Hamberger: Freight Business Booming, Intermodal Top Revenue Source

WASHINGTON ― Railroads are experiencing a surge in traffic volumes for all commodities, including coal, and, for the first time, intermodal freight is the industry’s top revenue source, Association of American Railroads President and CEO Edward R. Hamberger said in a speech at the National Press Club.

Carload freight is growing at a rapid pace and is up more than 3 percent this year, with grain traffic rising 10 percent and coal up 3 percent. Coal remains the bedrock of the industry, accounting for the largest source of tonnage by a wide margin.

“Freight railroads have crossed a new threshold ― expanding beyond our traditional role in transporting bulk commodities ― to an indispensable link in providing ‘just-in-time’ delivery of consumer goods,” said Hamberger. “The successful intermodal partnership among the rail, trucking and shipping industries combines the best abilities of the transportation modes to meet the demands of our customers and consumers around the nation and across the globe.”

Intermodal goods are shipped in containers and trailers that can be interchanged to travel on trains, trucks or ships. Containers today account for almost 75 percent of intermodal volume, up from 40 percent 15 years ago.

“Growth in intermodal signifies railroads’ progress and strength,” Wall Street analyst Anthony B. Hatch said. “It means that railroads move finished goods in addition to bulk commodities and that an industry once thought to be stodgy and slow is actually high-service, high-speed and totally modern. It also means that railroads are a vital link in the global supply chain and that shippers ― and ultimately consumers ― like saving money with rail.”

Freight railroads move more than 42 percent of the nation’s intercity freight on a 142,000-mile network. Intermodal and other forms of rail transport are used to move a huge range of consumer products ― from electronics and furniture to orange juice and garden tools. They also move 66 percent of our nation’s coal, providing more than half of the nation’s electricity, and 40 percent of our grain, including enough wheat to make 315 loaves of bread for every person in America.

“Best Buy had done very little intermodal transportation until about a year ago.  Due to the large volume of vendor freight originating on the West Coast, and increasing imports from the Far East, we needed additional capacity beyond our existing truckload volumes,” said Eric Morley, director of logistics-transportation for Best Buy Company, Inc.  “Our experience with moving freight via rail has been positive.  Along with a cost savings, we have had a significant increase in capacities and good service.  We look forward to continued growth in our intermodal program."

Over the past decade, intermodal transport has been the fastest-growing segment of the U.S. freight railroad industry. Intermodal traffic grew from 3 million trailers and containers in 1980 to 9.9 million in 2003, and set volume records in 21 of the last 23 years.  In 2003, intermodal accounted for 22.0 percent of industry revenues.  Intermodal traffic is split almost evenly between domestic and international trade.
 “A number of our member motor carriers have noted for some time, the opportunities available to them when combining the best abilities of rail and trucking to meet the demands of our customers and consumers across the country,” said Bill Graves, president and CEO of the American Trucking Associations.

“The alliance between railroads and ports through fast, efficient intermodal service connects American businesses to the global marketplace,” said Jean Godwin, executive vice president of the American Association of Port Authorities.
“The North American intermodal network is an integral component of our global transportation infrastructure, enabling major retailers and manufacturers to enhance and expand their logistics and supply chain networks,” said Joni Casey, president and CEO of the Intermodal Association of North America.

Technology has enabled railroads to carry more trailers and containers on one train.  A single intermodal train can carry nearly 300 truck trailers.  Railroads also are safer and more efficient than ever, developing technological advancements such as electronic equipment to inspect track conditions, redesigned brake systems, as well as Global Positioning Satellite (GPS) instruments to improve efficiency in routing and real-time shipment tracking.
Additionally, rail helps protect our environment, with a 72 percent increase in fuel efficiency since 1980 and accounting for just 9 percent of total transportation-related nitrogen oxide emissions.

“With freight demand expected to jump 67 percent by 2020, the role of freight rail will be even more important to our national and international economy,” Hamberger said.