Rail & Intermodal Looks Healthier in 2016

Logistics Management will soon ring in the new year with our highly anticipated transport forecast Webcast.

The 2016 Logistics Rate Outlook: Global economic dip causes ripple effect on pricing, features for the first time, Tony Hatch, a rail analyst and principal of New York-based ABH Consulting.

Hatch notes that intermodal is set to surge due to driver shortage issues and reliance on public spending for highway infrastructure.

However, he also points to environmental issues, noting that rail has fewer carbon consequences.

“Intermodalism is set to grow even faster, as more business is conducted in cross-border,” says Hatch.

“The North American Free Trade Agreement [NAFTA] is becoming far more cohesive - one only has to look at the what’s happening in the automotive sector to see that.”

Hatch adds that while railroads would prefer to have more control over rates, most of that is determined by third-party logistics providers.

“Led by continuous market share gains in intermodal, both domestic and international, rails will be even more important to the national and continental supply chain than they are today, and rates will keep pace with inflation through 2016.”

According to Hatch, shippers will, at the same time, remain heavily reliant on motor carriers for most of the movement - especially from “the first and last mile,” says Hatch.

Readers may also wish to read Tony’s insights shared with readers of the Financial Times, where he champions the “success story” of North American rail freight (below).

North America is a Freight Rail Success Story

Sir, To cover a story of railroading in a country (continent) as big as North America (“Slow train coming”, Financial Times, Life & Arts, December 5) is to ignore the issues of distance outside of or between select corridors such as the Northeast Corridor and the middle, southern or western portion of this big country. Perhaps, as Matthew Engel points out, our “absurdities” are indeed grander here in the US, but our successes can be large as well, and the real point that the esteemed Mr Engel misses is that railroads are indeed working - thriving in fact - in the US, to the benefit of the economy and society!

North America is a freight rail success story - the “railroad renaissance” of the 21st century. Starting essentially with deregulation in 1980, freight rails have regained long lost market share, revived their own financial fortunes and in turn spent immense amounts of private capital on capacity, safety and service enhancements. In so doing, the freight rail industry engineered arguably the greatest industrial turnround in business history. Like other, passenger rail-led success stories around the globe, this privately financed freight rail boom also accomplishes many of the same social and political goals espoused by governments, citizens and rail-backers the world over - enhanced economy, efficiency, safety, fluidity, infrastructure, emissions reduction, etc - as passenger rail does elsewhere.

Jimmie Rodgers, the “Singing Brakeman”, noted that “there are (always at least) two ways to skin a cat”; and we have chosen this one, which makes sense given budgets, allocations, distances and so on. The train over here may be (relatively) slow, and it often runs at night or otherwise beyond notice - but it is full.

Anthony B Hatch
New York, NY, US

Source: ft.com | Comment | Letters