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

In the third-party logistics (3PL) sector, the ongoing trend of merger and acquisition (M&A) activity never seems to take a break. That is apparent in recent weeks alone, with XPO Logistics recent acquisition of Norbert Dentressangle for $3.53 billion, Echo Global Logistics scooping up Command Transportation for $420 million, and Kuehne+Nagel buying ReTrans for an undisclosed sum.

During this webcast attendees will learn about technology that is delivering real-time tracking on freight and putting an end to the all too common question of “Where’s My Brokered Load?”. Whether you’re a broker, 3PL, shipper, or carrier, find out how you can gain automated, TMS-integrated visibility on all your shipments.

FedEx recently took another step in its plans to acquire Netherlands-based TNT-NV and a provider of mail and courier services and the fourth largest global parcel operator for $4.8 billion, which it announced in early April. The company said it has “submitted the required filing to the European Commission to obtain regulatory clearance in connection with the intended recommended public cash offer all issued and outstanding ordinary shares in the capital of TNT Express.”

The American Trucking Associations last week praised Senator Deb Fischer (R-Neb.) for her bill that takes some positive steps towards alleviating the current environment regarding the truck driver shortage.

Global third-party logistics (3PL) services provider Kuehne+Nagel (KN) said this week it has entered into an agreement to acquire ReTrans Inc., a Memphis-based provider of multimodal transportation services.

Comments

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


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA