CSX has made a big deal about the greenness of rail transportation for awhile now, advertising the economic value of rail vs truck transportation. BNSF has gotten into the act now with a new tool for estimating carbon savings on specific routes and rail consists. The tool they developed is a bit more sophisticated than a similar tool that CSX put out several months ago. Check the BNSF tool out here.
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One hundred years ago, railroad police were mostly focused on the security of railyards, preventing robberies of trains en route and keeping "non paying" passengers off their trains. Today, while many of those responsibilities remain, the job of keeping the rails secure has multiplied many fold, especially since 9/11.
Today, rail operations and security teams must not only protect rail assets and the public, they must defend against unknown and unseen threats from terrorists. After 9/11, the rail industry established industry standards for rail security and the sharing and reporting of threats. The key mantra of that initiative was "Recognize, Record and Report". CSX has taken that industry standard and built upon it.
As a class 1 railroad, CSX operates 1000 trains a day over 21000 miles of track. If it moves from Chicago eastward in the United States, there's a good chance its moving on a CSX train. To protect the rail network, CSX has developed a web based workstation application called SecureNOW. SecureNOW stands for Secure Network Operations Workstation.
Using SecureNOW, rail operations teams can see, in real time, the location of every train and every rail shipment on the CSX network. Further, they can isolate hazmat shipments within the train consist to determine geographic location, shipment details, rail car type and class as well as hazmat emergency information.
SecureNOW also uses GoogleMaps type technology to allow zoom in geographic mapping to allow operations teams to see exactly where a rail car is relative to cities, towns, shipper plants and facilities etc. Suppose there is a fire at a shipper rail facility. Also suppose that there is a tank car of hazardous toluene on the rail siding. CSX can immediately see where that car is located and report the threat to local fire and police authorities.
The beauty of SecureNOW is that this system is designed to share information. CSX has made it available to state and federal authorities in many states with intent to share with all agencies across its network. For law enforcement authorities this is great technology for understanding both potential and actual risk in their communities. The railroad has SecureNOW active in 5 states within the CSX network
Future versions of SecureNOW will allow display of information on intermodal and ocean containers. With the TSA focused on 10+2 and other information transparency initiatives, the railroads will have to develop this capability in order to show hazardous or high risk shipments within ocean containers. For doublestack train consists, the ocean carrier is the shipper of record as far as the railroad is concerned, but the manifest for the container and shipping information will need to be available to systems like SecureNOW in due course.
Eric
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Burlington Northern Santa Fe Railroad moves a lot of ethanol. With major track ownership in the US midwest, BNSF is a prime mover of corn and corn related products. Unit trains of ethanol move to market regularly with BNSF operating a key unit train to Dallas called the Ethanol Express.
Warren Buffet has invested a lot of money in BNSF as well as other railroad assets such as Union Tank Car. (UTLX).
BNSF Expands Ethanol Express to Dallas/Fort WorthFORT WORTH, Texas and OKLAHOMA CITY, Okla., Oct. 9, 2008:BNSF Railway Co. today announced that it will begin delivering unit trains to Musket Corporation's newest ethanol storage terminal on Nov. 1. With storage capacity of 10 million gallons, the Dallas/Fort Worth Musket Ethanol Terminal is one of the area's largest ethanol storage facilities and is designed to meet the daily needs of the Dallas/Fort Worth Metroplex. Located in the Mark IV industrial area in North Fort Worth, the facility maintains its own rail spur and is designed to completely unload a unit train of 95 cars every 24 hours. Tank cars are drained via an underground piping system and ethanol is pumped directly into the four storage tanks. The ethanol can then be pumped directly into trucks for local distribution. The new facility will receive shipments exclusively from BNSF Railway's Ethanol Express a 95-car unit train service specifically created to move ethanol from a single origin or gathering place to a single destination. The Ethanol Express will save ethanol producers and end-users time and money through increased fleet utilization, lower inventory carrying costs, and logistics coordination and support each and every day around the clock. BNSF moves more than 370 million gallons of ethanol per year through the Ethanol Express program. |
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On October 7th, I and a number of other bloggers had a unique chance to visit with CSX Railroad management in Chicago. CSX invited a number of social media folks to come to Chicago to see their newest genset locomotive technology, as well as to provide access to CSX's communications and operations staffs. About 15 people from sites such as Ars Technica, mattgoesgreen.com, ecollo.com, travel, trains and other things and others visited the CSXT intermodal railyard and got schooled on both Chicago local operations and how railroads work. I was the only logistics geek there, but that's good for freightdawg.com!
CSX is spending considerable money on establishing their brand and their mode of transportation as an efficient and eco-friendly way to transport goods. That's not a touchy-feely thing as much as a solid approach to new media as part of a multi-media advertising campaign. CSX advertisements directly claim that rail transportation is an efficient and environmentally friendly way to move goods.
By inviting professional and industry related bloggers to come see for themselves, CSX is underscoring their branding while providing legitimacy to their environmental investments. Bloggers are usually good at unvarnished opinion. CSX has provided key bloggers with direct access to their communications teams for information when needed, as well as taking influential bloggers on site to see how the business operates. This a very sophisticated approach for an old school transport mode and shows tremendous understanding of how Internet social media works.
Check out this link to mattgoesgreen.com and the pics and video Matt Trachtenberg took. Personally, I got to meet some new and very smart people who are covering the Green side of business today. A very nice way to spend 2 days of vacation time!
Eric
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I'm amazed. A Class 1 freight railroad is actively advertising in the United States on radio, the internet and in print media. When I first saw this it drew my immediate curiosity. My initial thought was "Who will read this stuff then act on it in a way that generates revenue for the railroad?"
How many housewives buy rail traffic? Who is the target audience? Whatever the reason, I paid attention because something unusual was happening in the executive suite of an old school transportation business. I just didn't know what it was.
Then I got an email.
CSX was inviting ME to come to Chicago to attend a conference as well as to see their latest ecological and energy efficient equipment and operations.
The conference is the EPA Climate Leaders Conference in Chicago next week. CSX Railroad is investing heavily in communicating it's biggest value proposition. Railroads are both clean technology and the most efficient way to move product to market.
Railroads compete mainly against trucks. The bigger the load and the longer the haul, the more railroads present value to shippers. CSX has produced an on-line carbon calculator to allow shippers to compare distance and load vs. mode of transportation to determine transport efficiency.
CSX gets both its value proposition to freight shippers, but also to environmental groups. I got invited to join a group of bloggers from a broad spectrum of interests. These include transportation, technology, the environment and current events/news. Blogger attendees will tour the Chicago rail yard, see CSX's latest GenSet Locomotive, and attend a dinner meeting with senior CSX executives. Other on-line attendees include Ars Technica, Trains For America and Green Living.
CSX's communications and marketing teams are carving a new branding niche. Not only are they investing in traditional media to send their message, they are investing in both traditional and new on-line media. Lets face it, anybody with an audience can influence stock prices. Bloggers have a role in this.
CSX has really gone cutting edge in addressing this market by educating bloggers on what they are doing. If bloggers from a wide range of interests consider railroads an efficient transport medium, then the public perception of railroads will change. BNSF, NS and others owe CSX a debt here I think!
For an old school transportation medium, I congratulate CSX on how well it understands the branding opportunity that the net and industry bloggers offer. I've spent 25 years in the transportation business working with heavy iron in modes ranging from containerships to B747's.
I'm looking forward to some steel wheel love.
Eric
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Hurricane Ike, which ripped the Texas coast over the weekend blew inland and has caused numerous problems with Class 1 rail lines running throughout Texas, Oklahoma and Louisiana.
BNSF, KCS, NS and UP all had rail lines impacted by flooding and wind blown debris. Intermodal traffic headed eastbound is likely to be delayed as much as 48 hours.
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House Passes Passenger Rail Investment and Improvement Act of 2008
In days of $4.00 a gallon gasoline, the United States is in serious need of additional mass transit and longer range railroad infrastructure. Given the size of the United States and the speed and convenience of airline travel, passenger rail service in the form of government owned Amtrak has diminished substantially over the years and become unprofitable. However, now that fuel has become almost prohibitively expensive, rail service could make a come back.
HR Bill 6003, known as the Passenger Rail Investment and Improvement Act of 2008 aims to provide renewed funding for Amtrak, as well as to fund private efforts to establish rail service on class 1 freight rail lines as well as improve state and regional rail infrastructure.
The bill is primarily Democrat backed and lead by Rep James Oberstar (D-MN). Critics see it as funding of a dying horse in Amtrak. However, given the critical need of this country to create cost effective and fuel efficient mass transit services, I view this as a potentially great use of public funds.
The US, unlike Europe, does not have a significant passenger rail infrastructure to fall back on. We need one. Airline travel has become brutal. Security screening, high passenger volume, decreased service to smaller destinations and the shear cost of tickets, have made airline travel ugly. It's a necessity, but darned ugly.
Here's just some of what HR 6003 includes.
state preparation of state rail plans. Requires studies of passenger rail service, locomotive biofuel, and the use of bio-based lubricants. Requires Amtrak to establish a Next Generation Corridor Equipment Pool Committee. Directs the Secretary to establish a rail cooperative research program, and the Comptroller General to compare the U.S. passenger rail system with the systems in specified other countries. Authorizes a public transportation authority or rail carrier to submit disputes over trackage use and railroad rights-of-way to the Surface Transportation Board for non binding mediation. Authorizes the Secretary of Transportation to establish a high-speed rail corridor program, including capital project finance grants. Directs the Secretary to solicit proposals for projects for an initial high-speed rail system between Washington, DC, and New York City (Northeast Corridor), as well as for additional projects on any other corridor. Directs the Secretary to conduct an alternatives analysis of the December 1, 1998, extension of the designation of the Southeast High-Speed Rail Corridor.
What if train service became fashionable again?
In these days of high speed electric rail trains in Europe and Asia, as well as the Amtrak Acela trains, why cant rail services be established to serve 150 to 500 mile rail corridors profitably? Consider a high speed train with modern internet connections, airline type seats, meeting room cars, satellite television, dining and bar cars (of course!) etc? Combine those amenities with modern, hybrid locomotives and this might be a real winner.
"I'm telling you, as a 100K a year flyer, I'd use these kinds of services. Delta could still haul my luggage and me to Los Angeles from Atlanta, but I'm not going to pay them $1400.00 to take me to Jackson, MS. when I could go from Atlanta to Jackson for less than $100.00 by train."
I need speed to get to where I am going, but more importantly I need productive time. If I could use my internet connections and cell phone while rolling through the countryside to a region where I would be for several days, I would use the train without question and happily.
Give me my Super Chief! It's time for America to get back on the railroad.
Eric
clipped from www.progressiverailroading.com
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You can tell when the economy is tanking by the rhetoric on Capital Hill, particularly when deregulated industries start to become targets for re-regulation. Somebody gets to feeling abused and complains to their congressman. If it's a lot of "somebodies", or even better, a corporation or two, then legislation gets drafted. Generally this involves politicians responding to the worries and needs of their constituents. Unfortunately, the congressional response doesn't always represent a cure to the problem.
The core of the issue noted below has to do with access to competitive rail service by shippers who may be located in remote or spur line sites. Unlike other modes of transport, the railroads own the tracks. If you happen to be off a BNSF trunk line with no other carrier with adjacent service, guess what? You get to deal with the BNSF and whatever they need to charge at market rates. Thats as much an issue of site location as it is the railroads available. If you build an ethanol plant and want to have access to more than one major railroad, then do the site selection survey first.
Presently there is a lot of competition for railroad capacity. Coal, grain and ethanol in tank cars, are key commodities for railroads in the upper Midwest. Demand drives rates. A congressional "demand" for competition may not be effective, but could absolutely screw up pricing and true market economics, especially if we wind up with some form of "blended" regulation where carriers have market limits on profitability. Canada has that now for wheat and grain. Where some extra regulation is probably warranted is even application of fuel surcharges etc.
I don't see a need for railroad re-regulation (yet). Railroads are both efficient movers of volume tonnage and have a unique investment in the tracks the tonnage moves on.
Where I could get much more interested in re-regulation would be the airline business. Service stinks, maintenance is sometimes questionable, customers are abused and rates are going up. Airlines are abandoning markets and merging as a course of survival. If ever there was a case for re-regulation, the passenger airlines in the US are a classic case. But thats another article.
Link to HR 1650 Legislation: GovTrack.US
Gary Sattler at Bloggingstocks.com also wrote an excellent article on this topic.
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This is a "Best of Freightdawg" article
I originally published this in December 2007. Now that we are through the first quarter of 2008, this outlook still remains accurate.
What might 2008 hold for the logistics and transportation industry?
Here's what I think the key issues are and what impact they will have by mode.The key issue above all remains fuel. Security is a hot second. Technology also has a big role to play along with the "Green" environmental movement. All will combine in unexpected ways to reshape our industry in the next couple of years.
The aggregate of this information is important to consider not only for budgetary reasons but as shippers and carriers enter pricing negotiations by mode. Rates are important, but its not all about the price. Available service will also be critical. There were plenty of instances in 2007 where contracts signed at cheap rates didn't yield priority freight carriage, especially in air freight peak season. If you are a big shipper, you should consider that last sentence and how you will handle the 2008 negotiations. 
Air Freight - main deck air freight I think will remain in high demand on the Asian trade lanes but not all because of volume. European carriers such as Lufthansa shifted freighters out of Asian trades in order to take advantage of higher rates in the Transatlantic markets. Latin American markets for main deck freight will be strong southbound. I see no reason for that to stop.
Flights from Europe, North America and Asia to Latin markets remain strong. Airline belly freight markets globally are reasonably strong and should stay so. Pricing however is much more competitive on the airline fleets worldwide. The line between what freight should fly versus what freight should go by ocean freight however is blurring some. LCL freight increasingly is taking air cargo as shippers reconfigure their supply chains to adjust for fuel costs.
Airlines - US air carriers will continue to match smaller planes to longer routes in an effort to contain fuel costs. Fuel hedging, which has always been important, but better done by some airlines, will be huge. Southwest Airlines is hedged through most of 2008 at $51.00 a barrel while open trading runs almost twice that. Nevertheless, traditional discounters are now going to have to find new ways to compete with the big guys. While Delta and Northwest emerged from bankruptcy in the spring of 2007 with a new battle plan, the fuel issue is complicating the competitive landscape and impacting their returns. The recent extension of mandatory pilot retirement age to 65 could also be a complication as high time and highly paid pilots remain on the books instead of being replaced by younger (and cheaper!) pilots moving up the ladder.
These two issues could force merger talk to increase as airlines focus on optimizing air fleets and air crew costs. I'm watching to see if Delta in particular places an order with Boeing to replace their 767's with B787's. An order of around 100 planes had been predicted earlier in 2007. If Delta sits on it's hands, that means it could be looking at fleet rationalization under a merger before any new planes are ordered...especially since one of the possibilities is Northwest, who is already a big 787 customer. Merger talks for Northwest may also come in play as DHL, its largest air cargo customer, phases out of Northwest's cargo fleet in favor of its investment in Polar Air Cargo by late 2008. Much depends on whether NWA can replace the DHL express volume.
The Green issue is an interesting one for the air carriers. The public sees airlines as huge fuel users and high carbon polluters. Continental Airlines marketing department didn't do the industry any favors by offering to plant x number of trees for passengers willing to pay a premium. That's well meant, but I think takes away from more important operational actions like matching planes with payloads and ranges, ordering the most fuel efficient jets available and optimizing the networks though rationalized services with airline partners.
Trucks and LTL - UPS and FedEx significantly reshaped the US Less than truckload (LTL) market in 2007 by acquisition of Overnite and Watkins Motor Lines respectively. Using parcel express expertise and planning, both have upped the LTL service level by introducing time definite products in the LTL space. LTL traditionally is a day definite business. With parcel carriers now entering that business, service requirements are going up while margins will go down. Meanwhile available freight has been shrinking. If shippers can hold freight long enough to make FTL shipments, or zone skip, then they are doing it. Freight that was moving domestic air is now moving back to deferred air freight, otherwise known as GROUND.
For FTL, the slump in US housing was a major hit this year. That should continue at least into the first part of 2008. Despite market pressure I believe that the labor market in trucking will be stable going forward because UPS and the Teamsters have already concluded their 2008 contract renegotiation. That will allow the National Master Freight Contract to be concluded using the UPS contract as a basis.
Parcel - All three major parcel players will take an increase of approximately 4.9% for express shipments in 2008. However, watch for accessorial fee changes to figure the true cost to ship. UPS, FedEx and DHL all carried record levels of parcel freight this holiday season, with UPS accounting for 22 million pieces on their largest day. In order to combat the increases I think shippers will work hard to choose deferred modes for parcel and especially on LTL shipments. The US Postal Service could become an increasing factor in commercial parcel shipping if allowed by Congress to negotiate rates. The US Post Office is the 800 lb gorilla in the mail room! The Postal Service also has access to the FedEx day air network as well.
I am also intrigued to see whether the US Government will force the union issue with FedEx in 2008. FedEx has always claimed its employees need to be covered under the Railway Labor Act while UPS and other Teamster employers are covered under the National Labor Relations Act. Airlines are covered under the RLA and it's much harder to nationally organize under that law. However, with the FedEx folks now offering every single mode and service that UPS has, a difference in labor laws seems outdated. Fred Smith may find himself in front of a congressional microphone again on that this year.
Railroads - Warren Buffett and Berkshire Hathaway decided to buy the ultimate train set. Buffett invested this year in BNSF, Union Pacific and the Norfolk Southern Railroads. All are major players in the movement of coal and other energy products. With oil being as high as it is and European markets now clamoring for US coal, Buffett is buying into the primary capacity to move coal and biofuels to market. Not a dumb guy. These commodities will drive rail capacity and rail pricing for some time to come. Buffett strengthened and underlined that strategy this week when Berkshire Hathaway secured 60% ownership of Union Tank Car Company. UTLX is one of the primary constructors and repair facilities of tank rail cars. Matching use of the rails with available capacity puts Berkshire in tremendous position to capitalize.
Ocean Freight - Asian imports continue to drive volumes in the international ocean markets. Fuel remains the biggest part of ocean transportation costs. However pressure from security concerns at US Ports in the form of the new Transport Worker Identification Card (TWIC) will force all port workers and those with access to the ports to have background checks in order to work in US port facilities. Security will add cost to liner infrastructure costs and will show up in the freight rates in due course.
Green pressures from local environmental groups will also add costs as Southern California ports force new environmentally friendly trucks and truck modifications on local drayage firms. In order to fund the conversions the ports will charge a $35.00 port fee per container. Those fees will immediately show up on ocean bills of lading as surcharges. For mid-size importers these fees almost immediately add 5 figures to the transport budget, and for the really big guys, this number represents millions in cost.
Look for importers to strongly consider alternative ports in Canada and Mexico such as Prince Ruperts Island in British Columbia, or Lazaro Cardenas in Mexico. Both have significant rail tie ups with the Canadian National Railroad for Prince Rupert and Kansas City Southern De Mexico for Lazaro Cardenas. These are two seriously great port alternatives if SoCal is a problem.
APL added exciting new container equipment to the ocean business by introducing 53 ft international ocean containers. While potentially market disruptive, These box sizes will be welcomed by importers of volume cargoes from Asia where they have the order management technology to cut a store level distribution list from origin.
This is my view on the last day of December 2007. I will look back on these quarter by quarter to see what's changed. With this much cargo in play, along with the major market dynamics of fuel, currency, security, sourcing and the attendant technology, I am sure much will change.
I haven't even touched on the 3PL and contract logistics markets or supply chain technology. Perhaps I will write on those within the next several days.
Happy New Year. I think it will be exciting.
Eric
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I ran across this article on Yahoo! finance today from Money Magazine regarding why Warren Buffet and Berkshire Hathaway are investing in railroads. Its the same thing I've been saying here at Freightdawg.com for almost a year. (It's the economy silly!)
This is an interesting article, but frankly theres more and better content here at the dawg on this. The nut of it is that Buffett sees that railroads are a very cost efficient way to transport goods and are the key to transporting key energy crops like corn and soybeans as well as coal.
Buffett has also been smart in buying vertically into railroad industries like tank car production with acquisition of Union Tank Car. Check out the "railroads" section here at Freightdawg.com for complete coverage of this subject going back for months!
These "Money" and CNN guys really need to read Freightdawg.com to keep up with "what's what" in logistics news!
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