Posts Tagged “RailEx”
Union Pacific Railroad announced recently the acquisition of Railex LLC’s refrigerated and cold storage distribution assets in Delano, CA, Wallula, WA, and Rotterdam, NY. Terms were not disclosed, and the acquisition does not include Railex Wine Services LLC.
Railex, a refrigerated rail service and third-party logistics leader, plays a key role in Union Pacific’s Food Network transporting fruits, vegetables and other temperature-sensitive cargo across the United States.
“The Railex team developed a fantastic business changing how fresh food arrives on America’s tables, offering food shippers fast, reliable door-to-door rail based transportation solutions,” Brad Thrasher, vice president and general manager of agricultural products for UP, said in a press release. “The integration of their highly efficient cross dock facilities and logistics capabilities into Union Pacific’s broader food network allows us to offer our customers increased access to a wider range of capacity and service solutions in a rail-centric cold chain.”
Union Pacific, based in Omaha, NE, food trains directly serve Railex’s Delano and Wallula facilities, located in the heart of major agricultural-production regions. The food train network provides a fast and reliable service from these growing regions to the Midwest consumer base via Chicago and further into the heart of the Northeast region via the CSX. Railex will continue managing facilities during the transition and integration of its operations with Union Pacific.
In an Aug. 24, 2016 post, HaulProduce.com rported the following:
Even refrigerated carriers have their challenges hauling fresh produce, but it is an awesome mountain for rail entities, which is why there have been so many failures over the years. Now we hear Railex LLC is ending service to the Southeast, although it claims it will be back one day.
The rail logistics transporter, based in Riverhead, NY, ceased operations in Jacksonville, FL August 13th with its refrigerated perishables. Rumors of the closing had been circulating since July. The company apparently felt it was in its best interest to reassess the Southeast receiving location and close the Jacksonville location…..Paul Esposito, executive vice president of corporate affairs said. “The transit times were two days longer than what we had planned and what our customers expected. Now, two years later, during the peak summer season, with transit variabilities as well as the decline in truck rates, we find it difficult to sustain any significant volume into the area.”
To read the entire post from last August, click on “Sections” and then click on “News,” then scroll down to the 8/24/16 post.
Even refrigerated carriers have their challenges hauling fresh produce, but it is an awesome mountain for rail entities, which is why there have been so many failures over the years.
Now we hear Railex LLC is ending service to the Southeast. although it claims it will be back one day.
The rail logistics transporter, based in Riverhead, NY, ceased operations in Jacksonville, Fla. August 13th with its refrigerated perishables..
Rumors of the closing had been circulating since July. The company apparently felt it was in its best interest to reassess the Southeast receiving location and close the Jacksonville location. Railex was unable to properly structure its operations at the Jacksonville facility that was too small. The company was operating with a short-term lease.
Railex is working with the Union Pacific and CSX railroads to find a service plan allowing timely deliveries to Southeastern customers through a different location. Railex is hoping to negotiate a service agreement within the coming months.
The Jacksonville location was intended to be a temporary solution to satisfy customers that had long demanded Southeastern service.
“For various reasons beyond our control, Railex could not run the traditional unit-type train service into Jacksonville,” Paul Esposito, executive vice president of corporate affairs said. “The transit times were two days longer than what we had planned and what our customers expected. Now, two years later, during the peak summer season, with transit variabilities as well as the decline in truck rates, we find it difficult to sustain any significant volume into the area.”
The carrier transported apples, carrots, onions, potatoes and wine to receivers via 64-foot refrigerated railcars.
Railex ships from Delano, CA, and Wallula, WA., and unloads and distributes at a Rotterdam, N.Y., refrigerated warehouse near Schenectady, N.Y.
The company opened the Jacksonville location in June 2014.
Rail companies have a history of basing their rates to a significant degree, on truck rates.
In sort of a flashback to the ’70s it seems history is repeating itself as a lot of hoopla is taking place about the rail industry getting more serious about hauling fresh produce – and competing with trucks. In the short run it seems not to have worked out that well — at least for some.
The latest example is McKay TransCold of Minneapolis, which closed its doors November 1st, after launching a new refrigerated boxcar service last June. Known as Transcold Express, it had weekly runs between Selma, CA and Wilmington, IL. However, the company had problems with its cross dock operation in Wilmington, where it had spent monies on significant upgrades of the facility. Unable to find additional investors to continue operations, the company decided to call it quits.
Another short lived example of a foray into the rail perishables business is the Cold Train Express Intermodal service that suspended service last summer. Cold Train saw its on time service on BNSF’s Northern Corridor plummet from 90 percent in November 2013 to only 5% percent last April. Cold Train said the reason relates to soaring oil and coal shipments by rail. For example, the Northern Corridor of BNSF saw tank car shipments increase from 20,000 three years to over 400,000 this year. Unlike it’s southern routes, which has two sets of tracks, the northern route has only one set of rail tracks.
Meanwhile, Railex, which started a rail service a few years ago, seems to be doing better than anyone, with it’s coast-to-coast service. Another service, Tiger Cool Express LLC, also remains in business, but we hear little about it.
Produce is viewed by some in the rail industry as the last long-haul, $100 billion market that intermodal has yet to penetrate. Still, over 95 percent of fresh produce is delivered by truck in the U.S.. Rail officials are counting on trucks supplies tightening, with the driver shortage continuing to worsen and increasing government regulations on the trucking industry – which in theory is supposed to be deregulated.
Cold Train Express Intermodal Service on August 7th announced it would be suspending service at its location at the Port of Quincy, WA. Cold Train, operated by Rail Logistics of Overland Park, KS, developed a transportation program model which allowed fresh producers in the Pacific Northwest to take advantage of refrigerated rail service that moved commodities to Chicago, IL, and points beyond in a timely and efficient manner.
The Northwest is expecting large crops of pears and apples. Shippers are concerned about availability of trucks and need all the transportation options available.
It is up in the air for the time being seeing what service Cold Train may be able to take to restore in the future. One other rail option continues to be Railex service to move fruit.
The Cold Train announcement follows a number of scheduling issues on BNSF Railway’s Northern Corridor line that have been occurring with BNSF beginning late last fall because of increased rail congestion. This has been caused by a surge of oil and coal shipments on the Northern Corridor line,” Cold Train said in a statement. “In fact, from November of 2013 to April of 2014, BNSF’s On-Time Percentage dramatically dropped from an average of over 90 percent to less than 5 percent.”
This past April, BSNF Railway announced an initial reduction in intermodal service out of Washington to one train a day with transit times being two to three days slower than prior timetables.
“As a result of the scheduling change in April, the rail transit time nearly doubled,” Cold Train stated. “Unfortunately, this caused Cold Train’s costs of equipment, fuel and other costs to double, and caused many customers — especially fresh produce shippers — to look for other transportation service options.
In fact, because of BNSF’s scheduling issues from November of 2013 until present, Cold Train lost most of its fresh produce business, including apples, onions, pears, potatoes, carrots and cherries, which was more than 70 percent of the company’s business. In addition to adversely impacting many Washington State fresh produce growers and shippers, BNSF’s scheduling changes have affected many retailers and wholesalers in the Midwest and East Coast that purchase Washington State fresh produce and frozen foods.”
According to data made available by Cold Train, use of intermodal transportation was growing from the Pacific Northwest. During 2010, Cold Train moved approximately 100 containers of perishables per month from Washington to the Midwest. By 2013, that number had risen to approximately 700 containers per month shipped from Washington and Portland, OR.
By the end of 2013, Cold Train anticipated it would be shipping 1,000 containers each month from the region.
100 years ago the railroads ruled when it came to long haul freight transportation. The advent of the interstate highway system in the 1950s changed all of that and led to a thriving trucking industry. Then in the 1970s there was a renewed interest in rail service, and this involved fresh produce. It was primarily refrigerated intermodal trailers and refrigerated box cars. However, as the trailers and rail cars aged, the companies invested in those ventures too often had problems coming up with the capital to replace the equipment. Additionally, in those days the rails had difficulty understanding perishable produce had to be treated differently than coal or auto parts. There also were too many produce receivers filing claims at the drop of a hat. The rails also were notorious for taking forever to pay claims.
But times have changed. Here are some of the rail related companies that have come on the scene in recent years.
****Railex LLC, Rotterdam, NY. This was perhaps the first one, and it partners with the Union Pacific Railroad, using 64-foot refrigerated railcars transporting produce from the West Coast to an upstate New York distribution center, where trucks take over. It also is establishing a presence in the Southeast.
****Rail Logistics Cold Train, Overland Park, Ks. The Cold Train used containers shipped out Washington and Oregon to the Midwest and East Coast.
****McKay TransCold, Minneapolis. It works with the Burlington Northern Sante Fe Railroad using refrigerated boxcars out of California to Wilmington, IL citing each boxcar is equivalent to 3.5 to 4.2 truckloads of product.
****Tiger Cool Express LLC, Overland Park, Ks. According to its website it “Provides retailers an efficient, cost-effective, safe alternative to all-spot, all-the-time brokered transportation that relies on small, independent owner-operators who supply shippers through intermediaries.”
****C.R. England of Salt Lake City. While it is widely known as the nation’s largest refrigerated carrier with about 4,500 trucks, it also has had an intermodal division for about eight years and uses refrigerated containers.
Ricky Stover is director of business development – intermodal, for C.R. England. The company has 1,150 containers and plans adding 400 more this year.
“The percentage of produce we haul is small. We do a lot of frozen food, dairy, beverages, etc. That type of stuff is really our bread and butter,” he says.
Jason Spafford, McKay’s Vice President of Business Development credits the down turn in the nation’s economy resulting in people being “more open to new ideas.”
Spafford also points to increasing regulations on the trucking industry working in favor of the railroads.
“There’s the restrictions on driving hours that’s making it harder and is pushing it more towards a rail solution,” he states.
Additionally, Spafford says McKay TransCold believes they have to offer rail rates that are eight to 15 percent less than truck rates, depending upon the commodity and specific traffic lane.
“Traditionally rail has had difficulty with box car and intermodal concerns with damage claims. We’ve developed a racking system that creates a rock solid load. It can actually have less shifting than in truck load,” Spafford says.
McKay TransCold took a different approach in that it initially developed westbound rail shipments from the Midwest with commodities like eggs and ice cream. It then developed its eastbound freight, which is the opposite approach from most companies.
While a lot of attention is being paid to rail hauling fresh produce, Kenny Lund, Vice President of Allen Lund Company of LaCanada, CA states, “Owner operators move probably 95 percent of the produce cross country. Owner operators dominate cross country transportation of produce. The carriers that haul for us have 25 trucks at the most. We work with over 9,000 refrigerated carriers and they are mostly guys with 25 trucks or less.”
Continuing, Lund points out it is the rules and regulations that are hurting the owner operators. He adds there is no driver shortage, it is an owner operator shortage. The truck broker has been one of CARB’s (California Air Resources Board) biggest critics, citing such requirements on equipment such as refrigerated units for trailers cannot be over seven years old. Lund also is critical of the new diesel engines calling them a “nightmare. They shut down and you can’at fix them out in the field. You have to tow them in. They are so complicated and these regulations are going to make it worse.”
Paul Kazan, president of Target Interstate Systems Inc., Bronx, NY, is equally critical of excessive regulations on 18 wheelers.
“You don’t see it (increasing regulations) with trains, but at every turn you see it with the trucking industry. There is a very concerted affect out there by the rail industry to restrict trucks and I’m surprised there is not a more concerted effort by the trucking industry to push back against this effect. We’ve never had the power or the clout of the rail industry,” Kazan states.
At the same time, Kazan adds he is having conversations with rail entities and says, “we need a rail component.”
Target is headquartered on the Hunts Point Terminal Wholesale Market. Still, Kazan sees the rails “shying away” from wholesale terminal markets because these facilities hold on to the trailers (TOFC) too long using them as storage.
Kazan concedes, “Rails are here to stay. You have the green (environmental) technology, the carbon footprint.”
This is nothing new since various types of rail service, whether using refrigerated rail cars or piggy trailers, has been tried since at least the 1970s. But after a long lull, some new services have been introduced. We’ll get more specific on these in a future feature story. For the time being, here are some observations by veteran individuals whose focus is on transporting fresh fruit and vegetables by truck, and their take on the efforts to increase rail service.
Kenny Lund, vice president of the Allen Lund Co. of LaCanada, CA notes rails only account for one to two percent of the fresh produce being shipped. There are only so many tracks and it would take billions of dollars worth of equipment to increase produce volume rail to say, four to eight percent.
“Refrigerated rail is increasing,” Lund notes. “They are doing more with wine, dairy and more temperature controlled products. But we don’t see a massive shift to rail and don’t see a pathway to do that.”
Fred Plotsky is president of Cool Runnings LLC of Kenosha, WI. He says new services such Rail Logisitics Cold Train, a rail operation based in Overland Park, KS, bases its freight rates on truck rates.
“The rails understand the market and they are taking advantage of it. Cold Train….will set a rate of say $3600 when the truck rate (to the same destination) is $4000,” Plotsky observes. Then when the truck rates increase to $4500 or $4600 Cold Train will increase its rates accordingly.
“Their service (Cold Train) is good and you can load them Monday for delivery Friday 0ut of Washington or California to Chicago,” he says.
However, Plosky adds if a shipper has a mixed load of produce spread out over 100 miles with three pick ups you are not going to use that rail service. Now if the rail service involved is a straight load or two pick ups in the same town, that is feasible.
At Des Moines Truck Brokers in Norwalk, IA, President Jimmy DeMatteis says they have working relationships with companies using the railroads.
“But there have been problems with claims. With some loads the rails don’t want to take responsibility for it. There’s not enough rail equipment yet and the rail infrastructure is poor. But the rails are making inroads,” DeMatteis says.
Lund at Allen Lund Co. adds, “The rails don’t like produce and they don’t like the claims that come with it. They won’t go out of their way for produce like they will wine and other temperature controlled items. What the rails like is consistency. Produce is opposite of consistency, because growing regions change, and demand changes. The rails build their world around schedules. The rails and trucking are major competitors, and the rails don’t want to do anything to help trucking.”
Doug Stoiber is with Raleigh, NC-based L&M Transportation Services. The company vice president had expected a “greater impact” from rail related companies such as Railex LLC of Rotterdam, NY, that partners with the Union Pacific Railroad and CSX Transportation.
“Railex is successful and they are growing and they are encouraging some competition. I’m surprised they haven’t taken more truck loads of freight off the highways than they have,” Stoiber states.
He notes 98 percent of all consumer goods are delivered by truck and about 95 percent of produce is handled by truck. Stoiber says while the rails can take a lot of long haul produce off the highways, instead of “eliminating” transportation, it tends to “re-arrange” the movement of product.
“You still have to pay (a truck) for that first mile and the last mile, because the rails can’t deliver to the store doors or distribution centers, at least not yet. The cost comparatively for that first mile and that last mile is a lot higher than if it is delivered from shipping point to destination on a truck,” Stoiber says.
Better treatment of truckers was a primary theme at a session titled, Transportation Best Practices for the Produce Industry, held during the annual show of the United Fresh Produce Association, May 1, at the Dallas (TX) Convention Center.
The theme of the meeting is based around a set of transportation guidelines released earlier this year by The North American Produce Transportation Working Group (NAPTWG). The group has released a document combining various transportation guidelines for the produce industry to use, with the end result being better treatment of truckers leading to more refrigerated equipment and drivers being available to haul fresh fruits and vegetables.
A member of the audience tells the panel there is a shortage of 200,000 drivers and “we’ve got some problems coming up” with an improving economy.
Panel member Ken Lund, vice president, support services, Allen Lund Co., said the average age for truckers is over 55, and not that many drivers are entering the industry. There are 2.7 million Class 8 trucks and 98 percent of those are companies with 10 trucks or less. Most refrigerated produce haulers have a one truck operation, he says.
“We want drivers to be treated well,” Lund states. He adds that today more retail receivers are treating drivers better.”
Lund notes the USA is looking at an eight and one-half to nine percent unemployment rate, yet there are “tens of thousands of openings” in transportation. “But there are not a lot of people entering the industry and we want to make it better for them.”
He points out the Allen Lund Co. has a transportation education program for drivers providing them various kinds of information such as how to take the pulp temperature of produce to ensure product being loaded has been pre-cooled.
Panel member Frank Swanson, category manager, U.S. Foods said, food safety is a concern for his company. “We look at how to get transportation companies that take care of the product and maintain the correct temperature.”
Panelist Ken Nabel, president, Kingston and Associates Marketing, LLC points out a lot of military personnel are coming home, receiving discharges and should provide a lot of potential for jobs as drivers.
Another member of the audience asks the panel what is the leading cause of produce loads being rejected?
Bret Smith, director of commodities procurement, Safeway Inc., responds the majority of kicked loads results from temperature problems with fruits and vegetables, as well as issues relating to quality.
“We need to know if a problem exists in route, not when the load arrives,” Smith says. He adds having a driver check list, plus ensuring the driver has been trained to “check all components” associated with the load helps to avoid problems with claims.
Lund points out that there are seperate points on the NAPTWG website for shippers, truckers and receivers. Those points can be found at: www.naptwg.org
What is the number one issue for produce transportation in 2012?
Nabel believes it is the cost of diesel fuel.
Smith cites “having good companies (carriers) with a good driver base.” He also says the high cost of goods Safeway must purchase for its stores is a concern. On the plus side, Smith believes docks used to consolidate loads are becoming more efficient, which is making consolidated loads more attractive to drivers.
Lund, obviously looking weeks ahead to the peak spring and summer shipping season for produce states, “When rates get high, a lot of people jump into the market (especially) when rates hit $10,000 from California to New York….Prices (rates) have gone up. Ten years ago it was $3,000 from California to Atlanta; now it’s $10,000. If we had those prices 10 years ago….” he notes
The transportation broker then adds, “Thre are a lot of shady brokers out there and a lot of double brokering going on.” Lund relates a lot of times a shipper will list the Allen Lund Co. on the document as a shipper. “We are not a shipper, we’re a broker. This is where a lot of theft occurs, as well as double brokering.”
On another topic, the panel discusses railroads and its role in hauling fresh produce.
Smith of Safeway says the retail chain has not been very successful using rail, although the company continues to consider it.
Swanson of U.S. Food cites the service of RailEx, a company working with major railroads, providing coast-to-coast unit trains. He likes the RailEx “door-to-door” service, but says over all the service is very limited.
Lund points out that only one to two percent of the nation’s fresh produce is shipped by rail.
“Some people on Capitol Hill think 50 percent of produce should be on the rails. But the infrastructure changes would be monumental,” Lund says.
Ending the session was an audience member asking the panel about 18 wheelers being powered by natural gas.
Lund says there has been a lot of testing in this area, however the infrastructure for cross country trucking is not available. Most trucks using natural gas are doing local hauls.
(For more information on the NAPTWG, see press release published on HaulProduce, titled, Transportation Group Releases Best Practices. It ran on Jan. 17, 2012)