Move their loads is making intermodal rail
U.S. shippers’ increasing difficulties in finding long-haul trucks to move their loads is making intermodal rail, including the transport of refrigerated goods, more a “capacity play” than about saving money.
This holds particularly true for shippers, such as Harry & David, which are challenged geographically. The seller of fresh fruit, flowers and gift baskets has little trouble finding truck capacity to serve its Columbus, Ohio, facility, but getting over-the-road trucking services out of its Bedford, Oregon, distribution center is another matter, said Jeff Brady, director of transportation and logistics, at JOC Group’s Inc.’s 4th annual Inland Distribution Conference in Kansas City, Missouri.
“It used to be a price play for me to use intermodal, with some nice green aspects,” said Brady, who helped drive Jack-in-the Box’s use of intermodal reefer and aims to do the same at Harry & David. “If I was better geographically located and deliveries weren’t hyper-seasonal, I would still see some price savings, but in some cases now, I’m paying more for intermodal (than trucking) because I know it will be delivered and capacity is available.”
Over-the-road truck capacity is showing signs of further tightening, as demand builds and motor carriers struggle to fill truck seats, a result of increasing federal regulation, the strengthening construction industry luring drivers and the general lack of attractiveness of truck driving as a career. Average reefer trucking rates are $2.45 per mile, a 5 percent to 7 percent increase from last year, said Geoff Turner, CEO and president of Choptank, a third-party logistics provider specializing in refrigerated transport. Intermodal rail pricing generally is competitive with over-the-road trucking rates.
The biggest challenge facing dry and refrigerated intermodal growth is the deterioration of intermodal rail service, resulting from cargo backlogged during the 2013-2014 winter and steady volume growth. Delays range from hours to days, with most lanes experiencing roughly half-day delays.