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Origin Drayage Rail Linehaul Destination Drayage Billing Processes TOFC vs COFC

Complexity of Operations. Origin Drayage Rail Linehaul Destination Drayage Billing Processes TOFC vs COFC. Where Does Intermodal Work?. Intermodal Terminal. Intermodal Terminal. Shipper of Origin. Shipper of Destination. Linehaul. A. B.

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Origin Drayage Rail Linehaul Destination Drayage Billing Processes TOFC vs COFC

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  1. Complexity of Operations Origin Drayage Rail Linehaul Destination Drayage Billing Processes TOFC vs COFC
  2. Where Does Intermodal Work? Intermodal Terminal Intermodal Terminal Shipper of Origin Shipper of Destination Linehaul A B If you are outside the circle, the distance to the terminal makes it cheaper to ship directly to the receiver via truck
  3. Original Intermodal terminals were known as “Circus Ramps,” and they are still frequently referred to as “Ramps”
  4. BNSF Intermodal Yard in Chicago
  5. BNSF Intermodal Yard in Chicago
  6. Intermodal Equipment Shipment Boxes Chassis Intermodal Rail Cars Lifts, Cranes & Packers Hostlers
  7. Intermodal Equipment Shipment Boxes Containers Do not have attached chassis Designed to be picked up and placed on rail cars and chassis Typically 20, 40, 45, 48, 53 ocean and domestic Trailers Actual motor carrier trailer with built-in chassis Virtually any motor carrier trailer, 28-53 feet, including refrigerated
  8. Intermodal Equipment Typical Container without Chassis
  9. Intermodal Equipment Typical Intermodal Container Chassis
  10. 28’ UPS Trailer on Typical Flat Car
  11. Intermodal Equipment Intermodal Rail Cars Well Cars Allows doublestacking of containers Articulated version has 3 to 5 cars permanently joined to form one unit which can carry up to 12 containers
  12. Intermodal Well Cars
  13. Intermodal Well Cars
  14. Double Stacked Containers in Well Cars
  15. Double Stacked Containers in Well Cars
  16. Intermodal Equipment Intermodal Rail Cars Conventional Designed to carry containers or trailers Can carry two trailers up to 40 feet in length. Doublestacking not possible Spine cars Same capabilities as conventional cars Less weight for better fuel economy
  17. Intermodal Equipment Conventional Intermodal Flat Car with Trailer
  18. Intermodal Spine Cars
  19. Intermodal Spine Car Connections
  20. Articulated Spine Car with Fifth Wheel and Shared Trucks
  21. Intermodal Equipment Intermodal Spine Car with Two 20’ Containers
  22. Intermodal Equipment Intermodal Spine Car with 53’ Trailer
  23. Intermodal Equipment Terminal Equipment Lifts, Cranes & Packers Designed to move containers from chassis to flat car or vice versa or trailers from ground to flat car and vice versa Hostlers - A truck tractor designed for managing containers and trailers within the terminal
  24. Straddle Crane
  25. Straddle Crane Loading Spine Cars
  26. Straddle Crane Loading Well Cars
  27. Straddle Crane?
  28. Alternative Mobile Lift
  29. Alternative Immobile Lift
  30. Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions
  31. Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions
  32. Intermodal Growth Fastest growing segment of the railroad industry 3 million trailers and containers in 1980 vs 8.1 million in 1996 More than 17% of rail revenues, 2nd only to coal at 22% Containers account for more than 60% of intermodal volume vs 40% ten years ago Still, enormous untapped potential
  33. Growth in Domestic Intermodal Traffic: 1988-2003 Percentage Growth Year Total Trailers Containers Difference Total Trailers Containers 1990 6,206,782 3,451,953 2,754,829 697,124 3.66 -1.27 10.59 1991 6,246,134 3,201,560 3,044,574 156,986 0.63 -7.25 10.52 1992 6,627,841 3,264,597 3,363,244 -98,647 6.11 1.97 10.47 1993 7,150,457 3,458,406 3,692,051 -233,645 7.89 5.94 9.78 1994 8,128,228 3,752,502 4,375,726 -623,224 13.67 8.50 18.52 1995 7,936,172 3,492,463 4,443,709 -951,246 -2.36 -6.93 1.55 1996 8,143,258 3,302,128 4,841,130 -1,539,002 2.61 -5.45 8.94 1997 8,695,860 3,453,081 5,242,779 -1,789,698 6.79 4.57 8.30 1998 8,772,663 3,353,032 5,419,631 -2,066,599 0.88 -2.90 3.37 1999 9,041,771 3,298,024 5,743,747 -2,445,723 3.07 -1.64 5.98 2000 9,554,184 3,219,183 6,335,001 -3,115,818 5.67 -2.39 10.29 2001 10,265,761 2,413,933 7,851,828 -5,437,895 -0.71 -8.65 2.02 2002 11,191,142 2,344,130 8,847,012 -6,502,882 9.01 -2.89 12.67 11,903,121 2,400,558 9,502,563 -7,102,005 6.36 2.41 7.41 12,923,036 2,639,545 10,283,491 -7,643,946 8.57 9.96 8.22 13,641,872 2,584,262 11,057,610 -8,473,348 5.56 -2.09 7.53 14,234,074 2,432,928 11,801,146 -9,368,218 4.34 -5.86 6.72 14,078,952 2,145,466 11,933,486 -9,788,020 -1.09 -11.82 1.12 13,659,495 2,060,399 11,599,096 -9,538,697 -2.98 -3.96 -2.80
  34. U.S. Domestic Intermodal Traffic Growth 1988-2008
  35. Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions
  36. Impediments to Intermodal Growth Lack of availability of IRT service Use by mainly larger shippers Shippers concern for service Lack of knowledge about IRT by potential users Poor perceptions in the minds of many users Transit-time disadvantage of IRT vis-a-vis MC options Complexity, coordination, and image due to the multi-party nature of IRT Source: Harper and Evers, Transportation Journal, (Spring, 1993), pp. 31-45.
  37. Intermodal Ramp Closings by Region:1990-1997 9 3 8 2 6 5 8 4 3 8 9 7 11 10 11
  38. Priority Intermodal Projects In ISTEA “The purpose of this section is to provide for the construction of innovative intermodal projects” Type Number Percent Amount Percent A = Airport related 14 27.45 134.0 30.67 F = Freeway related 18 35.29 124.0 28.38 FT= Highway access to transit 4 7.84 37.9 8.67 G = Grade separation 8 15.69 86.1 19.71 IM= Intermodal freight related 5 9.80 39.0 8.93 N = Needs/corridor studies 2 3.92 15.9 3.64 Total 51 100.00 436.9 100.00
  39. Shippers Perceptions Shippers perceive IM service to be poor, but few actually measure it and/or compare total cost of IM to other options Survey of Manufacturers, Wholesalers, and Retailers in Arkansas, Missouri, and Oklahoma Sample size = 277 Importance of transit time reliability (TTR) 4.3* Measurement of transit time reliability 57.3% Use of TTR to aid in selecting carriers 13.1% Use of TTR to compute inventory costs 0.0% * Scale of 1 to 5, 5 = Very Important
  40. Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions
  41. 2AR VW  Q* = Determining EOQ Total Cost = OC + CC OC = Order Placement Cost = A(R/Q) CC = Inventory Carrying Cost = 1/2(QVW) Where: Q = Optimal Order Quantity (EOQ) A = Cost of placing an order R = Annual Rate of use V = Value per unit W = Carrying cost as a percentage of average value of inventory EOQ = Source: Coyle, John J., Edward J. Bardi, and C. John Langley, Jr., The Management of Business Logistics, 6th edition (St. Paul, MN: West Publishing, 1996).
  42. Total Cost Analysis Total Cost = OC + CC + Tr + PC + It + SS + Other Where: OC = Order Placement Cost CC = Inventory Carrying Cost Tr = Transportation Cost PC = Product Cost It = Inventory in Transit Cost SS = Safety Stock Cost
  43. Total Cost Analysis Total Cost = OC + CC + Tr + PC + It + SS + Other OC = A(R/Q) CC = 1/2(QVW) Tr = rRwt/100 PC = VR It = iVRt/365 SS = BVW Where: Q, R, A, V, W = As previously defined r = Transportation rate per 100 pounds (CWT) wt = Weight per unit i = Interest rate or cost of capital t = Lead time in days B = Buffer of inventory to prevent stockouts
  44. SDt =  (t)(SD)2 + (D)2 (St)2 Computing Safety Stocks Where: SDt = Units of Safety Stock required to satisfy 68 percent of sales levels during lead time t = Average delivery time St = Standard Deviation of delivery time D2 = Average Demand SD = Standard Deviation of Demand
  45. Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions
  46. Impact of Transit Time on Intermodal Shippers Examples Basic Assumptions: Annual Use = 100,000 units Cost to place orders = $30.00 Carrying cost = 20 % Interest expense = 10 % Service Level = 97.5 % Variation in Daily Sales = +/- 10 % Distance = 1000 miles Rate/Mile Transit Time MC = $ 1.20 3 days +/- 1 day IM = 1.00 5 days +/- 2 days
  47. Impact of Transit Time on Intermodal Shippers Extreme Value Goods Computers Specific Assumptions: Weight per unit = 50 lbs Value per unit = $1500.00 Value per pound = $30.00 Economic Order Quantity = 141 Shipments per year @ EOQ = 707 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 800 3,750 120,000 150,000 123,288 166,831 563,869 800 3,750 120,000 125,000 205,479 330,816 785,045
  48. Impact of Transit Time on Intermodal Shippers High Value Goods Televisions Specific Assumptions: Weight per unit = 50 lbs Value per unit = $350.00 Value per pound = $7.00 Economic Order Quantity = 293 Shipments per year @ EOQ = 342 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 800 3,750 28,000 150,000 28,767 38,927 249,444 800 3,750 28,000 125,000 47,945 77,190 281,885
  49. Impact of Transit Time on Intermodal Shippers High Value Goods Microwave Ovens Specific Assumptions: Weight per unit = 30 lbs Value per unit = $150.00 Value per pound = $5.00 Economic Order Quantity = 447 Shipments per year @ EOQ = 224 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 1,333 2,250 20,000 90,000 12,329 16,683 141,262 1,333 2,250 20,000 75,000 20,548 33,082 150,879
  50. Impact of Transit Time on Intermodal Shippers Medium Value Goods Mattress and Box Springs Specific Assumptions: Weight per unit = 100 lbs Value per unit = $250.00 Value per pound = $2.50 Economic Order Quantity = 346 Shipments per year @ EOQ = 289 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 400 7,500 10,000 300,000 20,548 27,805 365,853 400 7,500 10,000 250,000 34,247 55,136 356,882
  51. Impact of Transit Time on Intermodal Shippers Medium Value Goods Lamps Specific Assumptions: Weight per unit = 10 lbs Value per unit = $20.00 Value per pound = $2.00 Economic Order Quantity = 1225 Shipments per year @ EOQ = 82 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 4,000 750 8,000 30,000 1,644 2,224 42,618 4,000 750 8,000 25,000 2,740 4,411 40,901
  52. Impact of Transit Time on Intermodal Shippers Medium Value Goods Insect Spray Specific Assumptions: Weight per unit = 25 lbs Value per unit = $40.00 Value per pound = $1.60 Economic Order Quantity = 866 Shipments per year @ EOQ = 115 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 1,600 1,875 6,400 75,000 3,288 4,449 91,012 1,600 1,875 6,400 62,500 5,479 8,822 85,076
  53. Impact of Transit Time on Intermodal Shippers Medium Value Goods Kitchen Appliances Specific Assumptions: Weight per unit = 250 lbs Value per unit = $500.00 Value per pound = $2.00 Economic Order Quantity = 245 Shipments per year @ EOQ = 408 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 160 18,750 8,000 750,000 41,096 55,610 873,456 160 18,750 8,000 625,000 68,493 110,272 830,515
  54. Impact of Transit Time on Intermodal Shippers Low Value Goods Empty Cases of Glass Containers Specific Assumptions: Weight per unit = 10 lbs Value per unit = $5.00 Value per pound = $.50 Economic Order Quantity = 2450 Shipments per year @ EOQ = 41 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 4,000 750 2,000 30,000 411 556 33,717 4,000 750 2,000 25,000 685 1,103 29,538
  55. Impact of Transit Time on Intermodal Shippers Low Value Goods Xerox Paper Specific Assumptions: Weight per unit = 50 lbs Value per unit = $25.00 Value per pound = $.50 Economic Order Quantity = 1095 Shipments per year @ EOQ = 91 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 800 3,750 2,000 150,000 2,055 2,781 160,585 800 3,750 2,000 125,000 3,425 5,514 139,688
  56. Impact of Transit Time on Intermodal Shippers Low Value Goods Xerox Paper Specific Assumptions: Weight per unit = 50 lbs Value per unit = $25.00 Value per pound = $.50 Economic Order Quantity = 1095 Shipments per year @ EOQ = 91 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM 800 3,750 2,000 150,000 2,055 2,781 160,585 800 3,750 2,000 125,000 3,425 5,514 139,688
  57. Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions
  58. Intermodal Potential Ton-Mile Market Shares by SCTG and Value SCTG Description Value % RR % MC % IM % Othr 0 All commodities 0.31 38.4 38.5 2.1 21.0 38 Precision instruments 26.87 0.0 60.2 0.0 39.8 37 Transportation equipment 11.79 31.1 52.5 2.0 14.4 21 Pharmaceutical products 11.34 0.0 76.7 0.4 22.9 35 Electronic and electrical equip 10.98 2.2 80.2 2.7 14.9 9 Tobacco products 6.83 0.0 92.1 0.0 7.9 34 Machinery 4.18 3.9 80.5 5.9 9.7 30 Textiles, leather, and articles 4.13 2.2 83.1 0.0 14.7 36 Motorized vehicles (incl. parts) 2.91 25.3 55.5 10.0 9.2 39 Furniture, mattresses, lighting 2.44 1.8 88.4 2.7 7.1 40 Misc. manufactured products 1.87 4.4 75.3 1.4 18.9 29 Printed products 1.67 0.7 76.3 1.6 21.4 5 Meat, fish, seafood, preparations 1.16 2.8 92.3 0.3 4.6 23 Chemical products etc. 1.14 15.3 72.4 7.6 4.7 24 Plastics and rubber 1.07 32.0 59.6 4.2 4.2 33 Articles of base metal 1.07 11.6 72.7 0.9 14.8 43 Mixed freight 1.04 0.0 92.6 1.5 5.9
  59. Intermodal Potential Ton-Mile Market Shares by SCTG and Value SCTG Description Value % RR % MC % IM % Othr 28 Paper or paperboard articles 0.67 5.8 84.3 2.8 7.1 8 Alcoholic beverages 0.54 39.6 49.6 8.2 2.6 6 Milled grain and bakery products 0.53 33.5 59.6 3.0 3.9 1 Live animals and live fish 0.52 0.0 94.6 0.0 5.4 7 Prepared foodstuffs, fats and oils 0.44 27.0 63.5 3.9 5.6 32 Base metal, primary/semifinished 0.43 30.9 57.5 1.2 10.4 27 Pulp, newsprint, paper,etc. 0.35 42.3 52.3 3.0 2.4 20 Basic chemicals 0.27 50.8 24.7 1.3 23.2 3 Other agricultural products 0.25 18.7 41.0 1.8 38.5 26 Wood products 0.19 36.7 53.9 3.3 6.1 4 Animal feed and animal products 0.15 28.9 57.1 4.2 9.8 18 Fuel oils 0.10 9.1 25.8 0.0 65.1 41 Waste and scrap 0.09 32.5 49.1 2.1 16.3 10 Monumental or building stone 0.09 4.4 87.1 0.0 8.5 19 Coal and petroleum products 0.08 35.6 28.5 0.0 35.9
  60. Intermodal Potential Ton-Mile Market Shares by SCTG and Value SCTG Description Value % RR % MC % IM % Othr 19 Coal and petroleum products 0.08 35.6 28.5 0.0 35.9 22 Fertilizers 0.08 55.4 23.4 0.0 21.2 14 Metallic ores and concentrates 0.07 33.6 4.6 0.4 61.4 2 Cereal grains 0.06 58.0 9.1 0.4 32.5 31 Nonmetallic mineral products 0.06 15.4 69.7 1.8 13.1 13 Nonmetallic minerals 0.02 39.3 31.2 0.0 29.5 25 Logs and other wood in the rough 0.02 0.0 75.3 1.9 22.8 15 Coal 0.01 81.0 1.7 0.0 17.3 17 Gasoline and aviation turbine fuel 0.01 2.1 21.5 0.0 76.4 11 Natural sands 0.00 18.9 67.2 0.0 13.9 12 Gravel and crushed stone 0.00 11.8 62.8 0.8 24.6
  61. Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions
  62. Conclusions Intermodal Rail-Truck (IRT) has been growing rapidly However, it is barely 2% of the ton-mile market share IRT offers many advantages Many impediments to realizing growth potential One major problem is shipper perceptions of IRT service Related is that shippers do not actually measure cost of service Rate advantage may more than offset costs of poor service Shippers should use total costs to select shipment mode
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