SCDigest
Editorial Staff
SCDigest Says: |
Locomotives today get roughly 80% more mileage from a gallon of diesel than they did 30 years ago, making them much more fuel-efficient than big trucks. Locomotives typically haul a ton of freight over 400 miles on one gallon of fuel, three times as far as a truck.
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It’s a staple of many college business textbooks – how in the early 1900s the railroads didn’t perceive how the car would revolutionize travel, or refused to adapt even if they did, leading to a century of decline as cars and trucks took over the movement of people and goods across the US.
But is it possible we are entering a new “Golden Era” for railroads?
In North America, the fortunes of the seven major rail freight carriers (Union Pacific, CSX, Norfolk Southern, Burlington Northern, Kansas City Southern, Canadian National and Canadian Pacific) began to rise in the 1990s with the surge in imports. Import volumes grew at double digits annually, with many importers using rail carriers to move containers from east or west coast ports further inland.
Soaring fuel prices and fuel surcharges also moved in the rail carriers’ favor. Shippers were more likely to put up with the longer transit times and more inconsistent service from the rail lines as costs for truck movement soared. Children’s apparel maker Carter’s, for example said earlier this year it planned to move 15% of its current trucking volume to rail or intermodal transport in 2008.
The net result is expected steady growth in rail volumes for years to come – and even resurgent interest in rail for passenger traffic. China and Europe are investing billions in rail infrastructure for moving freight and people, and investors such as legendary Berkshire Hathaway CEO Warren Buffet are betting rail carriers will provide outsized returns based on the fundamentals.
Will Trucking Dominance Finally Decline?
Despite growing imports since the 1990s, trucking’s share of the freight market continued to grow through at least 2004, as the need for speed and flexibility in increasingly Lean supply chains trumped the lower cost of the rails. Trucking accounted for 82% of the U.S.'s truck-and-rail intercity-freight spending in 2004, up from 78% in 1990, according to Eno Transportation Foundation, a research organization in Washington, D.C.
(Transportation Management Article - Continued Below)
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