delivering to one location are actually fairly rare.

fordmanvt

Maybe when companies who bought the product transported it, but these days the vast majority of companies have the supplier ship to multiple locations. Walmart has approx 100 "distribution centers" where product is shipped to by the vendor, warehoused and then shipped to the actual store.

Another methoed is called "direct store delivery", used mostly by the beverage industry where the vendor has warehouses across the country and employs day drivers to make local deliveries. This method generally offers much better service as you have a representative of the vendor at the store much more often. But even with the shipping of product by rail from production to regional warehouses, the direct to store delivery method is signifigantly more expensive.

bmclaughlin807

Yeah, like that.

supton

Yeah, but locomotives aren't exactly zero pollution machines either.

Quote:

Second, based on the type of freight (industrial material, agriculture product, coal, etc) , the rail is 2-8 times more fuel efficient than trucks.

No argument.

Quote:

Third, Rail is more environmentally friendly. It emits only 2.6% of the total U.S. green house gas emissions, while trucks, 21%.

I call bogus. Not the numbers, but the argument. Let's say we move 90% of our shipping to trains. Egads! Trucks would emit 1% of total US greenhouse gases, while trains emit 23%! You get the idea.

A better argument would be the reduction in greenhouse gases if we were to shift x% from trucks to trains, or somesuch.

Quote:

Fourth, the progress of information technology helped the railroad companies build more sophisticated train control systems, resulting in increased accuracy, efficiency and flexibility, continuously narrowing the advantage of trucks over railroad.

Fifth, I believe the coming era will be featured by high energy price, which will continue to consolidate rail's cost advantage over the trucks.

Sixth, intensified environment concerns will drive stringent regulations, which will drive up the operation cost for both rail and trucks, but the impact will be a lot more punishing for trucks than for rail, thus the cost advantage of the latter will be further consolidated.

I dunno. At some point, someone will figure out that these locomotives are running with much less pollution controls than big rigs. Efficency could go down in response. At least they are not running on bunker oil.

Quote:

Seventh, under the recession, the cost awareness of the customers makes rail an even more attractive alternative to trucks. This will help rail companies gain market share against trucks, better position themselves to take advantage of opportunities created by the economic upturn, thus further build its dominance over trucks.

Yeah, but in a sour economy, trucks allow more flexibility. As one poster pointed out, if you need to move something coast to coast, it will take 6 days by train, 2 by truck (if you have two drivers). Similar math would show up for any distance.

supton

Can fix that with over/under passes. On (History? Discovery?) channel, they showed a train going across the country, and in one CA town, the train basically dropped just below ground. The top of the tunnel was mostly open, save for where the typical roads went overhead. Both train and cars were unimpeded for this; tunnel was like miles long.

Might not be able to do that every intersection, especially not in the countryside, but big roads could easily accomodate this.

Roughstuff

Many good arguments. Trucks can more easily make multiple stops/loadings/unloadings, for example. The time/days issue already is a factor...highly perishable/value added products are shipped by truck, where time is of the essence. In contrast coal-laden cars can sit at sidings for days if needed.

roughstuff

Kevrob

I saw a good report on the PBS NewsHour https://www.pbs.org/newshour/bb/trans...eck_04-21.html last week about the sad state of the U.S. rail network.


Getting rid of grade crossings anywhere I ride would have to accompany greater reliance on rail. Waiting for cars and trucks to clear an intersection is a cinch, compared to the years it takes a long, slow freight to make the same distance.

Keith99

fordmanvt gave far more datials than I ever could. My observation is just that the trend has been the other direction for several decades now. Near me spur lines have been taken out. One still sees some of the remnants, industrial areas only 1/4 mile wide centered on where the tracks were.

I do think trains coul dbe used more than they are now, but I have a feeling the shift will not be nearly as large as the article writer thinks. If it stays in hte mindset trucks vrs. trains, trains will lose. If someone comes in with the mindset of getting the best out of both with a truely integrated truck-train system they may show significant advantages over either alone.

snowman40

Extreme Trains on The Hitler Channel.....oops The History Channel

It was a freight express and went from the LA/LB port to the middle of TX (Dallas I think). From there, the freight went by truck to final destinations.

MKahrl

Another way to make rail more competitive would be to charge all users of highways and roadways for the amount of wear and tear they do to the roadway. Railroads already pay for their own wear and tear because they own their rails and roadbed.

Car users would see their taxes drop, cyclists would probably be due a rebate, and trucks would be paying serious money. Since a legally loaded semi truck wears out a roadway equivent to 6,700 cars, think would he would be paying compared to what a car driver does.

Wanderer

The main reason for using trucks - believe it or not - is speed.

The railroads cannot compete when it comes to moving something quickly - whether it be across town, or, across country.

You can load vegetables on a truck, out in the growers field in Imperial Valley CA, on Friday, and, deliver it to market on Monday, in New York City. Or, the same with oranges in Florida, to Chicago the next day.

Something the trains cannot do.

It works the same with paint, chemicals, bicycles, whatever.

fordmanvt

How did you get 6,700 cars?

Roody

Well, not so much if some town is unable to make electricity or all those days the train is stuck.

Interesting that a lot of environmentalists are demanding more passenger trains, and giving passenger trains priority over freight trains on the tracks. That would force even more cargo onto trucks, and end up being worse for the environment.

Actually, this is one difference between America and Europe. Europeans travel more on trains, but rely more on trucks for freight movement.

MKahrl

GAO Report. It's quite old, over ten years ago.

dhofmann

Or start-stop "mild hybrid" systems.

David13

Yer not supposed to sit with your motor running while you're waiting for the train to pass. Shut your stupid motor off. It takes less gas to restart it if you sit for more than 20 seconds.
The shippers are getting wise and are using rails more and more.
The trucks should only do the short haul.
dc