U.S. freight rail figures point toward continued growth
With several leading economic indicators pointing toward expansion and growth, the freight rail industry within the United States appears to be headed toward a bright future in freight transport.
A piece on AreaDevelopment.com broke down why freight rail should see steady growth through the middle of this century. Coal shipments, which comprised about 37 percent of total U.S. railway carloads in 2010, appear to be one of the biggest driving forces behind continued freight rail expansion in the United States.
Industrial, manufacturing and intermodal numbers are all up, which should also continue to feed a growing freight rail business.
Rail continues to capture a larger and larger market share from trucking by offering a cheaper and more fuel-efficient mode of freight transport. While the transition away from trucking is expected to be slow, industry experts have predicted that freight rail activity could double by 2050.
Bill Rennicke of the Oliver Wyman Group told the Wall Street Journal that “If the traffic-level trajectories are correct, then ton-mile [one ton of paying freight shipped one mile] growth could be in the 80% range by 2035 to 2040, and on this basis, industry prospects are bright. Rail activity could possibly even double by the midpoint of the century.”
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Despite the anticipated growth, North American freight rail rates are expected to continue to be near the lowest in the world, and companies are expected to finance most or all of its own capital requirements, making public support unnecessary.
Freight rail companies spent a record-breaking $10.7 billion on capital investments, with the industry expected to break that record this year by spending a predicted $12 billion in 2011. Freight rail’s labor pool is also expected to increase, with 10,000 new hires predicted this year.
FedEx is Reshaping Last Mile with Autonomous Vehicles
FedEx is embarking on an expanded test of autonomous, driver-less delivery vehicles to develop its last-mile logistics.
The US logistics firm piloted autonomous vehicles from Nuro in April this year, and the pair will now explore that further in a multi-year partnership. Cosimo Leipold, Nuro’s head of partnerships, said the collaboration "will enable innovative, industry-first product offerings that will better everyday life and help make communities safer and greener".
FedEx will explore a variety of on-road use cases for the autonomous fleet, including multi-stop and appointment-based deliveries, beyond the boundaries mass movement of goods from A-B. The logistics company says the exponential growth in ecommerce is spurring its experimentation in new autonomy solutions, both in-warehouse and on-road.
“FedEx was built on innovation, and it continues to be an integral part of our culture and business strategy,” said Rebecca Yeung, vice president, advanced technology and innovation, FedEx Corporation. “We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations.”
The changing role of couriers
Unlike structured delivery networks, operating under long-term partnerships and contracts, agility is where couriers deliver true value - and their ability to deftly solve last-mile fulfilment has most acutely been felt during the pandemic. For the billions of people around the world forced to stay at home to protect themselves and their communities from the spreading COVID-19 virus, couriers have been a constant. They may have been the only knock at the door some people experienced for weeks or months at a time.
But the last-mile has been uprooted by a boom in ecommerce, a shift that has been most apparent in the UK, US, China and Japan, according to the Global Parcel Delivery Market Insight Report 2021 by Apex Insight. These are markets with dominant economies and populations used to running their lives with a tap of a screen or double-click of a mouse.
“Getting last mile delivery right has long been a challenge for retailers,” says Kees Jacobs, Vice President, Consumer Goods and Retail at Capgemini. “In 2019, 97% of retail organisations felt their last-mile delivery models were not sustainable for full-scale implementation across all locations. Despite increasing demand from customers, companies were struggling to make the last mile profitable and efficient.”
Jacobs says that the pandemic alleviated some of these stresses in the short term. With no other option, consumers were understanding and tolerant, if not entirely happy, with longer delivery times and less transparent tracking. “But, as extremely high delivery demand continues to be normal, customers will expect brands to contract their delivery times,” he adds.
Last mile's role in ESG
Demand and volume weren’t the only things that have changed during the pandemic - businesses looked closer to home and as a result became more sustainable. Bricks and mortar stores were transformed from mini-showrooms to quasi-fulfilment centres. Online retailers and other businesses sought local solutions to ship more faster. In densely populated London, UK alone, Accenture found that delivery van emissions dropped by 17%, while Chicago, USA and Sydney, Australia saw similar emissions savings.