SHORT-HAUL RAIL INTERMODAL: CAN IT COMPETE WITH TRUCKS? (WITH DISCUSSION AND CLOSURE)

Document Type

Journal Article

Publication Date

2004

Subject Area

operations - traffic, organisation - competition, mode - rail

Keywords

Train traffic, Terminal operations, Short haul, Railroad traffic, Market share, Line haul, Intermodal transportation, Intermodal systems, Freight transportation, Drayage, Costs, Cost control, Competition

Abstract

Intermodal traffic, that is, truck trailers or ocean containers handled on special rail equipment, is the fastest-growing segment of rail traffic. Between 1990 and 2000, rail intermodal grew at an annual rate of 4.6%--much faster than rail carload freight, which grew at an annual rate of only 1.4%. However, during the same period, truck tonnage grew at an annual rate of 6.9%, and air cargo at a rate of 17.9%. The growing rail intermodal is expected to overtake coal as the single largest source of revenue for freight railroads in the year 2004. But railroad intermodal tonnage is not growing as fast as truck traffic, and market share is consequently falling. This is a problem: with total freight traffic projected to grow 57% by the year 2020, all the increased traffic will have to be accommodated on the highway network. The introduction of double-stack rail cars in the 1980s dramatically reduced rail haul costs, and it made intermodal traffic competitive at distances of 500 mi or so, whereas previously rail could compete with trucks only at distances of about 750 mi or more. Still, most rail intermodal traffic remains long haul. Three-quarters of all truck tonnage moves distances of less than 500 mi, and rail does not compete in this market. Rail haul costs are developed for a number of short corridors, and it is demonstrated that although double-stack usage has lowered line haul costs, terminal and drayage costs remain high. If these costs can be reduced, rail intermodal can be competitive even in short-distance corridors. Several ways to lower these costs, both by industry initiatives and by public investment, are proposed. Without some action by the public sector, short-haul rail intermodal will continue to be noncompetitive, and highway truck traffic will continue to grow.

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