May 17, 2020

How Intermodal Rail Made a Comeback

how-intermodal-rail-made-comeback
Freddie Pierce
4 min
Freight rail is becoming a hot topic inside the United States, where U.S. Department of Transportation Secretary Ray LaHood will travel to California to deliver his views on the subject
Rail freight services have always had a stigma attached to them, mainly regarding the length of time it takes to transport goods, but also due to their...
Rail freight services have always had a stigma attached to them, mainly regarding the length of time it takes to transport goods, but also due to their inflexibility because, unless you have a railhead on every high street, you are always going to need road transport eventually.

However, recent statistics show that despite these issues rail freight is going from strength to strength, particularly intermodal rail or combined transport services, as customers seek to reap the benefits of this more environmentally-friendly and cheaper method of transporting goods.

High diesel prices also mean that rail freight customers benefit from cheaper long haul journeys. “The benefits of loading 20 ft and 30 ft containers is that you can load up to 28,000 kg, much more than road trailers,” says Ian Logan, Managing Director of Formula Freight Europe.

“These days, the European rail infrastructure is actually quite good and if you have a good set up at either end for shipping across channel and collection/delivery of the container, the transit times are about six to seven days. The rates are also much more advantageous compared with road freight.”
Intermodal services also offer greater security, as tighter controls protect the rails system, while the accident risk of rail traffic is 40 times less than on the roads.

Thomas Lange, Director of Communications at Union Pacific, believes that intermodal rail services are also more reliable than truck services because they are less impacted on by congestion and weather conditions.

International market
The growth of intermodal services has been hit, like most sectors, by the global recession. Lange explains: “The recession and weak housing market impacted our international intermodal volume, which in the third quarter of 2009 was down 25 percent year-on-year, and in the fourth quarter of 2009 was down 9 percent year-on-year.”

However, recent statistics have revealed that the market is beginning to turn around. In August, the Intermodal Association of North America (IANA) concluded that rising international cargoes was the biggest driver in the second quarter for rail hauls of intermodal containers and trailers.

It found that combined domestic and internal traffic increased by 17 percent from the same period in 2009 to 3.3 million units, led by a 21 percent increase in demand for international services, while domestic moves grew by 13 percent. The domestic traffic rise reflects a moderate U.S. economic recovery and what rail officials say is a continued modal share shift from all-road shipments to rail intermodal.

Meanwhile, the Association of American Railroads (AAR) reported record rail intermodal volume on U.S. railroads for the week ending 21 August - a new record for 2010. It said 236,404 trailers and containers were moved that week, up 22 percent from the same week in 2009 and up 3 percent compared with 2008.

Weekly container volume was the highest on record, up 24 percent compared with the same week in 2009 and up 12 percent on the same week in 2008.

In Europe, combined transport services are also seeing an upturn in volumes. In the first half of 2010, Swiss operator Hupac carried 343,332 road consignments by rail – about 50,000 more consignments than in the first half of 2009, but still 30,000 fewer consignments than in the same period of its record year 2008.

Investing in facilities
The recovery of the economy is helping boost intermodal traffic, but so is companies’ investment in their facilities. An example of this is Union Pacific’s Joliet Intermodal Terminal, near Chicago, which opened on 1 August. The facility represents a $370 million investment and creates intermodal terminal capacity in an area of high demand.

Lange said: “Recent Union Pacific investments include five new terminals, three terminal expansions and rail infrastructure upgrades to create shorter routes.”

Meanwhile, Pennsylvania, Alabama, Virginia, Tennessee, Mississippi and North Carolina have sought $109.2 million from the US Department of Transportation to support the expansion of independent intermodal facilities in Harrisburg, Philadelphia and North Carolina, along with track and signal improvements in Alabama, Tennessee and Virginia. The improvement project aims to create a 2,500-mile intermodal route from New Jersey to Louisiana.

While the future of intermodal rail sector looks bright, some experts are warning that things may remain challenging for a while yet. Fred Green, President and Chief Executive Officer of Canadian Pacific Railway, said: “Markets are likely to remain volatile, but ... quickly adjusting our resources to meet changing volume demands position us well for the second half [of 2010]."

If intermodal rail sector is to continue to grow it needs to tackle some important infrastructure issues. In Europe the upturn is being impeded by serious bottlenecks in the rail system. In recent months, insufficient locomotive and staff resources, building sites and storms have led to serious delays and tailbacks across economic areas. “We are working closely with our rail partners to overcome the existing operational problems,” says Hupac’s Managing Director, Bernhard Kunz.

Experience shows that sector competition and collaboration often leads to investment in infrastructure, creating improved services for customers, so it seems rail intermodal is moving in the right direction.

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Jun 19, 2021

Driver shortages: Why the industry needs to be worried

Logistics
SCALA
supplychain
Brexit
Rob Wright, Executive Director...
4 min
Logistics professionals need urgent solutions to a shortage in drivers caused by a perfect storm of Brexit, COVID-19 and compounding economic factors

While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks. 

A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so. 

What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.

"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"


That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.

But where has this skills shortage stemmed from? 

Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.

COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.

It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing. 

So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done? 

Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change. 

Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.

Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line. 

On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains. 

Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months. 
 

Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector

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