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Railex Speeds Goods to Market in Record Time by Editors Capital Press, December 8, 2006

After a period in this country of considerable consolidation in the rail industry and when communities have fewer competitive choices or lost their railway services completely, there is a positive example of how some rail services can still be depended on to get Western agricultural products to their markets.

Most importantly, they can get there on time.

They also guarantee there will be enough temperature-controlled railcars to ship the goods, especially at a time when farmers who depended on trucks to ship their perishable vegetables are competing with Christmas tree producers and others who also have time-sensitive markets for the holiday season.

Railex LLC in Wallula, Wash., has shortened to five days - or fewer - the usual 11 to 20 days it usually takes to travel to the East Coast. The key is that the train only stops once, in Chicago, to change crews.

Farmers who want to ship their apples, pears, potatoes and onions can now deliver by truck to a Railex warehouse in Wallula and load on trains to travel on Union Pacific and CSX railroads to Rotterdam, N.Y., to a new 212,000 square-foot facility there.

From there products can be shipped to retailers or other distribution centers, or be kept in storage as needed.

Railex is using two 55-car unit trains that guarantee the five-day delivery. The cars load in 36 hours and can unload within 24 hours. As one train is sent east, the other heads west.

Each of the railcars replaces trucks on the roads and saves about 5 million gallons of diesel fuel a year, according to the Yakima Valley Growers-Shippers Association.

Paul Esposito, Railex's senior vice president of sales and logistics, explained in press releases that "The mile-long train, which consists of 55 new, 64-foot ARMN railcars ... is equipped with fresh-air exchange, global positioning system tracking and temperature control, (and) are unloaded 14 cars at a time inside the cooled facility, which preserves the cold chain."

Option welcomed

Western agricultural producers welcomed this option to get their products east sooner, and the timing couldn't be better.

Earlier this month a report from the Council of Supply Chain Management Professionals said logistics costs for transportation in 2005 were at record levels in this country, rising to $1.183 trillion in 2005, "a result of soaring fuel costs, strained capacity, driver shortages and the costs of meeting security requirements," according to www.foodlogistics.com.

Quoting Rosalyn Wilson, who presented the annual State of Logistics Report for CSCMP, the website article said, "Wilson painted a bleak picture of the U.S. logistics landscape, pointing out that logistics costs rose from 8.8 percent to 9.5 percent of the nominal gross domestic product. This was an increase of $156 billion over 2004, nearly double that year's rise and the largest year-to-date change in more than 30 years."

The article added that logistics costs rose more than 50 percent during the last 10 years, mostly due to trucking costs and the higher diesel prices. Transportation costs jumped 14.1 percent over 2004 levels, the article stated.

Traffic congestion, insurance costs, an aging fleet, a driver shortage and tighter control of hours driven also affected the trucking industry.

Wilson predicted there will be 70 percent more trucks by 2020. The article added this "has nearly doubled in the last 25 years and yet we increased roadway capacity by only 5 percent. We are not keeping pace with the need."

Security concerns and even natural disasters can also throw a wrench into the transportation system and raise the costs and challenges.

Yet the CSCMP does point out that America's supply chain is still considered a lot more efficient than many other nations in relation to what logistics cost compared to gross domestic product.

"In 1980, logistics represented 17.9 percent of U.S. GDP," stressed CSCMP, compared to 9.5 percent last year.

Meanwhile, the transportation costs in China and India are 22.3 percent and 17 percent of gross domestic product.

"It is estimated that the total logistics costs associated with delivering a $3.60 box of cereal from the field to the consumer's table is about $.37 in the U.S. The net retail profit is about $.05," said CSCMP on its website.

America may be efficient, but farmers can't afford higher transportation costs when their margins of profit are so tight.

In light of the report and the challenges facing the trucking industry, it is even more important that farmers have not just more options but more efficient, cost-effective ones that help them get their products to their customers in a timely manner.

Railex invested about $20 million in its new facilities in Wallula and Rotterdam, and the Port of Walla Walla used state loans, grants and other sources of funds to help with improvements there.

Hopefully the leadership shown by Railex to make these investments and guarantee farmers better transportation of their products will also spur other companies to look at ways to overcome transportation challenges and keep costs manageable.

Supply chain numbers

$1.183 trillion: 2005 U.S. cost of logistics.

9.5: Percent of gross domestic product spent on logistics.

12: The U.S. expenditures are larger than the national GDP of all but this number of countries.

11.3 million: U.S. workforce in transportation-related jobs.

8.6: percent of U.S. total labor force involved in transportation.

4.36 trillion: ton-miles of freight moved in the U.S. in 2003, equivalent to shipping the State of Liberty around the world more than 1.16 million times.

3.97 million: Miles of highway in the U.S.

99,000: Miles of rail (Class 1).

25,000: miles of navigable channels.

674,000: Number of interstate motor carriers.

798: Number of marine vessel companies.

14: Number of major air carriers.

7: Number of railroads (Class 1).

$1.5 billion: value of containerized shipments that pass through U.S. ports each day.

20: Percent of all inbound U.S. container shipments that go through the Port of Long Beach, Calif., each day, all of which must pass through one traffic signal.

20: Percentage of all U.S. container shipments that come to a halt when that light is red.

Source: Council of Supply Chain Management Professionals