Supply Chain and Logistics

It’s no wonder that US intermodal traffic is declining. Poor service from the railroads has made using any system that involves a transfer an invitation to delays. And shippers can’t afford delays.

Companies offering intermodal container service don’t have enough pull with the railroads in the US to get highly regular service. And now that container rates are dropping fast, shippers won’t pay an excessive amount for the service. So the large rails don’t feel any obligation to serve them well.

Will the major rail lines make any adjustments? My guess is they will be dragged kicking and screaming to provide more reliable service. The fuss they are making over simply making regular deliveries of feed grains to major customers, and the resistance to reciprocal switching, and the labor difficulties they are experiencing show that they don’t feel that customer service is top of their mind.

Why not? Recently I read a book about Charles Lowell, a young man from Massachusetts who fought in the Civil War. Before the war, and after graduating first in his class from Harvard, he worked as an agent in Iowa for a firm building railways west in that state. Each time they completed 25 miles of railway, the firm got a large new swath of land from the US government. The firm had to survey the land, decide on their route through it, and sell the land they didn’t need to fund the next 25 miles. They sold the land to migrants, from the east or from other countries, who were moving west to obtain cheap land for farms and businesses, their piece of the American Dream. There was a lot of graft in these land dealings. But Lowell insisted that his firm sell at a fair price and not engage in special deals with investors speculating on the land. His reason was interesting and farsighted.

Lowell believed that the railroad needed customers, and that was what he was creating by selling them land.

Today’s railroad executives don’t seem to think they need customers.

There are plenty of reasons to use intermodal for container shipment. It reduces emissions. It could be faster. It could require fewer transloads. (Most US truck traffic from ports is transloaded to 53-foot truck chassis before a cross-country trip). And it could be safer, and cheaper, or at least no higher in price, for the shipper. Rail lines could participate in this effort to reduce pollution while making the business profitable for them by operating their lines efficiently to accommodate it. But it does require them to serve their customers, those who want to ship on intermodal.

Too bad rails can’t seem to focus on the advantages it offers and shape their business around it. It would save the hassle of government regulation forcing them to accommodate it.

By Ian Putzger, Americas correspondent 10/02/2023

The worst January for US intermodal for ten years, and no sign of relief – The Loadstar