Packaging Express Rail

Packaging Express Rail

Copyright 2003, Traffic World, Inc.

UPS isn''t satisfied slashing full days off its cross-country express ground service. It has set its sights on the much more elusive I-95 corridor in the Northeast.

The express delivery giant is conducting a month-long test with Norfolk Southern using Amtrak''s Northeast Corridor between Elizabeth, N.J., and Washington, D.C., to find out if rails can compete with trucks for premium service in the congested region. At the same time, NS is watching the ambitious test to see if it can shave time off its premium service between Atlanta and New York, now a 30-hour run on its own system.

"We''ve identified the fact that trucks have an overwhelming market share in that lane," said NS spokesman Rudy Husband, "and any service that we can introduce that would entice shipment by rail instead of truck is something we take a serious look at."

Husband insists the trains are not UPS trains but "premium service" trains and would not release the identity of other customers.

Ten test trains are to run between New York and Atlanta from Oct. 17 to Nov. 12.

The test marks the first time that UPS has attempted to compete along the crowded NEC, which runs between Washington, D.C., and Boston, for premium intermodal freight that moves over the road along I-95. It is the only section of track Amtrak runs over that it actually owns; the freight railroads lease Amtrak the track it uses for its intercity service.

The stakes also are high for Amtrak: UPS already pays the freight railroads more than $1 billion a year to move packages and the financially strapped passenger carrier would no doubt like a piece of the action.

"It''s revenue but it also fosters a spirit of cooperation" between Amtrak and NS, said Amtrak spokesman Cliff Black. "Amtrak needs NS every bit as much as they need us."

Some believe that cooperation is more important than any revenue Amtrak might get from UPS and NS. The railroad is fighting attempts by Congress to cut or even eliminate its subsidy and Amtrak chief David Gunn also is pleading for help with rail infrastructure improvements.

The presence of UPS on the Northeast tracks "really underscores the need for deferred maintenance along the NEC. Otherwise (Gunn''s) argument for Amtrak funding is going to be a moot one," said Donald Itzkoff, a partner with law firm Foley & Lardner. "David Gunn has made a significant effort to maximize revenue and utilization of existing assets all across the company, and looking at the (NEC) is clearly a principle component of their system and business plan."

Using Amtrak''s NEC will allow UPS to avoid heavy road traffic along I-95, but it also likely will require NS to move at higher speeds during the day. Amtrak currently restricts freight trains to 30 mph in the daytime, Black said.

"If we can get (shipments) up and down the corridor during the day, it would enhance the flow of packages from the New Jersey-New York area and Philadelphia, which is one of our international air hubs," said UPS spokesman David Bolger. "Rather than having a trailer leave Dulles (airport outside Washington) and spend two hours on the interstate, we take it off the road and put it on train and just have the short haul.

"I think up and down the NEC there are opportunities that could be presented by this service."

For UPS, the test is part of a national effort to improve delivery standards along its entire U.S. ground distribution network. The company recently reduced transit times in its ground network on about 60 major lanes.

The changes amount to the largest time-in-transit improvement effort for UPS since 1998 when it became the first carrier to offer money-back guarantees on its ground service. "Each modification has slashed a full day off the previous guaranteed delivery time without any change in customer rates or pickup and delivery hours," UPS said.

One of the biggest improvements was in rail service between Los Angeles and New York, where Union Pacific Railroad helped UPS guarantee a four-day service instead of five. That came at the expense of Burlington Northern Santa Fe Railway, which previously had the UPS L.A.-New York rail contract.

UPS said the enhancements on the ground came through improvements in its technology. Extending tracking to ground shipments and giving customers the ability to generate their own shipping labels gave the company more information about each package''s movement, allowing the company to model more efficient transport paths. UPS also recently deployed a suite of package routing technologies to improve load balance while speeding the loading of delivery trucks.

FedEx sees UPS''s effort to cut transit times as a response to FedEx''s own advances, saying they long have had four-day, coast-to-coast service. "UPS is playing catch-up, in our view," said John Payne, FedEx Ground''s director of transportation.

FedEx uses the freight railroads for only 3 to 4 percent of its ground service, said FedEx Ground spokesman Perry Colosimo, preferring to deploy its more than 900 driver teams over the road. UPS does not disclose its specific rail use.

Itzkoff, a former deputy administrator with the Federal Railroad Administration, said regulators will have a keen interest in the test. "The one thing to emphasize is that safety is paramount, as Amtrak has clearly underscored. And the maintenance and capital investment requirements of the corridor absolutely need to be met, or else nothing is going to get through in a timely and efficient manner," he said. "It doesn''t matter if it''s time-sensitive freight or high-speed passengers."