Friday, January 6, 2012

Operating Cost Comparsion - Diffferent Modes

I ran across a study back in the 1976's entitled, "U.S. Cargo Transportation Systems Cost and Service Characteristics."  I guess the copy I have of it is very rare as a search in the library search site,, came up with three libraries! Of course, the U.S. Department of Transportation's library in Washington, D.C. The study compared the cost per ton to move a ton 600 miles.

Identifying an updated study through an internet search was fruitless. So, my comments are based upon the 1976 study.

The costs identified were pickup, linehaul, terminal and delivery. Now, the tools for transporting a ton are lot different today than 1976. Tractor and trailer, locomotive and rolling stock, and aircraft are more efficient tools today.  Deregulation had not yet been implemented. But the rough ratios the study demonstrated in comparative costs remain instructive.

Whatever the transport mode, what is being transported must be picked up. Once the ton of something is picked up, the particular mode may or may not move the ton through a terminal. An exception are truckloads moving dock to dock that do not involve a terminal. All modes perform linehaul movement from origin to destination. An intervening terminal maybe required before a destination is made.

The 1976 study identified a ratio of 1:6:35 for rail, truck and linehaul costs. The rail has the linehaul cost advantage.

Terminal and pickup costs were 75% of pickup, linehaul, terminal and delivery total costs for the railroad. For trucking it was 37%. For air carriers it was 60%. But, the railroad linehaul cost being so advantageous meant and means that typically the rail rate is the lesser.

The railroad in 1976 as now has a decided comparative cost advantage in linehaul cost to move a ton.

In many instances the railroad then as now has the ability to meet the truck linehaul speed.

The substantial disadvantage for a railroad is the cost for pickup, terminal and delivery. In 1974 unit trains were not as prevalent as today. Containerization was a shadow of what it is today. Unit trains and containerization have proven to be productive tools. Anything lessening costs for pickup, terminal and delivery benefits the railroad mode.

Not only are the costs of railroad pickup, terminal and delivery real problems, it is the actual time required to perform pickup, terminal sorting and delivery that historically has destroyed any competitive linehaul speeds between railroad and truck.

An exception for the lack of linehaul competitiveness is the application of the dual mode freight vehicle called Roadrailer. A Roadrailer vehicle may convert from highway to railroad to highway quickly. No separate lifting equipment is required. The Roadrailer in rail mode uses a specially designed railroad wheel set that eliminates the need for a railroad car to support and carry the Roadrailer vehicle. Given the inherent linehaul efficiencies of the rail mode, the Norfolk Southern Railroad Company's truck subsidiary, Triple Crown Services, must be making a significant contribution to corporate earnings.

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