CUSTOMERS KEEP LTL CARRIERS OFF RAILROADS

CUSTOMERS KEEP LTL CARRIERS OFF RAILROADS

National less-than-truckload carriers, which fought and won the right to raise the cap on their use of intermodal during last year's Teamster's strike, are

finding a new limit on its use - the demands of their customers.

Each of the four long-haul LTL carriers insists that rail will continue to play a role as they carry out programs to cut delivery times. But none are close to the 28 percent level they won in the contract.For example, CF MotorFreight of Palo Alto, Calif., has adopted a program it calls Business Accelerator. When getting approval of the new system from the Teamsters, the company agreed to hold its use of intermodal to 17.2 percent of its operations.

CF and its major competitors - Yellow Freight System Inc. of Overland Park, Kan., Roadway Express Inc. of Akron, Ohio, and ABF Freight System Inc. of Fort Smith, Ark. - are sending trucks out on scheduled departures rather than waiting for full loads, increasing their just-in-time reliability for shippers. ABF has placed only 4 percent to 5 percent of its freight on the rails.

"We've always thought that given the service demands of customers, the use of rail intermodal by the long-haul LTL carriers is going to be limited," said H. Perry Boyle Jr., an analyst with Alex Brown & Sons of Baltimore. "The CF cap of 17 percent probably isn't going to be a limiting factor under their new business accelerator model."

The national LTL carriers are all moving toward more direct hauls between terminals, rather than sending freight through breakbulk hubs. They also are implementing or increasing the use of "sleeper teams" - two drivers who can drive a total of 16 hours a day, making better time than railroads in most lanes.

Douglas Rockel, an analyst with Furman Selz in New York, estimates that a

sleeper team can make the trip between Chicago and the West Coast a day or more faster than railroads. Congestion, more than actual transit time, is the problem, he said.

"They get a truck dispatched, loaded and headed in the right direction before the train can even leave the yard," he said. "If we started a train and truck in Chicago, fired a starting gun, the train should win. But that's not reality ."

The LTL carriers have primarily used intermodal in Western lanes, and they and their Western partners insist that rail can be competitive, even with

sleeper teams - in the railroads' best lanes.

"I don't know they can beat them (sleeper teams) hour for hour," said Ed Zajac, assistant vice president for the Burlington Northern & Santa Fe Railroad Co. "But depending on the sort time for the facility, we're very, very competitive."

Mr. Zajac said one common element of the national LTLs' improved service

plans - sending trucks out based on scheduled departures rather than load factors - is helping them mesh better with rails, and will lead to an increase in intermodal.

"It has resulted in them probably putting a little more trailer volume into the system, at least right now," he said. "We've been part of the program. They've made an emphasis we have to perform, and that's what we're doing."

Complaints about reliability of rail, rather than its speed, have caused the greatest friction between railroads and LTL carriers, according to both trucking and railroad executives.

"In certain (high-volume) corridors, reliability is every bit, if not more important, than speed," said Mike Chapman, senior assistant vice president of intermodal and automotive operations for Union Pacific Railroad. "I think as the rail carriers learn the customer requirements, they will become more and more dependent on the intermodal product." He said that excess capacity among truckers is another major factor limiting the move to intermodal.

The national LTL carriers say they are not abandoning their plans for the less-expensive intermodal.

"Our goal is not to use a certain percentage of rail service or a certain percentage of sleeper service," said Doug Kline, spokesman for CF. "Our goal is to meet our customer demands, and then find the best operational mode to fit that. In many cases that will be over-the-road service, either sleeper or meet-and-turn operations. In other cases it will be a combination of rail and road."

"When we approach the railroads to discuss both speed and reliability, they've been very receptive to work with us," said John Hyre, spokesman for Roadway Express. He said many lanes will have freight move by both rail and road.

"Our mode is selected based on service standards for each particular shipment," he said.