60-foot rail container promises savings

60-foot rail container promises savings

Canadian Tire's new 60-foot container is loaded onto a chassis hauled by a day cab to comply with Canadian road regulations.

Roughly 20 years after they pioneered the 53-foot intermodal container, Canadian Tire and Canadian Pacific (CP) Railway — the country’s largest retailer and second-largest railway, respectively — have unveiled another innovation that promises to reduce shippers and transportation providers’ transportation costs and increase efficiency: the 60-foot intermodal container.

The containers — or container, since only a single prototype is in circulation — cost more to manufacture, are only regulated for use in Alberta and Ontario, require larger chassis, must be pulled by a day cab in order to comply with existing tractor-trailer length limits, and will require some significant regulatory overhaul. But the addition of 7 feet and four additional pallet locations to the industry-accepted 53-foot container means a 13 percent payload increase that can only revolutionize the industry, CP and Canadian Tire say.

“I can’t see how people would ignore it when you’re considering the type of savings we’re seeing,” Gary Fast, Canadian Tire’s associate vice president of domestic transportation operations, told JOC.com. “Once people see this, it’s going to be a no-brainer. It’s going to be hard not to take a look at it.”

One container is just a fraction of Canadian Tire’s 6,500-strong 53-foot fleet, but it’s a start, Fast said. It’s the start of a 15-year conversion process for Canadian Tire and a historic change for the industry, he said.

For now, “this is most attractive to big-box retailers because of the nature of their freight,” Jonathan Wahba, CP’s vice president of sales and marketing, told JOC.com. That is high-volume, low-weight shippers like Canadian Tire, which moves more than 100,000 varieties of automotive, sports, leisure, and home products every year to more than 500 stores in Canada. Such cargo owners tend to run out of container space before they exceed legal weight limits, or “cube out” before they “weigh out”. US retailer Wal-Mart has been developing its own so-called “supercube” trucks that would add 30 percent more capacity, but face the same cost and regulatory challenges as Canadian Tire’s new 60s.

Like the 53-foot container they introduced in 1994, Fast and Wahba said the newer, larger containers will have wider appeal as more shippers become acquainted with them, transportation providers adapt, and localities reassess regulations.

Canadian Tire’s first 60-foot container made its maiden voyage to CP’s intermodal terminal in Calgary last Wednesday before embarking for the first time on Alberta’s roadways. Today, it’s the only one of its kind in North America, but Fast told JOC.com Canadian Tire plans to order roughly 100 more by the end of the year. “Ideally, by the third quarter,” he said.

Although the 60-foot containers are more expensive to manufacture, Canadian Tire could not provide an exact figure on the cost of the new boxes. “Theoretically, a 13 percent increase in space means a 13 percent increase in cost," said Fast. That translates to roughly a few hundred dollars more per container.

That won’t always be the case, though, Fast said. In the first place, “13 percent more space isn’t 13 percent more material, because you still have your ends. You’re just stretching out the two panels, the roof, and the floor.”

Second, the cost now is largely inflated because the containers are a new product. The first and only one on the market was built by hand by the Alabama-based American Intermodal Container Manufacturing Company. The next 100 will more than likely be built by one of the larger automated manufacturers in China.

The new containers also require shippers and railways invest in new chassis: either 60-foot chassis or expandable ones, which can extend from 53 to 60 feet in a matter of seconds.

“The chassis are the largest single cost outside of the containers themselves,” said Wahba. Like the cost of the containers, the increased cost of the new chassis is hard to determine, as so few have been manufactured, he said. “I would suspect, like any piece of capex [capital expenditure], the more automated the manufacturing becomes, the less expensive the product becomes.”

Railways like CP won’t have to necessarily configure terminal operations, but they will have to bear an increase in fuel costs as 60-foot containers stand to add more weight to trains. That’s still a long time off, Wahba said, given their limited use and the fact early adopters are bound to be mostly retailers moving light-weight cargo.

“There is only one of these. This is a prototype. There’s a lot we don’t know yet about what will impact our business, what a mass conversion will mean,” Wahba said.

But cost is not the highest hurdle 60-foot containers face, said Wahba. It’s the regulatory overhaul that will need to take place so the containers can move freely on road and rail.

It took two years for Canadian Tire and CP to get the appropriate permitting and approvals to introduce the first 60-foot container, which can only travel in the provinces of Alberta and Ontario. And then, only trucks with day cabs and not longer sleeper cabs, can haul the boxes, so as to avoid exceeding the legal length limit on Canadian roads.

“The rate and pace of change is going to be determined by how quickly the communities and governments and regulatory agencies can move to adopt to a 60-foot container,” said Wahba. “It’s not 'can CP and Canadian Tire figure it,' it’s 'how quickly can the regulatory agencies adapt to a new configuration.'”

That said, Canadian Tire and CP remain convinced 60-foot containers are the “next evolution” of the 53-foot containers they introduced to the market two decades ago. They face the same hurdles this go around and are expected to clear those same hurdles.

“If you think back to 1994 when the industry started to move to 53s, it was a long slow process because obviously the capex requirements for shippers, railroads was all very significant,” said Wahba.

“Obviously it’s going to be a long journey. Innovation is hard work. It’s not easy,” said Fast. “But we’re excited and proud to put this concept forward. Exciting times.”

Contact Reynolds Hutchins at reynolds.hutchins@ihsmarkit.com and follow him on Twitter: @Hutchins_JOC.