It’s not enough that urban planners are messing up passenger travel in cities. Now they want to “reduce urban impacts” of freight transport. This report, with its discussion of “modal shifts” and “Freight villages,” reads like someone took a smart-growth plan for rail transit and transit-oriented developments and simply did a bunch of finds-and-replaced.
The report includes numerous comparisons of the costs of truck vs. rail freight. Rail is less expensive than trucks–if you have high volumes moving from point A to point B. But rail simply cannot compete with trucks for low volumes moving from many origins to many destinations. That’s why most rail shipping today is coal, grain, or containers–all things that can go from one of a few origins to one of a few destinations.
The fundamental problem with this report is the same as is found in most anti-auto reports: it treats trucks as the problem rather than treating the impacts of trucks. Are trucks noisy? Yes, but muffling the noise works better than trying to limit truck traffic. Do they pollute? Yes, but we know that pollution can be cleaned up at the exhaust pipe more effectively than by reducing miles of travel. Do trucks add to congestion? Sure, but treating congestion with variable-priced roads, signal coordination, and similar road improvements works better than trying to reduce driving.
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Europe had a plan to reduce freight movements by truck. That plan worked so well that 75 percent of freight in Europe goes by truck (compared with 27 percent here), while only 16 percent goes by rail (compared with 40 percent here). A major problem with government planning is it often produces the opposite of the intended result. Instead of trying to dictate how freight is moved, transportation planners should limit their work to making sure the infrastructure freight needs is in good condition.
“making sure the infrastructure freight needs is in good condition ” is heavy lifting and planners don’t lift anything heavier than a 300 page report. Check out the job descriptions of the the Oabamcare planners.
Randall:
I agree the report is probably jargonisitic nonsense, but do not agree with your conclusions.
Rail freight has an economic advantage over trucks for all movements of at least carloard size lot (50 tons or a cube out of the car), where at least 4 to 6 cars can be gathered moving in the same general direction from one or multiple shippers. The same directional movement is only required for each segment of the rail journey, as cars can be remixed by destination at multiple yard nodes along the journey. This has two caveats. (1) Direct speed of movement is not excessively important for the shipment, as point-to-point truck movement is inevitably faster and will capture all low volume business where speed is of the essence. (2) Existing capacity in the rail system exists for additional marginal movements, as rail must pay its own capital out of pocket, where trucks piggyback on “free” roads at a low incremental cost. To demonstrate, there are shippers who find it worthwhile to ship individual carloads of material across a metropolitan area between two factories. For example, waste paper at a carboard box factory might be packed up and returned to the paper mill, or steel plates might be sent from a mill with a blast furnace to a specialized rolling mill by rail, or fuel oil and propane might be sent from a remote oil refinery in a rural area to a local oil dealer’s yard in the same general area. In another move I know of, an auto crusher sends scrap metal by rail across a metro area by rail insead of trucks because he happens to be located on a rail line near the origin of a local freight, and the port from which he is exporting the scrap is located directly at the destination of the same freight. Another movement I know of sees cutting scrap from an auto-parts stamping plant sent across town to a blast furnace for remelting. As shipment length increases from sub-50 miles to say, 50-200 miles (still thought of as highly truck competitive), the number of examples multiplies.
For intermodal movement (containers or trailers on flat cars with truckload or less than truckload lots), rail can again compete in lanes as short as a few hundred miles if capacity exists on its system and volume exists to fill out a reasonable sized train between the two gathering points. Short intermodal movements have been and are used for lanes like Toronto to Montreal, New York to Pittsburgh, Chicago to Columbus, or Savannah to Atlanta. Many more lanes could be developed to remove trucks off the highway if the capacity can be created in the system.
As you might note, the critical factor here is system capacity (tracks and yards), as railroads can only laydown and maintain tracks on which they can generate an economic return, which creates a systemic disadvantage to trucks since they are offered “at-incremental-cost” access to the entire road network via the fuel and tire taxes. In the interests of economic development afforded by access to rail freight since rail shipping is generally cheaper and makes business utilizing it more competitive, governments have generally found it worthwhile to lower the cost of capital to rail and its users by providing tax credits for infrastructure investment, and providing direct grants in a competitive environment for new sidings to new customers bringing jobs and factories or mines to a locale, effectively providing a partial leveling of the penalty faced by rail from providing its own infrastructure, and also reducing the level of road maintenance required by reducing truck movements from streets and highways.
“In the interests of economic development afforded by access to rail freight since rail shipping is generally cheaper and makes business utilizing it more competitive, governments have generally found it worthwhile to lower the cost of capital to rail and its users by providing tax credits for infrastructure investment, and providing direct grants in a competitive environment for new sidings to new customers bringing jobs and factories or mines to a locale, effectively providing a partial leveling of the penalty faced by rail from providing its own infrastructure, and also reducing the level of road maintenance required by reducing truck movements from streets and highways.”
Wow! That’s one long sentence [sic] loaded with passive voice and long strings of prepositional phrases.
The best part is the oxymoron, hidden in the terrible writing, that “since rail shipping is generally cheaper” government subsidizes it.
A little off topic, but today’s post reminds me of the “truck loops” is small urban towns in TX. Citizens complained about all the heavy truck traffic and noise coming through the heart of town. Hearing the complaints county judges, city officials, planners and traffic engineers decided to build circular highways around the outskirts of town for trucks to use to quickly bypass town. Of course, with the trucks went the cars and the downtowns effectively died. What is interesting is that the commercial businesses and commercial development didn’t suffer that much, it just moved out to the truck loop.
I think that land use policy decisions that promote desired activities are much, much more effective that attempts to eliminate perceived undesirable activities. Big trucks are a fact of life in the US. Sure, they suck because they block lanes on the highway, they stink, they’re noisy, but I can live with all of that as long as I can get the widgets that make my life comfortable at the drop of a hat. Sometimes what we perceive as undesirable is really a sign of desirability. Can I really be that upset about all the economic activity in my community?
If rail is supposedly less expensive for moving a variety of types of goods, then why is its market share so small? Are shippers really just so irrational that they can’t take advantage of opportunities for savings when they see them?
The same calls for modal shift are totally predictable. After all, they have worked so well for passenger traffic in our urban areas, why not double down on freight?
Great point. “Of course, with the trucks went the cars and the downtowns effectively died.”
The same planners/zoners and regulators who made downtown businesses impossible in many cities then blame the Walmarts on the outskirts of town (where the trucks can make deliveries to Walmarts) for “destroying downtowns.”
So now they will ban freight trains from “their” railroad tracks so that people don’t have to see or hear how products get from one place to another. Thus forcing the trains further away from where the goods are needed and exacerbating the problems they are allegedly trying to solve.
It is so ironic that the reason many cities are where they are is because they are where the roads and railroads and water met up.
Has anybody ever thought of making areas where people live, on quiet small streets, and placing the businesses along the major roads? That would keep the trucks and noise out of neighborhoods, and give the businesses easy access to the trucks and to customers. Maybe even a third area where industry could take place away from homes and retail businesses. Someone should try that.
Capital is a cost. Time is a cost. Both modes have their advantages depending on the situation. In fact, they often rely on each other. I would be curious to know how one accounts for that when calculating costs.
MJ:
If rail is supposedly less expensive for moving a variety of types of goods, then why is its market share so small? Are shippers really just so irrational that they can’t take advantage of opportunities for savings when they see them?
So small? In what terms? Total shipments? Tonnage? Ton-miles?
As a general rule of thumb, rail movement is always cheaper than truck movement if you have a carload of freight to move (= to 2-4 truckloads) due to inherent efficiencies in rail (steel on steel vs. rubber on concrete). However, you must also not be particularly concerned about movement time and thus inventory cost of good in transit, as rail is generally going to be slower than truck due to the need to aggregate shipments into trains and periodically resort the trains en-route by adding and subtracting cars. The carload requirement is also a big hurdle, as with the rise of trucks, many business adapted by changing their shipping and receiving patterns to much smaller truck size lots. Even the biggest truck today is still half the size of the smallest rail cars of 50 years ago. If a shipper insists on only sending out minute quantities of material, or only operating a business on a scale that is served by truck movement in an out, rail sized lots will make little sense.
As to whether shippers are irrational, they probably are when you look at how they decide to move goods. Generally the choice is (1) Internally owned truck fleet, (2) external trucking contractors, (3) rail.
They chose the internal fleet first because, well, once you own a bunch of trucks, you need to keep them full and busy. They chose external trucking outfits second because those companies perform more marketing than railroads, since it is far easier for a trucker to move one extra trailer load than for a railroad to build a new siding on each end of a shipment lane and possibly modify train operations to take on a new customer.
Railroads in general get all the business they can handle by sitting back and letting existing customers call them up and offer new traffic and new plants to serve. The large railroads don’t feel a need to go out and be entreprenuerial in drumming up business from businesses located along their lines. When railroads shed branchlines, they are often bought or leased by an entrepreneur who does want to drum up new business in order to pay back the loans he took on to buy the railroad. In many instances, the traffic will increase by 10 times or more over the previous level. One line I am familiar with went from 250 cars per year to 2500 cars. The owner used this new prosperity to buy two other lines in the area and now serves 25,000 cars per year.
Other issues with rail shipping arise from the economics of rate division when the shipment touches multiple railroads, and the desire of each railroad to maximize their chunk of the pie regardless of costs. When a railroad can’t get the division it wants, it declines the business, even when the business would be economically viable if the railroads were one entity. A number of local business growing mushrooms would like to receive peat moss from Canada in large boxcars. The railroad in Canada gets within 100 miles of the growers, but to get to their door, it needs to interchange with another railroad, and then that railroad must hand the car off to a third railroad. Generally, a minimal rate division of a movement is a few hundred dollars due to the inherent fixed costs of the business (crew starts, locomotive days, overhead, etc.). If the total rate is say $1500, handing off $700 of it to two railroads moving the last 15% of the total distance simply doesn’t make economic sense to the railroad doing most of the work. This is part of the impetus behind railroad mergers. When you ship by truck, interchange is rarely a consideration.
Thanks for adding all your expertise, Andrew!
“As a general rule of thumb, rail movement is always cheaper than truck movement if you have a carload of freight to move (= to 2-4 truckloads) due to inherent efficiencies in rail (steel on steel vs. rubber on concrete). However, you must also not be particularly concerned about movement time and thus inventory cost of good in transit, as rail is generally going to be slower than truck due to the need to aggregate shipments into trains and periodically resort the trains en-route by adding and subtracting cars” – Andrew
AKA, rail is frequently not cheaper than truck. Like most things in life “better” and “cheaper” are dependent on the individual situation.
“Railroads in general get all the business they can handle by sitting back and letting existing customers call them up and offer new traffic and new plants to serve.” – Andrew
This is the type of outlandish claim people who like to hear their own voice make. There is some truth to some of the things you are saying. But this is, to be blunt, a gigantic pile of elephant shit. Please provide a source for this claim.