E-commerce has been the biggest driver of domestic intermodal growth on the railroad this year, Tom Williams, BNSF’s group vice president for consumer products, told a shipper conference last week.
Overall retail sales are strong, led by 10-percent growth in e-commerce nationally this year. BNSF’s intermodal volume is up 4 percent this year, with the growth coming from domestic business.
E-commerce puts different demands on transportation than traditional retail. And that goes beyond last-mile deliveries to homes and businesses, Williams explains.
E-tailers sell a much larger inventory than brick-and-mortar stores, Williams says, so they need more transportation to maintain and balance their inventories among regional distribution and fulfillment centers. Plus, consumers are more likely to return items if they buy online than in a store.
Early on, there were questions about whether railroads would fit into an Amazon world. Now there’s no doubt that intermodal benefits from e-commerce, Williams says.
“As larger players, and one really large player in the space, build out their fulfillment centers and distribution centers in key population areas, they’re able to use intermodal much the same way brick-and-mortar retailers are for the inbound shipment to those fulfillment centers,” he says.
Amazon provides a platform for smaller merchants to sell their products online. Absent that platform, the smaller merchants wouldn’t likely use intermodal because they’d be shipping in small lots.
“But when you package that into fulfillment by the largest e-commerce player, they’re able to take your product, package it up into full truckloads, effectively use intermodal, and get that product into fulfillment centers close to population bases,” Williams says. “So we have seen strong intermodal growth from e-commerce at BNSF.”
Online sales, combined with a shortage of truck drivers and domestic containers, is behind the sharp rise in trailers used in intermodal service. Although trailers represent just 14 percent of BNSF’s intermodal traffic, trailer-on-flatcar traffic has surged 22 percent this year, with 28-foot pup trailers leading the way.
With intermodal demand rising, BNSF is working on several ways to increase capacity, Williams says.
Half of the railroad’s originating intermodal traffic arrives at terminals between noon Wednesdays and midnight on Fridays.
“That’s a big surge. It creates a rush-hour effect,” Williams says.
So the railroad is collaborating with customers to see if there are ways to smooth out traffic flows throughout the week.
“To the extent that we’re able to collaborate to smooth that out, there’s a lot of capacity opportunity to get out of the existing franchise,” Williams says.
Part of the effort involves working on developing a “need date” for container and trailer shipments. By gaining a better understanding of what’s in each container and when the goods need to arrive, it can help BNSF prioritize loads and send them via either its standard or premium service networks, Williams says.
To standardize rail equipment and to better use available capacity, BNSF is encouraging TOFC users to switch to containers. It’s also encouraging shippers and receivers to operate 24/7, like the railroad does. And it’s working to increase automation at intermodal terminals.
BNSF is seeing a shift in its intermodal business mix as international business flattens out and domestic sees strong growth. Shippers are increasingly transloading international goods into domestic containers, a trend skews intermodal numbers toward domestic shipments.
The busiest U.S. container ports at Los Angeles and Long Beach also are seeing increasing competition from East Coast ports, with is a factor in the flat international numbers as well.
Williams spoke last week at the North East Association of Rail Shippers fall conference.
Okay, we hear the phrase quite often “Get the trucks off the Highway and on to the rails” Do the class !’s really want that ? I don’t think they really do! Here’s why– It would mean offering a service that they could not charge what it cost and also have a profit. Let me explain (I am going to use common language instead of railroad language)– The trucks in conversation have both the tractor and trailer and they also have a driver. The tractor and trailer can be dealt with using a Auto carrier by modifying its inside. Now the driver is another issue– that is going to require a passenger car. Oh horrors of horrors, a passenger car on a freight train. Well folks, it just happens that there is a real need for this kind of service. Who do these trucks belong to—- independent truckers, warehouses of all sorts delivering to their retail customers and some manufacturers who deliver direct to multiply customers. In each case the tractor and trailer must stay together and with the driver. Poses some problems doesn’t it They can all be over come, but at a cost Loading and unloading docks on each end of rail run. Loading and unloading personal, Time is of essence— Time equals $$$.,Passenger car will need to have attendant and be 1st class. Some Class 1 railroad with rail line adjacent to Interstate with a lot of truck traffic needs to do an R&D on this and afterwards put the cost out there along with a survey of price market is willing to bear. for all to see. Would it be Profitable?
TTX …Time to slap some sense into the Class 1’s and develop a viable intermodal rampcar.. 5 packer or 3 whatever fits the market better.. TOFC while not being as efficient as hauling containers can generate more revenue than COFC..Oh while were at it.. Negotiate withe BLE, UTU for one man crew, develop short haul markets with these new rampcars.. Grab some of those retired Amtrak P40’s.. Remove the HEP, regear them for freight service, and run 3500-4000’ trains equipped with ECP brakes at 80 mph between markets of 200-700 miles.. It can be done.. Of course capacity must be available to run such service, but it will be worth it to try something new.