Intellitrans Rail 101: Chapter 2

Intellitrans Rail 101: Chapter 2

RAIL INDUSTRY OVERVIEW

Rail Freight Equipment

Within the North American (United States, Canada and Mexico) rail system as of 2018, there were an estimated 1,670,000 freight cars in service. Of these, 19% were owned by the rail carriers, 53% were owned by lessors, 18% were owned by shippers, and 10% were owned by TTX (a jointly owned subsidiary of all the Class 1 RR’s). *Source GATX

Rail Industy Revenue and Capacity

Rail freight revenue in 2017 was nearly $74 billion for the US railroads, who had 13 million carloads originating on their lines, plus another 14 million intermodal units. A modern railcar has a gross capacity of 286,000 lbs. (or 125.5 tons) moving in trains consisting of 100 cars or more, yielding a total carrying capacity of 12,500 tons per train. For 2017, the average Class 1 RR length of haul was 1033 miles at an average of $.0402 revenue per ton mile.

In 2018, railroads moved a ton of freight an average of 473 miles per gallon of fuel. On average, trains are three to four times more fuel efficient than trucks.

Rail Carrier Network

Passenger Rail

The National Railroad Passenger Corporation, known as Amtrak, is the intercity passenger rail operator in the U.S. With 21,000 route miles in 46 states, the District of Columbia and three Canadian provinces, Amtrak operates more than 300 trains each day to more than 500 destinations. Amtrak is also the operator of choice for state-supported corridor services in 15 states and for four commuter rail agencies. Although the Rail Passenger Service Act of 1970, which established Amtrak, specifically states that “The Corporation will not be an agency or establishment of the United States Government,” the federal government (through the United States Department of Transportation) does own all issued and outstanding preferred stock in the company. Amtrak began operations on May 1, 1971.

For more passenger train information go Amtrak’s Facts page here.

Intellitrans Rail 101: Chapter 1

Intellitrans Rail 101: Chapter 1

RAIL INDUSTRY OVERVIEW

Rail Companies and Infrastructure

Currently, there are 540 freight railroads operating 140,000 miles of track in the United States.  Of these, seven are Class 1 railroads because of their 2019 annual operating revenue in excess of $447 million.  These are BNSF Railway (BNSF), Canadian National Railway (CN), Canadian Pacific Railway (CP), CSX Transportation (CSXT), Kansas City Southern Railway Company (KCS), Norfolk Southern Railway (NS), and Union Pacific Railroad (UP).  Class II, Class III and terminal and switching railroads make up the balance of the 540 freight railroads.  The seven Class I railroads operate 95,000 miles of trackage and employ over 194,000 personnel.  Class II, III and the terminal and switching carriers operate an additional 43,000 miles of track and employee another 27,000 personnel.

A Class I railroad in the United States and Mexico, or a Class I rail carrier in Canada, is a large freight railroad company, as classified based on operating revenue.  Smaller railroads are classified as Class II and Class III. The exact revenues required to be in each class have varied over time, and they are now continuously adjusted for inflation.

Rail Commodities and Business Mix

Coal remains the single largest commodity that moves by rail as measured by tons.  33% of rail carload traffic is coal, followed by chemicals at 12%, and grain at 8%.  However, in 2017, intermodal accounted for approximately 24 percent of revenue for major U.S. railroads, more than any other single commodity group and well ahead of coal.  Other commodities with substantial rail volume are forest products (including pulp and paper), motor vehicles, metals, metallic ores and scrap metals, crushed stone, sand and gravel, and petroleum products.

Thoughts on Visibility in the Supply Chain

Thoughts on Visibility in the Supply Chain

Supply chain visibility. Everyone in the transportation and logistics industry needs it. But there are many degrees of visibility in the marketplace. In-transit visibility, which is what is most commonly discussed and shows where goods are along the route from origin to destination, is only part of the picture.

What happens pre-transit? What’s happening at the facility – are they ready to load your freight? Just because a railcar or truck has arrived and is ready to be loaded, it doesn’t mean that the facility has the dock space to actually load it. When there is dock space available – how long did it actually take to load? And after the loading, what are the extra steps necessary before it leaves? For railcars, it could mean inspections, for trucks it might mean tarping for weather.  Many of these questions exist at the destination facility as well.

Another visibility aspect that is often overlooked is inventory visibility. How much product does my customer have, and how faster are they using it.  What is the status of inventory at the production location – Is it loaded onto a railcar or truck and then set aside, waiting for an order? Do you have certainty on the availability of that inventory – has it been assigned to an order already?  Is it really there, or just a reflection of data management issues?  If it sits too long on either side of transit will additional costs be incurred?

And finally, consider potential route visibility as well. Based on a railcar’s weight, it might be too heavy to travel certain routes. Knowing which routes are possible and which are not based on weight or other factors is another overlooked aspect of visibility.

It really does all boil down to getting the most complete, timely and accurate data that you can in order to execute flawlessly & perform continuous improvements in your supply chain. Without it – you’re only getting a small slice of the big picture.

Avoid Costly Penalties – Register your private Railcars in OT-57 NOW.

Avoid Costly Penalties – Register your private Railcars in OT-57 NOW.

OT-5’s complicated registration process is being retired February 3rd  and OT-57 picks up that same day. If you haven’t transitioned over now is the time!

The Loading Authority OT-57 system provides a centralized, paperless process for registering private freight rail equipment and access to controlling entity (shipper, owner, or lessee) contact information and storage information. It facilitates the potential placement of private freight rail equipment at specified storage locations on a railroad.

  • Final day to register is Feb 2nd
  • OT-57’s application is much simpler
  • Register up to 50k railcars from a spreadsheet
  • Unlike OT-5, there is no approval process. If your application is correct, you are registered

We are happy to help.

Confused? We can help you get registered. 

Freight Brokers vs. Shippers’ Agents

Freight Brokers vs. Shippers’ Agents

Freight Brokers

Within the transportation marketplace, brokers provide a myriad of services. Brokers fill the gaps between shippers, owner-operators, and draymen. Brokers also assist shippers and trucking companies with resource and technology-constraints. In addition, brokers help cover capacity shortfalls and often provide ancillary services like transportation management outsourcing.

Like everyone else, brokers want to make money. They earn their income by making connections and knowing the market. Brokers live and die by information. They use arbitrage and leverage between available truckload capacity and shipper demand. When there are plenty of trucks competing, brokers keep their fees to a minimum and work to pair available capacity with shipper needs. When capacity is scarce, rates go up; it’s more difficult to secure capacity and to increase margins over time. Sometimes scarcity results in significant markups over the actual cost of the truck. It doesn’t take long for brokers to cover enough shipments to make a profit that offsets any losses. Interestingly, capacity tightening is often regular, seasonal, even predictable — barring catastrophic events like major storms and geopolitical disruptions. Yet, shippers always seem willing to pay the premium when capacity tightens. Thanks to regularly occurring demand surges, brokers can usually be assured opportunities to turn a profit.

In every shipper’s roster of available carriers and capacity, brokers have their place. This is especially true when shippers don’t have the time or means to find asset-based carriers. They also frequently help with unusual, one-off service requests. To ensure the alignment of costs and value, shippers must think strategically about the utilization of brokers. At a minimum, a shipper should have a relationship with at least one broker, contracts in place, and established rates. Shippers also need to clarify liability, payment terms, accessorials, and required minimum service standards. These terms are required in advance to protect shippers from unforeseen circumstances potentially impacting shipments.

Shippers' Agents

Shippers’ agents act as extensions of your staff. Like your employees, these agents are measured by a combination of service, cost, and quality of work. However, the shippers’ agent model minimizes your fixed costs and helps you avoid making difficult staffing decisions in tough economic times. Inherent to the model is transparency regarding levels of service. Clients also have the flexibility to change service levels without making changes to technological infrastructure.

IntelliTrans is a Shippers’ Agent

IntelliTrans augments the shipper-broker-carrier relationship and provides complete transparency of rates, pricing, capacity, and the entire supply chain. We provide accurate, easy-to-access metrics, and give our customers a clear picture of their freight in the marketplace. Our pricing is on a per-shipment basis, making it purely transactional. In other words, when business is good you pay more, and when business is bad you pay less. Our team of career professionals leverage our technology and honed business processes to drive successful outcomes. We manage your freight regardless of the season or state of capacity in the market.

At IntelliTrans we work on your behalf to keep costs low – consistently. Our team contains cost by effectively managing your commitments with carriers and by avoiding higher fees during periods of high demand and low supply. IntelliTrans partners with customers for the long-term. We earn our fees based on the quality of services that we provide and our ability to innovate. You can depend on us to meet your freight needs with creative, technology-backed solutions.

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