Subscribe to our free, weekly email newsletter!


Rail shipment issues cited in WSJ report are a matter of network velocity

By Jeff Berman, Group News Editor
April 25, 2011

Earlier this month a Wall Street Journal report noted how Detroit automakers were “struggling with rail shipping woes…stalling deliveries of finished vehicles.”

The report pointed out how Chrysler and GM were forced to delay vehicle shipments by up to two days for large quantities of automobiles. While some of the delays had to do with the winter weather, the report explained how when the economy was contracting during the recession, railroad operators put thousands of rail cars into storage and cut staff. And now with shipments increasing, it said that U.S. railroads do not have enough rolling stock for fast deliveries, coupled with problems when dealing with demand surges.

While there was not enough rolling stock to meet the uptick in demand, FTR Associates Senior Consultant Larry Gross told LM that this situation is not so much a question of moving cars out of storage as it is a question of network velocity.

“The cars are out there but they are not moving as fast as they need to be,” Gross explained. “If you have a thousand loads a month and you are getting two loads per car per month, you need 500 cars to service that need.  Now let’s say the network is disrupted by weather and gets congested.  Train speeds slow down 5 percent so maybe you are getting 1.9 loads per car per month….now you need 526 cars to service the same demand, not 500.  The symptom says ‘not enough cars’ when the actual problem is lower velocity.

As of the latter part of March, Gross said non-intermodal merchandise train speeds were running at around 21 mph which is about 6 percent below prior-year levels.  And terminal dwell time—time spent in yards waiting for the next train—was up to 23 hours but has now retreated back towards 22 hours, which slightly higher than last year and is a sign of improvement.

In general, said Gross, it looks like railroads are having some trouble recovering from the slowdowns and congestion that resulted from adverse weather earlier in the year, adding it is similar to the problems the airlines have in recovering from cancelled flights, with not enough spare capacity, which, in turn, takes a long time to get all the passengers moved out.

“I think this is a temporary situation sparked by a quick uptick in volume,” said Brooks Bentz, a partner in Accenture’s supply chain practice.  “Cars have been steadily released from storage, but the nature of storage means putting cars out of the way so they don’t take up needed real estate and disrupt normal operations.  That can mean taking a bit longer getting cars back into service.  The railroads are not being overwhelmed by this, but rather I’d see it as a temporary blip that will smooth out relatively quickly.”

According to data from the Association of American Railroads (AAR), the number of rail freight cars in storage as of April 1 was 283,649, which was down 22,667 cars from March 1.

For related articles, please click here.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

A recent Wall Street Journal report stated that third-party logistics and freight transportation services provider XPO Logistics shut down seven freight terminals that were part of the Con-way Inc. less-than-truckload (LTL) network, Con-way Freight. Con-way was acquired by XPO for $3 billion last year.

Many transportation/logistic organizations are applying a new wave of robotic process automation (RPA), a “no coding” approach that integrates and automates data-driven activities.

Logistics Management Group News Editor recently caught up with Frank Guenzerodt, president and CEO of Dachser USA, the American arm of global 3PL Dachser, about the company's ongoing expansion efforts into the U.S.

In an effort to help buyers of freight transportation and logistics services to better understand the required best practices in order to be a shipper of choice for their carrier partners, non asset-based third-party logistics (3PL) services provider Transplace said this week it has rolled out a Preferred Shipper Checklist.

For a new facility in Chicago, DHL Global Forwarding converted to electric lift trucks. The result? Better uptime and a cleaner environment.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA