#how-intermodal-rail-made-comeback

How Intermodal Rail Made a Comeback

Rail freight services have always had a stigma attached to them, mainly regarding the length of time it takes to transport goods, but also due to their ...

Freddie Pierce
|Sep 24|magazine12 min read
Rail freight services have always had a stigma attached to them, mainly regarding the length of time it takes to transport goods, but also due to their inflexibility because, unless you have a railhead on every high street, you are always going to need road transport eventually.

However, recent statistics show that despite these issues rail freight is going from strength to strength, particularly intermodal rail or combined transport services, as customers seek to reap the benefits of this more environmentally-friendly and cheaper method of transporting goods.

High diesel prices also mean that rail freight customers benefit from cheaper long haul journeys. “The benefits of loading 20 ft and 30 ft containers is that you can load up to 28,000 kg, much more than road trailers,” says Ian Logan, Managing Director of Formula Freight Europe.

“These days, the European rail infrastructure is actually quite good and if you have a good set up at either end for shipping across channel and collection/delivery of the container, the transit times are about six to seven days. The rates are also much more advantageous compared with road freight.”
Intermodal services also offer greater security, as tighter controls protect the rails system, while the accident risk of rail traffic is 40 times less than on the roads.

Thomas Lange, Director of Communications at Union Pacific, believes that intermodal rail services are also more reliable than truck services because they are less impacted on by congestion and weather conditions.

International market
The growth of intermodal services has been hit, like most sectors, by the global recession. Lange explains: “The recession and weak housing market impacted our international intermodal volume, which in the third quarter of 2009 was down 25 percent year-on-year, and in the fourth quarter of 2009 was down 9 percent year-on-year.”

However, recent statistics have revealed that the market is beginning to turn around. In August, the Intermodal Association of North America (IANA) concluded that rising international cargoes was the biggest driver in the second quarter for rail hauls of intermodal containers and trailers.

It found that combined domestic and internal traffic increased by 17 percent from the same period in 2009 to 3.3 million units, led by a 21 percent increase in demand for international services, while domestic moves grew by 13 percent. The domestic traffic rise reflects a moderate U.S. economic recovery and what rail officials say is a continued modal share shift from all-road shipments to rail intermodal.

Meanwhile, the Association of American Railroads (AAR) reported record rail intermodal volume on U.S. railroads for the week ending 21 August - a new record for 2010. It said 236,404 trailers and containers were moved that week, up 22 percent from the same week in 2009 and up 3 percent compared with 2008.

Weekly container volume was the highest on record, up 24 percent compared with the same week in 2009 and up 12 percent on the same week in 2008.

In Europe, combined transport services are also seeing an upturn in volumes. In the first half of 2010, Swiss operator Hupac carried 343,332 road consignments by rail – about 50,000 more consignments than in the first half of 2009, but still 30,000 fewer consignments than in the same period of its record year 2008.

Investing in facilities
The recovery of the economy is helping boost intermodal traffic, but so is companies’ investment in their facilities. An example of this is Union Pacific’s Joliet Intermodal Terminal, near Chicago, which opened on 1 August. The facility represents a $370 million investment and creates intermodal terminal capacity in an area of high demand.

Lange said: “Recent Union Pacific investments include five new terminals, three terminal expansions and rail infrastructure upgrades to create shorter routes.”

Meanwhile, Pennsylvania, Alabama, Virginia, Tennessee, Mississippi and North Carolina have sought $109.2 million from the US Department of Transportation to support the expansion of independent intermodal facilities in Harrisburg, Philadelphia and North Carolina, along with track and signal improvements in Alabama, Tennessee and Virginia. The improvement project aims to create a 2,500-mile intermodal route from New Jersey to Louisiana.

While the future of intermodal rail sector looks bright, some experts are warning that things may remain challenging for a while yet. Fred Green, President and Chief Executive Officer of Canadian Pacific Railway, said: “Markets are likely to remain volatile, but ... quickly adjusting our resources to meet changing volume demands position us well for the second half [of 2010]."

If intermodal rail sector is to continue to grow it needs to tackle some important infrastructure issues. In Europe the upturn is being impeded by serious bottlenecks in the rail system. In recent months, insufficient locomotive and staff resources, building sites and storms have led to serious delays and tailbacks across economic areas. “We are working closely with our rail partners to overcome the existing operational problems,” says Hupac’s Managing Director, Bernhard Kunz.

Experience shows that sector competition and collaboration often leads to investment in infrastructure, creating improved services for customers, so it seems rail intermodal is moving in the right direction.