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— by Toby Kolstad
Turning points in the rail-car industry come infrequently and for many different reasons, and they are not short-term events or easily recognized developments. That is why it is difficult to say with certainty that we are experiencing one now, but if we are, the next 25 years will bring significant changes in rail-car fleets and rail traffic.
Consider the last two major developments that significantly affected car designs and traffic. The first was the introduction of the doublestack well car in 1985 to handle intermodal containers that had been in use since the late 1960s. Besides facilitating the containerization of merchandise imports and exports, and enabling railroads to capture the major share of this traffic, the adoption of the doublestack well car led to other developments that were not foreseen.
In the early 1980s, less than 25 percent of U.S. rail lines could accommodate the height of a fully loaded doublestack car; all major routes could not handle Plate "F" dimension cars, such as high-cube box and multilevel flat cars. The need to extend the range of doublestack trains also increased the range of these other car types, enabling traffic to grow and car designs to evolve. Demand for new high-cube box cars increased during the 1990s, as did orders for multilevel autoracks — high enough to handle more trucks and SUVs in bi- and tri-level configurations.
The second turning point was the gradual acceptance of the 286,000 gross rail load car design. Between 1994 and 1996, thousands of cars were built with a 286k capacity but registered in UMLER as 263k cars until railroads began to accept the higher-capacity cars in relatively unrestricted and strictly unofficial interchange. Formal rules for official 286k interchange rights took many more years to formulate. During the late 1990s, most of the coal car fleet was replaced with 286k cars and all new equipment delivered after 1995 was equipped to handle 286k loads.
Which brings us to the current turning point: the containerization of domestic intermodal traffic.
For years, U.S. railroads have actively sought to capture traffic from the trucking industry for shipments traveling less than 1,000 miles and longer movements where delivery was time sensitive.
In the West, railroads formed joint ventures with trucking companies to handle long-distance shipments and touted their successes in diverting freight off the nation’s highways. But it has been difficult to measure just how successful railroads really were. Intermodal traffic seemed to increase when container imports rose and decrease when imports dropped, moving in tandem with each other and changing by about the same percentage. Moreover, the recent trend of importers’ repackaging the contents of 40-foot containers off ocean ships into 53-foot containers for rail movement only complicated the effort of measuring domestic traffic from 53-foot movements and the volume of imported traffic involving 40-foot containers. These problems disappeared in recent months: Imported container volume decreased while domestic intermodal volume increased. For the first time, there is unambiguous evidence that railroads are taking market share away from trucks.
So where might this lead in the coming years? Will intermodal traffic fill the traffic volume lost from the recent decline in the coal industry? This might be the most obvious development, with higher container volumes leading to more frequent trains, which will improve service and lead to even more container shipments.
Perhaps most box-car traffic will be containerized and the old 70-ton box-car fleet finally will be consigned to the history books.
Between 2008 and 2011, the number of box cars and box-car traffic levels declined by 20 percent and 24 percent, respectively. Traffic moved in other car types, such as gondola cars, flat cars and covered hoppers, might be containerized as more facilities are built to handle these cars and more trains are scheduled to move them. When it occurs, the containerization of U.S. domestic freight traffic will be a game changer for the railroad and rail-car industries. And there are too many signs to ignore that it may be happening now.
Toby Kolstad has been in the railroad industry for more than 30 years, with stints at the Illinois Central Gulf Railroad, Denver & Rio Grande Western Railroad, a car builder and lessor. Currently a consultant on rail-car matters and president of Rail Theory Forecasts L.L.C., he can be emailed at Tkolstad@aol.com.