Discussing the future of US rail freight with Cordstrap's Rail Director, Scott Loudon

In this Q&A Scott discusses the risks facing the freight industry, how businesses can mitigate against this and his vision on the future of the railroad network in North America.

Are the challenges that freight shippers in the US face now substantially different to those pre-pandemic?

The break down and fragmentation of supply chains continues to cause havoc nationally and internationally, no industry has been immune to this.  AAR Senior Vice President, John T. Gray said: “Rail traffic is navigating many of the same challenges plaguing other supply chain participants, including chassis and container shortages at ports; shortages of drayage truck drivers; port congestion; insufficient warehouse capacity at many locations; and now, weather problems in the Gulf. Faced with this, railroads are working hard, in cooperation with other stakeholders, to keep the national rail network fluid.”

The reality is rail can offer the network fluidity that road simply cannot. The truck driver challenges which began a few years back shows no sign of abating and the knock-on effect is huge:

• Trucking rates continue to increase into the thousands of dollars rather than hundreds of dollars for even the shortest ocean container hauls and reducing truck service availability for BCOs.
• Businesses are either having to absorb the costs, driving down their margins or pass the costs on risking loss of business.
• There’s major truck congestion at airport terminals, with wait-times for trucks up to 10 hours to get a dock assignment, and then wait again at the dock for cargo to be located and loaded can add 3-4 hours. While there are many procedural changes and automation solutions that can be implemented to mitigate this congestion, airport cargo handlers exploit the cargo owners by charging storage fees for cargo they cannot locate or do not have ready for the truck when it arrives.

And so the solution for many shippers is simple – switch to rail. It has capacity and can ship greater quantities of goods at significantly lower cost. Previously, there has been some reluctance to switch over to rail from businesses who have been cautious about the regulations relating to loading and securing railroad cargo. However, the most successful business executives are getting very savvy at identifying excess cost in their supply chain. They can see the value of partnering with a specialist cargo protection expert like Cordstrap to facilitate the move to rail.

This not only reduces their total spend, but also delivers more efficient loading processes further reducing the total cost of ownership. As a Gold Member, Cordstrap has a unique relationship with the Association of American Railroads (AAR) and our experts work closely with their technical teams to develop perfectly engineered cargo protection systems that not only meet AAR approval but help set new safety standards. 

What are the greatest risks facing the freight industry in the next decade? And how do you think they will affect the railroads?

Climate change is the first thing that springs to mind when I think of risk. It is unpredictable and is set to have a massive impact on how business is done. Those companies taking a pro-active stance on reducing carbon emissions will have to be railroad friendly. CSX has reported that they can move one ton of goods 470 miles on the equivalent of one gallon of gasoline.

The next risk or challenge I see, is texting and driving. More and more people are driving "intexticated" and causing accidents or close calls on the highways. Sudden lane changes and stops cause large trucks to move in ways that risk the stability of their trailers. Sudden stopping and weaving have a ripple effect on the trailer that can cause goods to be damaged or even shift and cause trailers to lean or topple over completely. Exposure to human risk factors like these helps make rail an increasingly attractive prospect for shippers.

When you couple all that to the reduced risk of theft when transporting goods by rail rather than road, you can see why my money is on the railroads.

While rail is obviously safer in many respects, it is not completely without risk. Loads can be subjected to over 4G at certain points of a journey. But these can be mitigated by using carefully engineered, solutions like Cordstrap’s CornerLash system, which offers unrivalled security and is one of only two intermodal cargo protection systems fully tested and approved by the AAR. 

We’ve seen supply chain disruptions and challenges like never before. While we cannot know what the future holds, how can businesses mitigate against the effects of unforeseen disruptions and delays?

Things like the coronavirus and the recent blockades of Canadian railroads just serve to remind us of the importance of maintaining truly flexible and adaptable supply chains.  These will enable you to work round blockages whenever they occur. To do that, you have to be really fleet-of-foot and be able to deploy different routes and modalities at short notice. This just reinforces the importance of standardizing the way your cargo is loaded and secured so it will meet the regulatory requirements of every modality in every country. As a global supplier with local expertise, this is where Cordstrap’s greatest strength lies. Our precisely engineered protection solutions not only meet the stringent requirements of the AAR, they are also fully CTU code compliant, and certified by key global bodies such as DNV, the IMO and Mariterm AB. Partnering with Cordstrap will ensure you can easily and efficiently pivot rather than stall and become part of the blockage.

So, you see a bright future for the railroad network in North America?

Yes, I do. And I am not alone. Ian Jefferies the AAR President confidently predicted earlier this year ongoing increase in freight demand, with number higher than same period last year.  I’ve also been interested to hear that there is a growth in acquisitions of short lines by private investors who obviously see a bright future for the railroad element of national infrastructure. Short lines are being further supported by the US Government and Congress has just extended additional tax credits to them, guaranteeing their future.

This commitment to safe, reliable, cost effective, and environmentally friendly rail services to rural and small-town America is extremely reassuring. Couple that to intermodal yards (so you don’t need a siding to access the network) and the fact that rail can shift loads more than 4 times heavier than those on roads and you can see how the railroads are on track for a very bright future.

While this expanding rail infrastructure will facilitate use by a widening range of shippers across North America, the key to accessing the benefits of that network, will be to work with a cargo protection partner that can advise and train your staff to secure any load to comply with the AAR’s exceptionally high regulatory standards.

For more insight from Scott and his team about how your business could be making more of the rail network, get in touch.