Turning to the Railroad?
By Chop Hardenbergh, Editor, Atlantic Northeast Rails & Ports
As you begin reading this piece, you might hear the roar of a diesel tractor bringing a 53-foot trailer into your factory with another truckload of raw material. Five years ago, even two years ago, you might have felt pure satisfaction.
Today, though, you feel some worry. The trucker has just announced another major jump in fuel surcharge. Transportation, once a small part of your costs, has become significant. For some manufacturers, it is exceeding the cost of labor.
What about railroads, you ask yourself? Your company turned its back on the railroad decades ago, because the railroad could not provide consistent, just-in-time delivery. Could the railroad have gotten better? This article will provide some answers. First, let's look at what the railroad can do today, and then how you might take advantage of that.
Advantages and Disadvantages of Railroads
A railroad does best with a large amount of product in a long train moving some distance. Think propane, which arrives in Westfield in unit trains of tank cars. But you only want to move maybe about 400 truckloads a year from, say, Texas. That translates into about 100 to 200 railcars. In theory, because railroads are about three times as efficient as trucks at moving weight, you would pay a lot less.
But you have to put up with, at best, a longer delivery time. A lot longer. Your factory may have a rail siding, long-unused. If your supplier loaded product in a railcar on a Monday in Texas, it might take two weeks to get to you in Massachusetts. Right, and a truck could get it from Texas in three days.
You still like the price, though. As an order of magnitude, you might pay $5000 to get the truckload from Texas, but only $3000 to get the same amount of raw material by rail.
You still have to deal with inconsistent delivery. Railroads are trying to get the product to your plant on the day you want it, but sometimes the railcar will arrive two days early, sometimes three days late. It's not a truck, with percent of on-time deliveries in the upper nineties.
Finally, the railroad is not as flexible as trucking. You can't telephone at 8AM and have the railroad at your door that afternoon ready to move product. Nor can you even get a rate quote that quickly. Be prepared to wait for two weeks to get a price for transportation, unless you have a fairly standard move which fits into the rates railroads publish on the web.
Using Railroad in New England
You have two ways around the inconsistent delivery problem; they both involve not using your own rail siding. Many, many manufacturers don't have their own rail siding anymore anyway. Installing, or re-installing, one can cost $250,000 and up.
First, you can look at using containers in intermodal service. Railroads like this, because they don't need to worry about what the railroads call the 'first-mile, last-mile' problem. In the Texas example, your supplier will load the product into a container, and have it drayed to a railroad intermodal yard. The railroad will put it onto a flatcar and whisk it to Massachusetts. In contrast to carload movements, intermodal trains move much more quickly.
Massachusetts has four places to pick up your product: the CSX Intermodal yards in Springfield, Worcester, and Allston, and the Norfolk Southern yard in Ayer. Your trucker picks up the box, drays it to your loading dock, and you unload it.
Intermodal used to be for sissies like electronics; now even grain is moving this way. But it does cost more than carload. So let's look at the last option: transload.
A transload works much like intermodal: the product is loaded into a railcar in Texas–usually right at the plant–and moved to a facility in Massachusetts where it is transferred into a truck for delivery to your door.
While the transload is slower than intermodal, it can bring consistent delivery to your supply chain, by providing storage at the transload. The product can sit in the railcar until you pick it up. For example, whenever General Cable needs more plastic pellets to make the wrapping of the cable, it sends a truck to five railcars parked in Taunton and siphons out more.
Another example: Yankee Candle in Whately uses a transload in Holyoke which keeps wax from Louisiana hot and ready to flow into tanker trucks on demand.
How to Approach Railroads
If you're a small manufacturer making your first approach to a railroad, go to one of the short lines or regional railroads in Massachusetts. The state is rife with these small railroads and their sales people can provide you with a custom solution to your transportation. Here's a list:
- Housatonic Railroad (Pittsfield area), Rian Nemeroff, (215) 914-0392
- Pioneer Valley Railroad (Westfield-Holyoke), Mike Rennicke, (413) 568-3331
- Massachusetts Central Railroad (Palmer-Barre), Gary Hoeppner, (413) 283-2911 x 12
- Grafton and Upton Railroad (Grafton-Upton), Jon Delli Priscoli, (508) 481-2023
- Bay Colony Railroad (Millis, Westport-New Bedford), Bernie Reagan, (781) 380-3556
- Massachusetts Coastal Railroad (Tauton, Middleborough-Cape Cod), John Kennedy, (508) 771-8400 x3
- Providence & Worcester Railroad (Worcester to Providence, Worcester to New London), (508) 755-4000 x315
- New England Central Railroad (East Northfield to Palmer), Doug Low, (248) 320-2291
- Pan Am Railway (North Adams to Haverhill, including Boston area), Mike Bostwick, (978) 663-6938
In general, the closer the railroad to you, the less the transportation cost. But, as in all consumer situations, shop around! Tell them Chop sent you.
Chop Hardenbergh writes Atlantic Northeast Rails & Ports, a weekly trade newsletter covering New England and Atlantic Canada, and provides consulting on rail freight facilities.