Ecommerce and changing consumer expectations have had the logistics industry working on mastering front-door deliveries for years. Cost challenges, capacity constraints, and infrastructure instability present consistent hurdles for every mode of transportation. However, just like in the story of the tortoise and the hare, slow and steady may win the race. Rail, historically perceived as sluggish and unreliable for freight, has made significant advancements across the last three decades. Now, with warehouses welcoming trains through their front doors, service has never been better. Shippers with supply chains that feel “off the rails” should consider the advantages of inside rail service in warehousing.
What is Inside Rail Service?
Many are familiar with truck deliveries, which involve opening the trailer doors and backing the unit into an exterior door through a practice known as “bumping the dock.” For inside rail service, trains drop freight cars directly within the warehouse. Rail siding, a section of track separate from the main line, runs indoors. This low-speed, low-traffic offshoot from the primary route accommodates railcars for freight loading and unloading directly in the facility while never leaving the track. The service is efficient and brings an essential mode of transportation directly to the warehouse.
What are the Benefits of Inside Rail Service?
Limited space and infrastructure make warehouses with inside rail service rare compared to the general population of providers. Further limiting availability is the popularity of the service for its competitive advantages in areas like cost, capacity, and social responsibility. Savvy shippers benefit from leveraging the many traits that make inside rail service such an attractive option.
Rail rates typically are lower than truck rates, especially over longer distances. Rail also represents a mode of transportation in which costs have decreased over time. According to the American Association of Railroads, average rail rates were 44% lower in 2018 than 35 years ago. This means US shippers can move twice as much freight at nearly half the cost. Rail also is less price-sensitive than truck rates, which can fluctuate up to 40% in peak seasons. Rail rates typically vary no more than 10-15%.
Railroads are working diligently to stay ahead of demand growth. The US Department of Transportation estimates that rail freight tonnage will increase by 88% by 2035. To prepare for this surge, railroads have allocated more than $650 billion in capital investments across the last 30 years, with approximately $130 billion explicitly spent on capacity expansion. Compared to other transportation modes, this represents one of the highest investments to maintain and increase capacity. This expansion marks a stark contrast to the trucking industry’s current 60,000 driver shortage.
Service and Security
Many shippers hesitate to use rail for fear of cargo damage. However, nearly anything that can ship by truck can ride the rail. Cleveland Research Group estimates nearly 45 million annual truckload shipments could convert to rail. The major rail providers offer free consulting services for shippers on cost-saving options, blocking and bracing shipments for safe rail transport, and reducing environmental footprints.
With freight cars holding nearly four truckload’s worth of cargo, less individual shipments must move simultaneously and are easily tracked. Freight is offloaded directly from the freight car onto warehouse shelves making products quickly available for outbound customer shipments. The process eliminates delays caused by traffic congestion at railyards or limited, expensive drayage capacity. Rail shipments also are less susceptible to over-the-road issues like weather and traffic delays. Trains average slower speeds overall, but typically maintain consistent momentum between 40-45 miles per hour, which trucks do not. Plus, trains do not have to take mandatory 10-hour breaks like truck drivers.
For companies looking to go green, rail provides an environmentally friendly option. Trains are three to four times more fuel-efficient than trucks while hauling more pounds. This equates to a 75% reduction in greenhouse gas emissions by using a train instead of a long-haul truck. Inside rail service improves this impact even more by eliminating the need for truck drayage from a railyard to the warehouse.
Warehouses offering inside rail service provide a truly significant benefit to shippers, and we’re proud to be one of them. If your company is looking for better value in your supply chain, let’s discuss how MWCold’s inside rail service may be the perfect advantage for your company.