Posts Tagged “rail shipments”
Following a number of years where intermodal and rail shipments of fresh produce have been down, some observers think volume will be increasing at the expense of trucking.
Rising fuel prices and increasing truck rates should make refrigerated shipments by intermodal and rail more competitive, according to a new USDA report.
The first quarter 2018 edition of the USDA’s Agricultural Refrigerated Truck Quarterly, issued in July, reported 2017 investments in refrigerated facilities and technology have increased the long-haul capacity for shipping fresh fruits and vegetables by intermodal and rail.
“Furthermore, increasing fuel costs and a driver shortage for trucks may further increase demand for shipping fresh produce by intermodal and rail,” the publication said.
Rising fuel rates figure to make intermodal and rail more competitive. Diesel prices rose from $2.47 per gallon at the end of 2016 to $2.87 per gallon by the end of 2017. On July 23, the U.S. Energy Information Administration reported the average price for a gallon of on-highway diesel in the U.S. was $3.22 a gallon.
The publication cited Tiger Cool Express who feels rising diesel prices make trucks a less competitive option to intermodal and rail since diesel fuel makes up a higher percentage of the variable costs associated with truck operating costs.
Diesel fuel averaged close to $4 per gallon in 2012, the USDA said, which was the peak year for shipments by intermodal and rail.
Later fuel price declines led to decline in intermodal and rail shipments of fruits and vegetables.
Now rising fuel prices could be good news for intermodal and rail, the USDA said.
In addition, strong economic growth in 2017 increased demand for shipments by truck, putting upward pressure on truck rates while decreasing capacity.
2017 availability ranged from adequate to shortage conditions, which potentially will cause some shippers to consider seeking shipments of fresh produce via intermodal or rail, the USDA said.
The USDA said that since 2012, the overall trend for intermodal and rail shipments of fresh fruit and vegetables has been decreasing for shipments originating in California and the Pacific Northwest, registering a 42 percent decrease between 2012 and 2017.
Combined rail and intermodal shipments decreased from 1.6 million tons in 2012 to 937,265 tons in 2017. Between 2016 and 2017, rail shipments decreased 22,055 tons and intermodal shipments decreased 3,230 tons.
The report said the 2014 demise of Cold Train — a major provider of refrigerated railcar service through its partnership with BNSF Railway — cut the availability of intermodal and rail service for fresh produce.
Still, the USDA said the January 2017 announcement by Union Pacific that it had acquired Railex LLC’s refrigerated railcar and cold storage distribution facilities in Delano, CA, Wallula, WA, and Rotterdam, N.Y. could signal more volume for that service.
The report noted that Union Pacific said it would increase the frequency from 3 to 5 days per week for Cold Connect on east-bound departures from California and Washington.
In 2017, the USDA reported intermodal shipments of iceberg and romaine lettuce increased from the previous year. Reported shipments increased 24 percent (10,125 tons) for iceberg lettuce and 28 percent (7,280) for romaine lettuce. On the other hand, shipments of lemons decreased 50 percent (112,230 tons).
Reported rail shipments increased 5 percent (8,925 tons) for potatoes in 2017.
While trucks will always be the most economical option for some shippers, the report said improvements in the refrigerated supply chain for intermodal and rail could make it a more attractive option, particularly for long-haul routes.
“Even if shipments by rail typically take several days longer than by truck, shippers may be willing to trade time for capacity and lower costs if the truck capacity crunch and rising diesel prices persist,” according to the report.