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

When a Wall Street Journal article reported that rail shipping woes were impacting auto deliveries, industry experts told LM the situation is not as dire as it seems.

By ·

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, 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. Contact Jeff Berman

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!

Latest Whitepaper
Six Ways Cloud ERP Supports Rapid Innovation
Kenandy is a new approach to ERP that lets you and your team focus on driving innovation, creating new product lines, and expanding your customer base even as you improve your business operations.
Download Today!
From the November 2016 Issue
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL) provider that could successfully combine transportation services and technology capabilities under one roof.
Warehouse & DC Operations Survey: Ready to confront complexity
2016 Quest for Quality Awards Dinner
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Best Practices: How to Efficiently Leverage APIs to Increase Your Net Income
Both legacy and modern technology leaders agree that leveraging API connectivity is critical in keeping up with the pace of a world that demands not only speed and agility, but also a deep level of visibility. During this session a panel of technology and industry experts discuss impact APIs can have on annual net income and market capitalization.
Register Today!
EDITORS' PICKS
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...
Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...

Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...