Shippers are increasingly opting for long-distance trucking over delivery by rail as supply chain bottlenecks cause delays at America’s rail yards, warehouses and port terminals, according to The Wall Street Journal (subscription).
Intermodal transports down: “U.S. intermodal transports, in which railroads carry containers and truck trailers, were down nearly 12% in the first six weeks of this year from a year ago, according to the Association of American Railroads, after tumbling in the second half of last year even as retailers and manufacturers rushed to bring in goods.”
Railroad congestion and delays: After railroads carried record amounts of cargo at the end of 2020 and for the first half of 2021, supply chain backups caused significant delays last summer. Major rail yards near Chicago, an important shipping hub, were the first to stall and led to a chain reaction throughout the supply chain. Delays were caused by a range of factors, including higher-than-normal cargo volume and a shortage of workers at warehouses and rail yards.
Shippers turn to long-distance trucking: Intermodal loads have lost about 1% of their market share to long-distance trucking since the pandemic began. This translates to about 30,000 more long-distance truck moves each week.
Trucking demand and costs increase: Trucking volume on America’s busiest route, Los Angeles to Chicago, is up 130% since last year. With higher demand, trucking costs on that route are also up 59% since last year. Though shipping by truck is more expensive than rail, customers are prioritizing speed of delivery.
Signs of a bounce back for rail: Intermodal cargo volume on ships to the U.S. are up 25% compared to the start of 2022. Still, experts say the entire supply chain must perform efficiently for shipping by train to go full speed ahead.
- “We need the entire chain to be able to handle it at the same pace so we don’t get into a similar situation where the trains keep coming and the street and the warehouses can’t process it fast enough,” said Elise Gosch, assistant vice president of intermodal sales at Union Pacific Corp.
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