Careful management of your supply chain means analyzing each link to uncover new strategies that can give you an edge. When it comes to moving supplies and finished products, rail could be worth a look. In specific cases, transitioning from trucking to rail can offer your organization several advantages, including good transit times at lower rates. (More on the benefits of rail in a moment!)
However, not all organizations will benefit equally from rail. Those that stand to benefit the most share three criteria:
Criteria #1: You Have Access to a Rail Spur
Moving freight exclusively by rail—as opposed to an intermodal solution—allows you to take full advantage of all that rail transport has to offer. This includes leveraging the additional capacity that rail cars can handle, both in terms of weight and volume.
However, if your shipment needs to move via truck at any point, you’ll lose some of these advantages. Instead of rail cars, your freight will need to be loaded into smaller intermodal containers that will have to meet FMCSA weight requirements.
While intermodal can still offer your business advantages, spur-to-spur solutions allow you to move more freight in a single shipment, often at better rates than over-the-road options.
Note: Even though you might not have direct access to a rail spur, one of your neighbors might. For example, if there’s a 3PL provider a few doors down from your warehouse, they might have a rail spur you can use.
Criteria #2: You Move Freight Across Longer Distances
For shorter distances, trucking will probably continue to be your most efficient mode. However, if you’re moving freight from coast to coast, rail is worth investigating. In many scenarios, long-distance freight shipments can be cheaper via rail than over the road. This can be especially true if you’re moving freight from the East Coast to the West Coast, a route that usually has available capacity.
Note: When it comes to time-sensitive freight, trucking will still be your best bet. Rail is both less feasible over short distances and also slower. So if you’re using just-in-time management strategies, trucking will help you remain more responsive to your customers’ needs.
Criteria #3: You Move Freight Consistently, as Part of Your Supply Chain.
When it comes to rail, the best rates are negotiated within long-term contracts. Operations with established shipping lanes will experience the biggest cost benefits. So if you’re looking for a long-term solution, rail is worth investigating. If you’re not moving freight over longer distances consistently, however, rail might not be the right solution for you.
Now, if your organization fits all three criteria, you’re well-positioned to leverage all the advantages rail transport can offer. Imagine what these four advantages could offer your business:
Advantage #1: Good Transit Times at Great Rates
Rail transit can give you the best of both worlds: Good transit times at great rates. As we noted above, trucking can offer faster delivery, especially over shorter distances. However, it comes at a cost. When it comes to longer distances, rail offers a strong compromise: Lower rates than trucking, with slightly longer (but still good!) delivery times. If your freight isn’t particularly time-sensitive, rail may still be an attractive option.
Rail can be especially appealing to companies with heavy freight. Because rail cars can carry heavier loads, you might, for example, be able to fit an entire order in a single rail car, whereas you’d need two trucks to carry that same load. As a result, rail can be a more efficient solution that offers significant cost savings.
Advantage #2: Fewer Delays Due to Weather Interference
Trucks may be impacted by heavy rain, fog and snow, delaying delivery. However, rail cars can often keep moving through this type of weather, largely thanks to the continued investments that America’s freight railroads have made in their infrastructure. With improvements totaling more than $635 billion since 1980, the country’s rail network is expected to continue expanding through 2020 and beyond.i
As such, your rail deliveries may experience less impact from inclement weather. If your business gets a boost from the holiday season, this issue can become critical in the winter months of Q4.
And while we’re talking about the holidays, rail can offer you another crucial advantage.
Advantage #3: Fewer Capacity Crunches
Trucking capacity can tighten up on the spur of the moment, making it difficult for you to find a carrier. This can be especially true during the holiday season. However, rail capacity is much more steady. Rarely will you have trouble finding someone to accept your freight, especially if you’re looking at negotiating a long-term contract.
As a result, this can mean steadier rates for you, ones that allow you to plan your supply chain expenses more accurately. So whereas you might see big changes in your trucking rates throughout the year, you’re less likely to see spikes in rail freight rates. Keep in mind, though, that your rate will depend on the agreements you’ve negotiated.
Advantage #4: Rail Freight is More Environmentally Friendly
In comparison to moving freight over the road, Rail is a more environmentally friendly option:
- Rail freight can produce up to 76% fewer carbon dioxide emissions, as compared to trucking.
- It can also produce as much as 15 times less nitrogen oxide when comparing equivalent freight.
If your company has made a commitment to environmentally-friendly solutions, rail will support this initiative. By moving some of your freight to rail, you’ll both reduce your carbon footprint and contribute to better air quality.
Adding Rail to Your Logistics Mix
Shipping your freight by rail isn’t right for every business—or every freight scenario. However, if you have access to a rail spur and regularly ship freight over long distances as part of your supply chain, this mode of transportation can offer you a wide range of advantages. With the potential for lower costs, fewer delays, fewer capacity crunches, and environmental advantages, rail could be worth investigating as you continue to optimize your supply chain.
Interested in talking more about adding rail to your logistics mix? Our experts would be happy to help. Just get in touch with us for a free consultation, and we’ll walk you through whether rail is right for your supply chain.
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