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.
in the NewsSupplier Relationship Micro Management June Cass Freight Index report is solid Move Inventory Faster Download: Material Handling Technology Survey Results Federal Maritime Commission now evaluating Transpacific carrier agreements More News
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 AuthorJeff 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!
2017 Truckload Brokerage Roundtable: Technology continues to connect the dots Cloud Transportation Management Systems (TMS): Weis Markets streamlines “both sides” of the DC door View More From this Issue