Railroads & Intermodal Transport Overview

Railroads & Intermodal

• Train accidents have decreased since 2000, with fatalities and injuries down by 44%.
• Boxcars are standardized freight cars used for general commodities, adaptable for specialized goods.
• Hopper cars are used for bulk materials, with covered hoppers protecting goods from the elements.
• Flatcars carry machinery and building materials, predominantly used for trailer on flatcar (TOFC) service.
• Refrigerated cars are equipped for temperature-controlled transport, while gondolas are used for bulk cargo without a roof.
• Tank cars are specialized for transporting liquids or gases.
• Rail intermodal transport accounts for ~30% of major US railroad revenue.
• Piggybacking (using circus style ramps) and intermodal container service allow for efficient transfer between rail, truck, and water.
• Double stacking improves rail equipment and train productivity.
• Line haul is long-distance transport using multiple modes.
• Intermodal rail benefits include efficiency (fuel-saving), reducing street congestion, and relieving truck driver shortages (truck efficiency, trade).

Ocean Cargo

• Absolute advantage in trade exists when a country has lower production costs for a given product.
• Comparative advantage exists when a country has a lower opportunity cost for producing a particular good even with higher production costs for other goods..
• Seaborne trade volume has nearly tripled due to imported products and their related cost/price benefits.
• The US mostly imports electronics, machines, and vehicles.from Asia.
• Maritime shipping has the longest trip time but the lowest per-unit transport costs.
• Water transport uses cargo containers to move bulk commodities.
• Strengths of water transport include high capacity and low costs, with commodity flexibility. Limitations include slow transit time and limited inland access.
• Air transport excels in delivering high-value, time-sensitive goods in small shipments with high speed and protection.
• Liner service involves regular voyages along fixed routes, while charter service is for direct point-to-point transport.
• Private service involves privately owned ships for importers/exporters.
• Bulk freight is transported using pumps, vacuums, scoops, and other conveyors.
• Break-bulk freight includes various products transported by different industrial equipment.

Air Cargo

• Air freight represents less than 1% of trade volume but comprises 35% of global trade by value.
• Air transport is characterized by short transit times and high unit costs for transport.
• Key commodities in air freight include retail, e-commerce, automotive, consumer goods, pharmaceutical products, healthcare products, food, and beverages.
• Strengths include high-speed, reliability, and security (tight safety controls over air cargo).
• Limitations include accessibility (limited to airports), high costs, and low capacity.
• Liner service is for frequent trips with pre-set stops, whereas charter service is for specific, one-off trips..

Transportation Management

• US business logistics spend ~69% of their budget on transportation.
• Tactical transportation management addresses mode selection, shipment planning, carrier scheduling, and issue resolution.
• Financial transportation management handles freight invoicing, audits, allocation, claims processing, and rate management.
• Strategic transportation management tackles aspects such as carrier sourcing, performance analytics, and cost improvement.
• Key aspects of successful transportation management include global ownership, consistent KPIs, standards and processes, carrier accountability, and leveraging TMS.
• Transportation management provides enriched analytics to improve cost efficiency and delivery performances.

Transportation Technology

• Transportation Management Systems (TMS) optimize inbound/outbound transportation (planning, execution, and monitoring).
• Key TMS functionalities include planning (load consolidation, mode/carrier selection, routing, scheduling), execution (tendering, tracking, handling exceptions, delivery), and settlement (invoice receipt, audit, payment, claims processing).
• Strategic TMS functionalities concern sourcing (bid management, carrier selection, contracting), and management (carrier performance, collaboration, contract management).
• The top 3 motivating factors for TMS investment are cost reductions, improved decision-making, and customer demand. 
• Typical TMS savings range from 5 to 15%.

Electronic Logging Devices (ELDs)

• ELDs are hardware devices used to log commercial vehicle driver activities and track compliance with hours of service regulations.
• ELDs provide tamper-proof records and streamline compliance, minimizing administrative burdens.
• Aerodynamic enhancements (devices) on trucks can contribute to significant fuel savings (5-9%).

Governments Role in Transportation

• The DOT and its agencies play a vital role in planning, coordinating, and regulating various transportation modes. These agencies regulate safety, establish standards, and address economic aspects (eg. FRA manages economic regulation on Railroads).
• Safety regulations cover elements like driver qualification, hours of service, maintenance, and inspections, along with drug/alcohol testing.
• Important agencies include FAA, FMCSA, FRA, and STB (independent agency managing surface freight rail).
• State and local governments also play an important role, often funding infrastructure through various sources.
• Interstate highways are predominantly funded by federal government budgets.

Third-Party Logistics

• Third-Party Logistics (3PL) companies handle the shipping and warehousing functions for businesses.
• Key advantages for companies outsourcing to third parties concern cost reduction, better resource allocation, increased capabilities, and scalability.
• Main risks include reduced control of resources, less customer priority focus from third parties, and integration issues.
• Key 3PL functions include domestic/international logistics, freight forwarding, and other outsourced logistics services.
• Outsourcing to 3PLs is a common strategy for many businesses to stay competitive and efficient.

Logistics Industry Challenges and Careers

• Projection indicates a ~50% increase in freight activity by 2050.
• Industries face congestion, and associated costs, especially in areas like US ports (e.g., Los Angeles).
• Key challenges in the industry include high costs, limited parking options, and high insurance costs.
• Top SCM skills in demand include decision-making and critical thinking, complemented by knowledge of SCM technologies like TMS and WMS.
• Career satisfaction of logistics professionals is generally high.

Explore the fascinating world of railroads and intermodal transport. This quiz reviews key concepts such as train types, safety improvements, and the efficiency of intermodal systems in the U.S. rail industry. Test your knowledge on how rail transport contributes to overall freight logistics.