Archive for Intermodal

US Intermodal Rail growth versus truck growth may be slowing after five years…

Intermodal Rail growth from truck may be slowing after five years…

A report in the JOC suggests that U.S. shippers are finding it more and more difficult to rationalize shifting their cargo from highway to rail.

Why?  Questionable service reliability and accelerating intermodal rates are to blame, according to intermodal analysts and a recent shipper survey.

For more details see http://www.joc.com/rail-intermodal/class-i-railroads/signs-point-us-shippers%E2%80%99-slowing-intermodal-conversion_20150617.html?destination=node/3197246%3Fmgs1%3DfafdkhKWld

And contact Reynolds Hutchins at reynolds.hutchins@ihs.com

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A few highlights from published sources:

A Wolfe Research survey of roughly 600 shippers, intermodal share gains have slowed to their lowest level in nearly five years.

In the first three months of 2015, shippers diverted 1.3 percent of their volumes from truck to rail, down nearly 19 percent quarter-over-quarter. On the flip side though, shippers moved 1.6 percent of their rail volumes to the highways during the last quarter.

The Wolfe Research found that this is the second straight quarter that shippers have indicated a net freight diversion from rail to truck, after four years of the exact reverse pattern.

WARNING PICKED UP IN RR FINANCIAL CONFERENCE IN MARCH

Over the past six months, the Cass Intermodal Price Index — a measure of “all-in” intermodal costs including rates and fuel surcharges — has risen more than 4 percent.

In the period, U.S. contract truckload rates rose only half that at ~ 2 percent, according to the Cass Truckload Linehaul Index.

SELECTIVE RR INTERMODL MARKET VOLUME CHANGES

CSX Transportation reported total intermodal volumes were up only 1.2 percent year-over-year in its first quarter.

Norfolk Southern Railway, reported intermodal gains, up 5 percent. Further west,

BNSF Railway reported port congestion among other factors had pulled down its intermodal volume roughly 5.5 percent for the quarter.

Over the longer term, a number of experts still expect railroads “to take market share from trucks” is the conclusion from Wolfe Research in its latest report.

The railroads continue to aggressively invest capital to improve track capacity and deploy more train equipment and train crews.

BNSF, for example, has trumpeted reports of significantly improved intermodal service and performance metrics. According to BNSF, since the fourth quarter of 2014, BNSF intermodal has experienced overall improvement with velocity up 6 percent since the beginning of November and on-time performance up nearly 20 percent since the middle of that month.

Log onto the Journal of Commerce for their complete report.

Technically wrong images often tease readers of marketing publications

BEAUTIFUL PICTURES send the wrong message as to what will be delivered.  The writers could change that and send a really powerful “this is possible message” if they focused on the engineering specifications.


Better news reporting can make a difference.  I urge them to improve on an otherwise good publication.

The April 2015 issue of CBTL-WATCH AFRICA is a very well laid out and professionally scoped marketing tool for the ocean carrier. It presents colorful to look at and generally well written subject themes for the various geographic sections of its Africa maritime business.

The authors put the best face forward in describing the announced railway modernization projects in this one April issue. The photo cover of the marketing document is beautiful.

Unfortunately, almost none of the modern railway operation pictured in that cover — or later in a page dedicated to Zambia –DRC modernized service — will occur under the current African rail plans.

A due diligence investigative report would quickly note that the image of the massive and highly efficient doublestacked container trains in the photos CANNOT OPERATE on the currently proposed rail lines in the story. In fact, from an engineering and economics technical view, NOT A SINGLE AFRICAN PROPOSED FREIGHT RAILWAY WILL BE ABLE TO OFFER DOUBLESTACK CONTAINER FREIGHT SERVICE using their current proposed engineering guidelines.

WHY NOT?

Because the tracks and infrastructure bridges of these new railways WITH DOUBLESTACK CAPABILITIES would have to support 1) 33 to 35 metric ton axle loads, 2) trains lengths of about 2,500 to 3,400 meters, and 3) vertical clearances above the top of the rail head in the 6.1 to 6.2 meter range (if a diesel electric locomotive operation) and in the range of 6.8+meters if an electrified line.

Neither the reporters on these stories or the ministers doing the technical planning are focused on these fundamental yet missing design standards.

The result is sort of like announcing a new international airport plan, but the runways and terminal ramps will not accommodate modern B-777 or A380 aircraft. In aviation, that would get you fired.

I am hoping that a future issue of this otherwise great news magazine will correct these mistakes. Please, at least do not tease the audience with a picture image that technically will not happen. Unless someone changes the engineering design.

If the authors can use this technical rail intelligence in future issues, perhaps they can influence modernization changes to the plans. Such engineering change would truly benefit their African customers. Because doublestack trains are about 35% to 45% more efficient than the current African rail plans will allow.

Commercial rail freight service NOT possible with almost all of current African rail plans

Commercial rail freight service NOT possible with almost all of current African rail plans

TRUCK KILLER RAIL TECHNOLOGY conintues to elude Eruope-Asia planners - Jim Blaze

Suez Canal — Quick plan execution will double its capacity in about one third of the expected project timeline

Leadership and focus can make a difference.  This is a good technical news story out of Egypt.  The project was originally expected to take 3 years and be ready by 2017.  Instead, it will be essentially completed in just one years time and dedicated in August this year.

The New Suez Canal (actually an expansion project) is more than 80% complete according to multiple sources. The project is intended to increase the capacity of the channel from the current 49 ships a day to 97 ships a day.  The market target of almost 100 daily ships (half in each direction) will be likely reached by year 2023

The result will be a POSSIBLE 1 DAY SHORTER journey on a 21 to 24 day containership passage between Asia & Northern Europe

Waiting time for entering the canal will be reduced to 3 hours from the current 8 to 11 hours. The actual canal transit times could drop from 18 hours to 11 hours.

COMMERCIAL REVENUE IMPACT

The investment could increase canal revenue from the $5.3-billion generated from the payment of tolls by 16,744 vessels in the 2013/14 financial year to $13.2-billion by year 2023.

The Suez Canal route competes with railways trying to offer price competitive and time competitive blends of container transport between Asia and Europe.  The water route via Suez has ~ a 99% share. Now the Suez sailing times will improve.  The maritime route has a huge price advantage in terms of the price per container moved. versus the railway prices.Suex Canal Asia - Europe route map

http://www.engineeringnews.co.za/article/egypt-eyes-opening-of-new-suez-canal-on-aug-6-2015-06-15 Sent from my iPad

Definitions of intermodal rail freight service

Railway business and train type definitions take on different marketing meanings in the context of the North American business model.

Premium intermodal trains carry very high value merchandise like on a United Parcel Service intermodal run where train distance covered could be about 900 to 1,000 miles a day with 98% train on time performance.

“Expedited” intermodal service might averages about 700 to 800 miles per day at 95% plus or minus delivery.  The price per container mike is a bit cheaper.

“Standard” intermodal trains might average about 500 to 600 miles per day at 93% or so on time arrival.

Wholesale intermodal operation trains might average 400 or so miles a day with delivery at unloading intermodal terminal at a 90% or so reliability. Here the rail charged price per container mile is about the lowest rate.

US rail intermodal train rates are unregulated.  The lowest recent price to move a 53-ft long container one mile can be as little as $1 to $1.20 a mile when using big train double stack rail technology.  The over the highway trucking costs can be as high as $2 to $2.40 a mile.

Trucking over the road is growing at about the U.S. GDP annual rate.  DOUBLESTACK rail intermodal is growing at about TWICE the US GDP rate.

Internationally, few railroads can equal the returns of the North American rail intermodal business model.  Technology, engineering, and market approach are the strategic differences.

New Chinese built Djibouti-Ethiopia rail line almost finished

Multiple source news report today 9 June that the New Rail Line for passenger and freight trains on standard gauge 1435mm track with electrified power supply is almost completed. However, it is NOT double stacked container capable.

Shorter train lengths, lighter axle loadings <33 metric tones with shorter than 6.2 meter vertical clearance for this new East African corridor presents a rail design nowhere near as capable as modern North American freight railroads.

Why go to all of this capital expense for a new national core freight railroad with a plus 50 year life and not be able to handle the most modern current equipment?  That is like building a new international airport that cannot land A380 or B777 and B747-400 aircraft. The track infrastructure here does not match modern freight rail train engineering capabilities.

Is the new rail line an improvement over the previous narrow gauge rail line? Yes,

But as a commercial business model, the new railway leaves significant economic productivity undeliverable by the freight trains.  Probably an example of due diligence missed.

Who did their commercial feasibility assessment?  Did they get a second opinion?

How many times will other African national leaders make the same engineering based smaller freight rail design choices?

MAP - Ethiopia & Djibouti Rail Corridor to begin operation in Oct 2015 China Eng Stds

See the URL for more. http://news.yahoo.com/africa-tracks-construction-key-djibouti-ethiopia-rail-line-033632871.html

Truck Killer photo – 3 Decades of intermodal rail technology produces market share gain

TRUCK KILLER competitive rail technology captured in a simple one page photo.

With 30 years of market deployment success, the engineering and operational merger by rail executives has given North America a competitive edge against trucks.

The technology  could also give Europe rail freight a WOW success factor. Also in Africa and in Asia.

But who will be the leader to champion this technology?

Who will take the first deployment steps with required corridor investment in clearances and commercial deployment?

In 1983 it was APL ocean carrier and Union Pacific railroad.  Not a government lead project.

It was a private commercial venture.

TRUCK KILLER RAIL TECHNOLOGY conintues to elude Eruope-Asia planners - Jim Blaze

Poor intermodal rail freight German 1st Qtr results suggests strategic issue

A news report tonight in the IRJ from German sources suggests a broader strategic question. What role does proven rail engineering technology offer a better growth future for Europe’s rail freight sector?

Let’s start with what was reported tonight. GERMANY’s railfreight industry has suffered a disappointing start to 2015 says the headlines. Germany’s federal statistics agency Destatis on June 3rd reported the largest decline in first quarter traffic since the height of the financial crisis back in 2009.

Overall rail freight traffic dropped 4.2% compared with the first quarter of 2014 to 88.1 million tonnes’

In the first quarter 2015′ —

International traffic fell 4.9%, —

German domestic traffic declined 2.1%. —

German rail freight intermodal traffic at 1.4 million TEU units was down a significant 12.8%

The posted rail results gives us the chance to ask about the real prospects for rail freight in Germany and Europe. Here is a short discussion

LENGTH TOO SHORT; HEIGHT TOO SHORT; WEIGHT TOO LIGHT

The German rail unit does not have doublestack container capability like the North American railways offer. With better stack train engineering and routes the North American rail companies have seen intermodal growth rates at a pace generally twice the national GDP rate of change — pretty consistently since 2009.

Read more

More evidence of Mounting Risks to Keep Africa Growing

Still largely a very poor region, Africa faces economic hurdles is its hopes for growth

A Bloomberg report on 2 June shows evidence that African nations are facing mounting risks as they seek to extend two decades of stellar economic growth.

Stellar but uneven.

To read the entire Bloomberg report, go to http://bloom.bg/1RHYdJ

 

Here are some important points for my associates in the African rail industry.

In May The International Monetary Fund lowered its 2015 growth outlook for sub-Saharan Africa by 1.25 percentage points to 4.5%

Based on multiple sources of evidence, economic growth in both Nigeria and South Africa is clearly slowing. “Sustaining Africa’s growth is going to prove increasingly challenging,” says Peter Attard Montalto (an economist at Nomura International Plc in London) in a conversation with Bloomberg reporters. Montalto points out that “competition for trade and investment within the continent is increasing. All countries will need to step up their game.”

THE NEED TO STEP UP THEIR GAME

Are the key government leaders, policy makers and company executives from companies meeting at this week’s World Economic Forum in Cape Town paying attention?

The forum will discuss growth in the context of a continent where 72% of the Sub Saharan population still lives in or at the brink of poverty (UN data). In numbers, that is a staggering 585,000,000 estimated souls.

IF (actually very likely) global commodity prices remain low or worse even decline further — then the African governments will have to go increasingly to a Plan B government budget cut approach. Most are not use to that tactic.

On the positive side, There is still selective growth in Africa.

Ernst & Young released a report to the public this week that shows Africa attracted $128 billion in foreign direct investment during 2014. That marked an increase year over year. However, the number of projects dropped by 8.4%.

On the negative side, a large number of mine and rail and port projects are on hold. Many indefinitely. My readers and clients have discussed this pattern before. Tonight’s report is just another confirmation of the pattern.

Where and on What?

E&Y found that 44% of the investment went to projects in the real estate, hospitality and construction industries 25% went for oil, natural gas and coal 9 of the world’s 15 fastest-growing economies are in Africa

SLOWING INVESTOR CONFIDENCE

EY surveyed more than 500 business executives in 30 countries Growth could slow they felt because of a combination of factors

Those identified include: 1) Africa’s political instability, 2) Corruption 3) Poor security 4) Lack of infrastructure including transport and electricity These plus a scarcity of skilled labor are the biggest deterrents to investors.

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What will come out of this week’s forum?

What leaders will leave with a sense of urgency and change?

Stay tuned and we can discuss later when more facts emerge.

Sent from Jim’s iPad

Implications from report showing coal decline in US. Impact on rail freight?

Reports show that tougher coal burn environmental regulations could further weaken an already financially hurting US coal industry. It would also, if true, subtract a great deal of US profitable rail hauled coal business.

To read the entire Bloomberg article, go to http://bloom.bg/1HySiC5

MY STRATEGIC OBSERVATIONS

Here area few of the important points made in the analysis.

1) Electricity generation from the domestic coal fuel could drop as much as 90 gigawatts a year.

2) Twice the decline analysts had previously predicted

4) ~ 292 gigawatts of coal-fired generation capacity available in 2014

5) Most of the coal-plant closures would occur by 2020

6) Sooner if natural gas remains highly price competitive

7) The Environmental Protection Agency’s proposal might cut carbon emissions from all U.S. power plants 25% below 2005 levels by 2020.

8) EIA analysis predicts that US coal production will decline 20%  by 2020 and 32% by 2035 versus a business-as-usual case.

9) Recent market price changes have already shown a customer change use pattern without the legislative push.

Coal fired power plants generated ,~ 37% of the country’s electricity in February 2015.  In contrast, coal had generated over 50% in 2007.

Bloomberg reports that the market capitalization of the publicly traded U.S. coal companies has dropped to about $19.4 billion this year. This market capitalization had been about $78 billion in 2011.

RAIL IMPACT?

Both CSX and Norfolk Southern have already een a significant drop in their eastern rail coal traffic. In the past, some USA rail companies earned as much as 35% or more of their profits just from rail coal transport. Some strategic rail planners saw that as a market weakness. Some as early as 15 years ago.

ACTION PLAN by RAIL COMPANIES

To adjust for the coal traffic shifts, companies like Norfolk Southern have been trying to market more intermodal truck competitive cargo. Unit trains of coal are in some ways being replaced by high vertical clearance double stacked container trains. These rail companies are shifting traffic mix by reaping the benefits of engineering and train technology investment in plant heavy haul infrastructure since about 1984.

Investments in higher vertical rail freight route clearance projects and heavier axle allowed track/bridge structures are paying off in North America. This reflects a “grind it out” strategic change by managers over three decades.

This well executed railway market strategy in North American has not yet been adopted by most of the rest of the world’s rail managers. Too often, international rail freight managers and government planners have not adapted to such commercial competition forces. They have ignored much of the commercial engineering advanced by North American railroad leaders. #########################################

WHAT DO YOU THINK?

Are the US railroads adapting fast enough as coal volume drops?

Are these rail market shift patterns to be repeated on the railways from Mongolia to South Africa, and Brazil to India? Do these nations have a rail strategy to adapt to the market shifts?

Which are already showing a strategic shift and investment towards more efficient big train mixed non coal traffic? Which are still in denial?

INNOVATIVE TECHNOLOGY EXTENDS RAIL Heavy Haul BRIDGE LIFE

This business case story below represents very innovative use of inexpensive smart technology to determine cost effective rail bridge capital budgets. Published case study in ASLRRA’s Tech Tracks –  “Short Line Railroad Saves CAPEX Funds with modern bridge stress and strain monitoring structural technology”

The Indiana Rail Road engaged an engineering consultant to provide a calculated load rating for a 100 year old multi-span bridge located in southwest Indiana. After a thorough visual inspection and a load rating analysis that uses AREMA visual inspection guidelines, the bridge was rated as unsatisfactory for the intended live loads. Report recommended rehabilitation of a number of main steel girders to achieve the required load rating. The consultant also suggested train speeds be reduced from 40 mph to a maximum of 10 mph.

Indiana Rail Road estimated the cost of the rehab to be approximately $2 million dollars. This bridge had been providing its customers with heavy axle freight service (32.5 metric tons per axle) with profitable revenues to the rail company. A critical business issue.

Indiana Rail Road asked for a second due diligence opinion.  Working  with Parsons, LifeSpan from Atlanta installed approximately 12 of its unique sensors on key structural elements. Next, the railroad ran known loads across the bridge to calculate a load rating based on actual structural response instead of just visual inspection. Data was collected on each run and the sensor peak channel manually re-set between runs.

DATA CAPTURED:

The technology  captures both compression & tensile displacements/strain

Can measure up to 11mm of displacement (up to  95mm with special sensor)

With a resolution of 3 to 4 micron range (average human hair is 80 microns)

Capture crack width/propagation, displacement/strain, out-of-plane bending, deflection

Captures peak strain data without power source

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RESULTS showed total stresses where within the allowable limits (AREMA).

The business lesson is that the use of advanced condition sensor technology can make a huge financial difference in a railroad’s capital budget.  In this example, $2 million.

Is your railway using this scientific approach to optimize your engineering budgets yet?

Using modern sensors to measure bridge risks

Using modern sensors to measure bridge risks