Fast Lane Transportation

Fast Lane Transportation

With the economic carnage of 2009 behind us, the transportation industry now must sort out the most effective way to manage the probable improvement in our economy. Unfortunately, I believe our industry may be among the last industries to fully recover for a variety of reasons. At the top of the list is overcapacity, which will hamper profitability in almost all segments of our industry because of the costs associated with redundant assets, whether it’s laid-up ships, sidelined railcars, parked trucks or stored containers.

Specifically with regard to containers, finding the right balance between preserving cash and maintaining an adequate supply of available containers will be a challenge. With marine terminals and many portside municipalities restricting the storage of empty containers, one strategy to minimize costs is to relocate equipment to less expensive inland locations rather than storing assets in costly and congested port areas.

This tactic would be particularly appropriate for equipment not expected to go back into service within the next 12 months. The lower cost of inland storage would more than offset the cost of transportation to the inland site.

The challenge in this plan is accurately predicting the velocity at which idle assets will return to service. Coming to the realization that containers meant to earn revenue-carrying freight are better stored at a remote location is a difficult process for any freight professional. But the economic benefits can be considerable from lower storage fees and deferring maintenance and repair on equipment designated out of service for an extended period.

There are risks in waiting too long to use remote location storage. With only a modest increase in freight movement during the 2009 peak season, container utilization will likely drop again from present usage.