Intermodel traffic up 5.8%

This is an inspiring (for railroads) article from the folks over at the Trefis team at talking about the cost effectiveness of using railroads over semi-trucks for product transport:

Constraints on the trucking industry

An increasing number of carloads are shifting from trucks to railroads leading to an increase in intermodal volumes. The main reasons for the shift from trucks to railroads are price difference between trucks and railroads and capacity constraint of trucks.

Price difference – Transporting freight by trucks is ten times expensive compared to railroads and is a less preferable means of long haul transport. [2] The price difference is expected to increase in the future driven by the price increase by trucks to counter the rising fuel prices and the declining trucking capacity.

Capacity constraints – The trucking industry has seen a 10%-15% decline in its average fleet size. [3] Though this reduction does not deter the trucking industry’s ability to support the present freight transport requirement, it may lead to a large supply demand gap in the future if the U.S. industrial output continues to grow. In the first quarter of 2014, U.S. industrial production grew 4.5% and in May 2014 it grew 0.6%. [4]

Moreover, the Hours-of-Service safety regulation for commercial vehicle drivers has put a cap on the number of working hours for truck drivers leading to additional capacity constraints for the trucking industry, which is already suffering from 30,000 unfilled driver jobs. [3]

Read the full article here.