As US truck capacity tightens, reefer shippers board the rails

Union Pacific Railroad.

In another electronic logging device ripple, the US truck transport capacity shortage is creating an opportunity for cold-chain train transport, and the railroads may be able to seize the day. Photo credit: Union Pacific Railroad.

Tight US truck capacity and rising rates marked the first quarter of 2018, and the outlook for the remainder of the year is more of the same, if not worse.

That is the dilemma for shippers of perishable goods, especially food, who are seeing growing demand from buyers on the one hand, tempered by a capacity crunch on the other.

“We are seeing a very robust economy,” confirms Canadian National Railway’s Dan Bresolin, assistant vice president, intermodal international, who says demand in the cold chain sector is growing in Canada, the United States, and overseas.

Electronic logging device: affecting capacity

However, the impact of driver shortages coupled with the US Federal Motor Carrier Safety Administration’s electronic logging device mandate is hurting capacity in the US trucking industry, he said.

It is also creating a trickle-down effect on chassis supply in inland terminals, with chassis not being returned to the terminals in a timely manner.

“The traditional flows in and out of the terminal are not the same now,” Bresolin said, and the impact is spreading throughout the supply chain, with shippers of time-sensitive products feeling the impact disproportionately hard.

Weather-related issues are also impacting the cold chain. Last year’s hurricanes slammed fruit producers in Florida and the Caribbean, prompting a sudden change in sourcing to European suppliers.

“You go from a refrigerated truck moving fruit out of Florida to the north, to containers coming in to East Coast ports loaded with fruit from Europe,” Bresolin said.

Girish Nair, CN’s director of order and shipment management, said that although a sudden change such as this is easier to accommodate when shipping dry goods, it is not as easy with reefer shipments “because you have to make sure that whatever gateway you choose, it has the full set of competencies to support refrigerated cargo.” That means ample reefer plugs, equipment, cold storage, and more, which is why CN continues to invest in cold chain capabilities at all of its gateway ports, Nair said.

Port of Vancouver: CN model for the cold chain age?

Canada’s Port of Prince Rupert is one gateway port that is getting a lot of investment from CN, ranging from reefer plugs to on-dock reefer racks.

According to Bresolin, “The long-term plan is to offer the same product at Prince Rupert that we do at the Port of Vancouver.”

Currently, CN is working with a group of customers on trials out of Prince Rupert to various markets, including Toronto, Montreal, and Chicago.

“The trials are going very well,” Bresolin said, and the long-term plan is to launch regular service out of Prince Rupert, perhaps as soon as late summer.

Nair said that close to C$10 million (US$8 million) has been invested toward gensets to power ocean carriers’ reefers while on CN’s network. The gensets also create “state-of-the-art monitoring capabilities, which not only support customers’ evolving cold chains, but help CN stay ahead of the curve on regulatory compliance requirements.”

That same forward thinking applies when working with ocean carrier partners and with customers, he said.

As carriers explore new products and services to support the cold chain, CN must likewise assure technology integration and operability. For example, when CMA CGM introduced its Aquaviva service — an innovative marine container designed for transporting live seafood in their natural water environment — CN ensured to have the right solution deployed to augment the operational viability of that marine equipment [Aquaviva] on rail.”

The same approach is extended toward customers, Bresolin explained. “We work directly with the beneficial cargo owners to understand their true demands, and the true forecasts for their goods.”

Nair emphasizes that point. “The Class I railroads in Canada offer shippers a protective service end-to-end for their perishable cargo. We are engaged at the field level, at the ports, the terminals, doubling up resources where we need to in order to protect the critical cold chain.”

Next-gen rail: cold chain railroads

At Union Pacific Railroad, the cold chain strategy is likewise very customer-centric.

“We recognize food and beverage shippers have specialized needs and require new and innovative approaches to safely and efficiently ship their products,” said Mike Parker, assistant vice president for food and beverage products.

“The enhancements we’ve made, like purchasing the Railex assets, launching Cold Connect, and growing the Food Network, are aimed at providing the kind of high-touch, expedited service that helps these shippers get to market in a very complex and time-sensitive supply chain,” he said.

Cold Connect is a multimodal platform for distribution of food and beverages consisting of first- and last-mile truck delivery with expedited rail service in between, all while maintaining cold chain integrity.

“Cold Connect has helped us break away from some of the previous conceptions about using rail to ship food and beverages,” Parker said. “Traditionally, rail has held a more specialized niche in the industry for items such as heartier produce and frozen goods — items that don’t spoil as easily. But with innovative solutions like Cold Connect, shippers can take advantage of rail for a wider variety of perishable products while delivering a truck-like — or better than truck-like — experience.”

Parker also pointed to the uncertainties associated with the tightening truck market. “It’s difficult to see what the new normal will be in regards to truck capacity. What is certain is that rail is well-positioned to provide a solution,” he said.

Contact Lara L. Sowinski at lsowinski@gmail.com.

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