Oil transportation causes US Rail Freight boom
Rail freight in the US is booming due to a rise in the transportation of oil, as petroleum exploration companies turn to the railway network to deliver raw materials.
The boom started in January this year, after TransCanada’s $7 billion pipeline proposal was denied, causing a 40 percent rise in rail deliveries in the first half of the year, according to the US Energy Information Administration (EIA).
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BNSF Railway, owned by Berkshire Hathaway is the biggest mover of crude oil in the US, and posted an increase of 60 percent in carloads of crude oil and petroleum products in the first half of the year, and they are planning to up this even further.
The company recently expanded its capacity to transport 1 million barrels per day of shale oil from the Bakken formation in North Dakota and Montana in 2012, a 25 percent increase from the previous year. According to Reuters, the Texas-based company expects to use a quarter of this capacity in 2012: ‘Still, with 88.9 million barrels of Bakken crude shipped on its rail cars in 2012, it will witness a nearly 7,000% growth since it started shipping by rail five years ago.’
One problem with this set-up is that to ship products by rail costs more, and these costs have to be absorbed somewhere- whether it be by consumers or passed through to companies and refineries as an increased cost. On average, shipping by rail costs an average $10-$15 per barrel across the US, up to three times more expensive than the amount it costs to move oil by pipeline.
Another problem with this could be other demands for railroads, as other sectors of the oil industry such as Hydraulic Fracturing, (an oil drilling technique often referred to as ‘Fracking’) has also created a major new business for railroads, with a massive requirement for sand. This increased demand for water, chemicals and sand is helping to revive many US railroad routes.
Cainiao Network Launches Customer-Centric Logistics
As the logistics division of the Alibaba Group, Cainiao Smart Logistics Network has decided to provide its Southeast Asian customers with unsurpassed service during its annual shopping festival. Based on customer feedback surveys, the company will expand its real-time customer service support and speed up delivery times. ‘By expanding and deepening our services, we aim to provide a stronger logistics infrastructure that can bolster the booming eCommerce sector, support merchants’ expansion into new markets and diversify retail options for consumers’, said Chris Fan, Head of Cross-Border, Singapore, Cainiao Network.
Who Is Cainiao?
According to TIME Magazine, Cainiao ‘is far from a typical logistics firm’. The company controls an open platform that allows it to collaborate with 3,000 logistics partners and 3 million couriers. This means that merchants can choose the least expensive and most efficient shipping options, based on Cainiao’s real-time logistics analytics. The company’s goal is to ship packages anywhere in the world in under 72 hours—and for less than US$3.00.
For countless small business owners around the world, from coffee-growers to textile-weavers, this could change everything. Usually, it costs about US$100 to ship a DHL envelope from Shanghai to London in five days. Cainiao aims to change that. Said its CEO Wan Lin: ‘The biggest barrier to globalisation is logistics’.
What’s Part of the Upgrade?
Throughout the Tmall festival, Cainiao’s logistics upgrade will be divided into four critical segments:
- Real-time customer service support. Cainiao has launched a direct WhatsApp channel for customers to receive logistics updates and ask questions.
- Expansion of air freight parcel size and weight limits. Packages can now be up to 30 kilograms or 1-metre x 1.6 meters to help ship large items such as furniture.
- Daily air and sea freight connections. Shipping frequency will almost double to seven times weekly to maintain resilience and efficiency.
- Compensation for lost or damaged packages. Customers will be reimbursed up to RMB 2,000 (US$311).
Where is the Company Headed?
From June 1st to June 20th, the finale of Tmall, Cainiao will ensure that its customers feel confident in the company’s ability to deliver their packages. Despite global shipping delays due to COVID, the show will go on. Said Fan: ‘This series of customer-centric logistics upgrades reaffirms our goal of pursuing value-added services to enhance customers’ shopping experience while mitigating challenges posed by external factors’.
Furthermore, Cainiao has recently expanded its Southeast Asian operations, achieving revenue growth of 68% year-over-year. In Malaysia, the logistics operation has partnered with BEST Inc. and Yunda; in Singapore, the company has partnered with Roadbull, Park & Parcel, and the Singapore Post. And if its recent measures help retain and grow its customer base, the company will be well-poised to lead the industry in resilient and customer-centric global logistics. ‘COVID-19 made everyone realise how important the logistics infrastructure backbone is’, said Wan. ‘And it gave us a peek at what Cainiao should look like in three years’.