Logistics Today

Creating intermodal capacity: the railroads speak out on current capacity, infrastructure investments and demurrage charges.

Though railroads have spent significant capital to meet present and future demands for rail capacity, much remains to be done. With the increasing number of companies sourcing offshore, it's no surprise that freight moves from these distant factories by ocean container. When it arrives at U.S. ports, much of this cargo moves intermodally.

Just as global commerce will continue to grow over the coming decades so will intermodal traffic for Class I railroads. The Association of American Railroads (Washington, D.C., www.aar.org) defines Class I's as line haul freight railroads with operating revenue in excess of $289.4 million.

According to the Intermodal Association of North America (IANA, www.intermodal.org), in the second quarter shipments jumped 5.9% compared to 2005. International containers dominated the growth, increasing 9% and accounting for more than 90% of the quarter's gain.

"Even though there may not be as much capacity pressure this year, all of the forecasts say that if the economy grows at 2.7 to 3.0% annually--which is roughly the outlook at the moment--that's going to almost double the tonnage of freight moving in the next 20 to 30 years," observes Lance R. Grenzeback, senior v.p., Cambridge Systematics, Inc. (www.camsys.com). Specializing in transportation, the Cambridge, Mass.-based company helps clients formulate transportation strategies. Grenzeback recently testified before the National Transportation Policy and Revenue Study Commission (www.surfacecommission.gov) on highway and rail freight demand and network bottlenecks.

"The two huge pressures on railroads today are to move the coal coming out of the Powder River Basin to power the utilities and to handle the intermodal freight coming from the West Coast," he claims.

As demand for rail capacity exceeds supply, Grenzeback says that railroads are, "becoming a little more choosy about what freight they take. Trying to maximize profit, rail is taking the freight that they can handle cost effectively and profitably. …

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