Shippers have two options to get their product to the destination, truck or rail. Depending on the commodity, shipping destination, & the load tonnage, it might initially appear to be more financially lucrative to ship by rail. However, here are several factors to consider before choosing rail.
Certain commodities can only be shipped by rail as an incident could endanger public safety if it were to occur on a public highway. Rail carriers charge different prices depending on the commodity type. More dangerous commodities will cost more to ship because of the liability.
How much will your shipment weigh? Each truck can haul approximately 26-30 tons while a railcar can hold approximately 50-70 tons. It takes two or three trucks to haul the same tonnage as what one railcar can hold. If that is the case, rail can be considerably cheaper with heavy loads. On the flipside, it can be more cost-effective to ship by truck with a lighter load as you will have to pay a fee to lease a railcar whether it is loaded to capacity or not.
The more distant the destination, the cheaper it usually is to ship by rail as opposed to truck. Of course, railroads only have a limited number of yards & spurs where railcars can be unloaded. Trucks can travel on just about any road in the nation. If the destination does not have direct rail access, this can increase the shipping costs as the load will need to be transloaded to a truck to complete the final leg of the trip.
Also, trucks are cheaper for short haul trips than railroads and delivery times are more secure.
Just In Time?
Railroads are not known for being the quickest transportation method in the world. Yes, there is “premium” freight like intermodal containers & automobiles that get first priority at running from point A to point B to meet delivery deadlines, but it’s not uncommon for railcars to sit idle for several days in railyards or along the line of road. Reasons can include manpower or engine shortages, mainline traffic congestion, or interchange delays when a different carrier needs to deliver the product to the other half of the country (rail carriers start/end their lines in cities like Chicago, Kansas City, Memphis, New Orleans, etc.).
Believe it or not, it’s not uncommon for large companies that primarily rely on rail shipments to also deliver time-sensitive deliveries by truck to keep the inventory pipeline flowing. If and when rail carriers do not meet service windows, trucks can prevent operational shutdowns. Even small companies with time-sensitive deliveries will ship via truck because of the relative uncertainty when a shipment will reach the destination. Hiring a truck means a dedicated driver & carrier until the shipment reaches its destination. Rail shippers might also maintain a larger-than-normal material inventory on-hand to prevent an operational shutdown, if railcars are not delivered on schedule.
Tariffs & Fees
Transportation companies earn incomes through tariffs & fees. Railroads are no exception. The more carriers required to make a delivery, the more fees the shipper will pay. If the shipment needs to be carried by more than one rail carrier, each company will charge their respective fees. If the shipment needs to be transloaded via truck at the origin or destination, there can be additional fees from these carriers as well.
The fact is that rail & trucks are both vital to the American transportation infrastructure. Railroads hold the competitive advantage when shipping heavy loads or to a distant destination. Trucks are more reliable in meeting delivery deadlines & they can go anywhere a road exists. For shippers that are primarily concerned about shipping cost and are flexible when the shipment arrives, rail can be the better choice. But, for shippers & destinations that cannot afford to take the chance of an operational shutdown in the event a shipment doesn’t arrive “just in time,” shipping by truck is the better option.
For more information on C.L. Services, Inc’s intermodal services please visit: http://www.clservicesinc.com/for-customers/intermodal-rail-drayage/