We’ve long understood that the cost advantage in freight transportation depends on distance, with railroads, and water carriers where waterways are available, making the longer hauls more cheaply, particularly with bulk commodities. The cost advantage of rail over highway transportation appears for shipments
travelling farther than five hundred miles, give or take. The railroads, however, have been
shying away from much of that intermodal business, that despite
signs of strain in long-haul trucking
manifesting themselves long before anybody heard of Wuhan, let alone of virology research there.
A week ago,
I noted, “There are no short-term solutions, and the railroads have to think about how best to do shorter-haul and retail intermodal trains.” Then an executive with a freight-forwarding company rented a boat to look at what was going on shoreside at Los Angeles and Long Beach and
posted his impressions. Among his
suggestions to ungum the works was an all-hands effort by the railroads to get the containers somewhere inland and let the truckers pick them up there.
I don’t know if somebody in Omaha heard him, or if somebody noticed that
there was money to be made.
Union Pacific, the Port of Long Beach, and the Utah Inland Port Authority have announced the launch of direct rail service between the Long Beach and Utah facilities to help address ongoing port congestion.
The executive directors of the two facilities, Mario Cordero of Long Beach and Jack Hedge of the Utah authority, said in a joint statement that the direct, regularly scheduled service “will allow cargo destined for all of the Intermountain West to be rapidly evacuated from terminals in Long Beach to Salt Lake City for further distribution throughout the region. Much of this cargo traditionally moves to Utah, Colorado, Nevada, and Idaho by truck, and thus must be removed from the port terminals one container at a time. Reengaging this direct rail service will allow removal of blocks of containers at a time.”
Cordero also said the agreement immediately reduces pressure on terminal storage, gates, chassis, and the local drayage community on the coast. … It’s a major step forward for exporters from the region.”
It’s a research project for another day to work out why those boxes weren’t already moving on stack trains to Salt Lake City rather than as one container at a time with a driver putting in more than a full day on the road between the coast and Salt Lake. Several commenters on that post are noting that the reluctance of the railroads to go after those 500 mile intermodal moves goes beyond Union Pacific. Perhaps, dear reader, you’ve heard of
North Baltimore, Ohio.
How much money might Union Pacific have been leaving on the table?
A Railway Age analysis includes this. “Millions of TEUs [a 20′ x 8′ x 8′ basic container load —
Ed.] of international goods are imported to or exported from the Intermountain West annually, but only 10% of this cargo currently moves by rail. This initiative aims to provide consistent, reliable movement of cargo by rail, which improves fluidity and reduces delays of shipments already set to come to the Intermountain region, rather than increase cargo volume.” The value proposition might have been there as early as 2018, and the allocation studies I referred to at the start of this post are over fifty years old. And
only now Union Pacific and Utah Inland are going after this traffic, and
only now claiming the environmental benefits and less highway congestion??
I’m also puzzled by the way Our Political Masters are working the problem. There’s now a
Container Excess Dwell Fee in
Los Angeles, applied to containers that aren’t railed out within three days or trucked out within nine. Forgive me my age, but what ever happened to
per diem charges for rolling stock in motion, and demurrage charges for rolling stock sitting around? The
per diem charge is the rental a railroad company pays to the owner of the car for a day, and there used to be a chess game called get-the-foreign-road-cars-interchanged-by-midnight, sticking the receiving road with the
per diem charge; while the demurrage charge applied to a consignee who treated a freight car as free warehouse space rather than unloading it promptly and releasing it for service.
Power Line’s Paul Mirengoff suggests that the Biden administration’s efforts to untangle the ports
aren’t likely to succeed quickly. But if you’re thinking about parallels to incapacitated presidents current and past, some of the port jam-ups bring to mind the logistical nightmare that was mobilizing the American Expeditionary Force. That, too, is outside my area of expertise.
Why, though, weren’t the freight railroads better positioned to go after some of those container hauls before the current emergency manifested itself?