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Spotlight: Rail Transportation in 2008
Welcome to 2008!
We hope your 2007 was prosperous and we hope that you’ve developed plans for a successful 2008.
It’s at this time of year that we generally get to express our views and take a guess at what 2008 will look like.
What we find in the rail industry is that trends tend to last until they’re worn out and then shippers, receivers, railroads and the political community
make enough noise that changes occur and courses are altered to the point of being back on track.
The rail shipping community then gets along for a period of time and works on the next set of improvements.
A obvious trend we’ve seen is the ever increasing price trend. It is always amazing what you can get charged for in the transportation arena besides the loaded move.
Some examples are:
1) Demurrage,
2) Private railcar repositioning (in a variety of ways),
3) Empty mileage (even though you may not control the route),
4) Storage of private cars (and in some cases railroad assigned cars),
5) Ordering cars in to a facility after stopping them short,
6) Maintenance of railcars at exorbitant rates,
7) Not using the carriers electronic billing system,
8) And a variety of other charges that tend to crop up from time to time.
On the rate side, we’re seeing some shipments move back to truck in shorter haul situations.
It would be interesting to know where the truck rail rate break is for specific geographic areas – this is a question you should ask yourself as well.
In general, as one would expect, we continue to see anything related to lumber and housing slow down; therefore, there are hundred's
of center-beam flat cars in storage.
We see segregation of other railcar types occurring on a capacity basis for specific commodities and I’m beginning to wonder if the intermodal
container world isn’t making the general service boxcar an endangered species.
The financial arena should prove interesting as well this year.
It appears the Federal Reserve continues to keep a close eye on the economy, recession possibilities and inflationary risks. Not an easy task.
If we had to sum up our outlook for 2008 it would be this:
Railroads will continue to price transportation and transportation services to the point that some business either shift to an
alternative transportation mode or go out of business. At some point there will be a leveling off of transportation prices and,
in certain instances, reductions (no this isn’t a typo).
Accessorial and maintenance charges will become the next wave of money making strategies for railroads which will fly under the radar screen until it gets the
attention fuel surcharges did in late 2007.
Shippers and users of rail transportation will either get more efficient with operational strategies that are in step with the railroads or
they will have to pass on significant transportation cost increases to their customers.
In all cases, we believe managing the details will become more important as the year progresses and get’s more tumultuous.
It should be a fun year! We look forward to all the prospects and opportunities available in the industry and hope to be part of the evolution right along side you.
We look forward to earning your business!
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