Railcars have transported Tropicana orange juice throughout the U.S. for more than 30 years. But while rail has proven to be the most efficient way to get its product out to the market, its railcars were running pretty much empty on the backhaul to the company's largest manufacturing facility in Bradenton, Fla.

Hit with the grim realization that its railcar utilization was only half as efficient as it could be, the logistics team at Tropicana Products Inc. jumped into action. In an effort to fill up precious capacity, the team launched the Tropicana Express in the first quarter of 2005, a unique service that offers open backhaul space in its boxcars to other rail shippers moving freight back into the Sunshine State—including the sister companies of its parent, PepsiCo.

Today, Tropicana's logistics team reports that the service has offered a 3:1 railcar to truck conversion ratio and has supplanted an estimated 2,700 truckloads rolling back into the state over its two years of operation. Here's how this savvy rail shipper has pulled over-the-road costs out of its own logistics budget, improved boxcar utilization, and has passed along the savings to peers looking for a more efficient way back into Florida.

According to Gene Zvolensky, Tropicana's vice president of logistics, the backhaul service was created to pull rising over-the-road transportation costs out of its own logistics network. "First, we asked this question: If we can't reduce over the road rates, is there a way to take waste out our existing system to bring costs down?" says Zvolensky. "In my mind, an empty railcar moving around the country is definitely wasteful."

Since roughly 60 to 70 percent of what Tropicana ships out of Florida goes by rail, its rail shipping network was fairly straightforward before the creation and deployment of the service. It shipped freight out of Bradenton to the Northeast, Midwest, and West Coast regions of the U.S. on loaded railcars which returned to Florida empty—and then started the process over again when the next shipments hit the rails.

Searching for a solution, a few realities jumped into Zvolensky's mind. "Florida is a huge consuming market with a lot of shippers, including our parent company Pepsi, shipping products into it," he says. "So we wondered if there was an opportunity for us to use our rail service, which is high-speed, two-day delivery from the Northeast and Midwest back into this huge, consuming market."

The idea led to meetings that included Tropicana's Zvolensky, railroad transportation manager Eric Potter, and the company's railroad partner CSX. After hashing out the details, it became apparent that a new backhaul service could be viewed as a potential "triple win" of sorts: Tropicana would win because they could utilize empty railcars coming back into Florida; the shipper customers would win if it could reduce transportation costs for shipping into Florida; and CSX, Tropicana's railroad partner, would win in the form of increased revenue.

"Our goal coming into this was to off-set our overall transportation costs, and that is what we have done," said Zvolensky. And in turn, Tropicana has helped CSX increase revenue with new business on a new lane while reducing its own costs by making better use of its unused railcars—icing on the cake for a partnership that's been active since the 1950s.

When Tropicana first implemented the backhaul service in March 2005, it used it on a limited basis—with four or five trains per week—whenever it had product that was manufactured near one of its forward distribution centers located in Jersey City, New Jersey, Cincinnati, Ohio, and City of Industry, California, says Potter.

"When we first started out, the idea was to market to shippers moving freight into Florida, along with marketing it within our Pepsi organization," says Potter. "This was great from a Pepsi standpoint, because we have plants in the U.S. that have to get product into Florida, and this became an ideal way to take transportation costs out of the overall system."

In a typical scenario, a shipper customer using the service would consolidate a product, say dried foodstuffs, for distribution to various food service establishments throughout Florida. If the customer is based in the Ohio or Illinois market, for example, they may have two truckloads coming in from northern Ohio and one from Illinois. These trucks will be directed to Tropicana's Cincinnati-based forward DC, where the trailers would then be loaded onto a single railcar and routed back to Florida.

In terms of the savings the backhaul service provides, Tropicana offered a rough example on a route from Indianapolis to Orlando. The cost of three truckloads would ring in slightly more than $6,800. But the same amount of freight moving on the Tropicana Express with a transit time of five days would costs roughly $4,100, resulting in a 35 percent to 40 percent savings in this specific example. Potter added that the average shipper is saving around 15 percent using the service.

While all parties are now reporting improved efficiencies, there were a few challenges as they were getting things rolling. One was the physical handling of freight that was typically hauled by truck. Zvolensky says this dilemma forced Tropicana to improve its material handling and logistics processes. "These improvements also made overall service operations better," says Zvolensky, "reducing the touches that are typical with rail transport."