Posts Tagged ‘logistics’

Truck Executives Calls for Railroads to Change Price Philosophies if They Want to Grow Intermodal Traffic

December 4, 2019

A trucking company executive told an investment conference this week that railroads need to change their prices if they hope to win more of if its business.

Speaking to the Stephens Nashville Investment Conference, the executive vice president of intermodal operations for J.B.Hunt Transport Services, Darren Field, said his company faces conflicts in selling transportation services.

Field said that J.B. Hunt has increasing moved away from being a trucking company to being a third-party logistics company.

“If we’re working with a customer, and intermodal is a good solution for the route or the origin-destination that the customer is asking about, but our truckload brokerage model says that that’s the best economic value for that customer, then we’re going to leave with that [truckload] service first and maybe intermodal is a secondary option to that customer,” Field said.

He said that if railroads want to see growth in their intermodal traffic they need to change their philosophy toward pricing.

“We’ve never held back in terms of communicating with the railroads that their underlying costs certainly influence our ability to help grow volumes on the railroad,” Field said.

Field said competition from trucks will continue to pressure the ability of railroads to raise their prices, particularly in the East.

“And we understand that we’ve got to work together to drive out costs so that we can both be more competitive against the truck,” he said.

Reports Gives Favorable View of PSR

July 9, 2019

A trade group says in a new report that precision scheduled railroading has bolstered the view of railroads in the eyes of their freight customers.

The report was released by the Council of Supply Chain Management Professionals and concluded that rail productivity continues to improve as the PSR operating model enables Class I railroads to reach lower operating ratios.

“Railroads did particularly well on intermodal as shippers sought alternatives to trucks,” the report said.

Among the frustrations that shippers encountered last year the report said were high demand and limited capacity that created a a sellers’ market that began in 2017 and carried into the first half of 2018.

That resulted in business logistics costs increasing by 11.4 percent last year. The cost of shipping by rail rose by 12.9 percent.

Shippers surveyed for the report complained about what the report termed “the worst year in memory in terms of cost and capacity availability.”

Intermodal shipping had the highest modal cost increase from 2017 to 2018 at 28.7 percent, which contributed to an overall transportation cost increase of 10.4 percent.

Capacity began catching up with demand in the second half of 2018, the report said, as the pace of GDP growth began to slow.