In order to alleviate the pressure of delivery, Americans abandoned trains and chose truck transportation

In order to get their goods faster, U.S. carriers are abandoning rail in favor of road transport.

According to the latest data from the American Railroad Association (AAR), the volume of multimodal transportation in the United States fell by nearly 12% in the first six weeks of this year compared to a year ago. Even during the peak freight season in the second half of last year, this figure slipped. Multimodal transport means that most of the journey is transported by rail, with trucks only transporting the last leg. This method is slower and more complex than pure long-distance truck transportation, but it is also cheaper and less environmentally damaging.

According to industry analysts, this shift is mainly due to the desire of companies to bypass supply chain bottlenecks that are currently difficult to resolve. Lawrence Gros, president of The United States' Transportation Consulting, said that since the epidemic, the market share of multimodal transportation has been taken away by long-distance trucking by more than 1%. Based on current freight volumes, this equates to an increase of about 30,000 long-haul truck trips per week.

Matt Weller, head of global research at GAIN Group, previously told the first financial reporter that with the gradual restart of economic activities in 2021, there has been a blowout in demand, but many companies are obviously not ready, making the global supply chain and logistics network tired. The continuous logistics and transportation delays also expose the risks of timely inventory clearance management ideas, and the response of enterprises also has the possibility of increasing transportation costs.

Why turn to trucking

Officials in the U.S. trucking and railroad industries say demand for freight 500 miles or more remains strong as companies across the country replenish inventories. This long-distance transport is usually carried out on the rail, but nowadays, shippers are beginning to choose more pure road transport because of the unpredictable delays often caused by shortages of labor, equipment and warehouse space in the supply chain.

Paul Svindland, chief executive of STG Logistics, based in Bensonville, Illinois, said he had to move many of the goods to trucks because the company couldn't find enough containers for rail transportation.

Over the past year or so, U.S. supply chains have been tested with record-breaking throughput. In 2021, imports rose 14 percent from the previous year at the ports of Los Angeles and Long Beach in California. Correspondingly, according to AAR data, at the end of 2020 and the first half of 2021, the volume of multimodal cargo transported mainly by rail reached record levels. But last summer, the key freight hub to the area east of the Mississippi River came to a standstill as the Chicago-area rail yard was flooded with tens of thousands of boxes.

Officials in the rail and truck industry say the congestion is caused by too many boxes flowing into the region that warehouses and truck drivers can't handle, a situation that has been seen intermittently in other multimodal hubs across the country.

JimFilter, chief commercial officer of The German company Schneider, a trucking and logistics provider based in Green Bay, Wisconsin, said shipping customers will take an average of 30 percent longer than usual to unload containers in 2021 because of crowded warehouse space and too few workers. This freezes a large number of containers and steel trailers used to pull boxes, meaning it is harder to keep up with demand for equipment that is no longer enough.

Bob Biesterfeld, chief executive of freight forwarder C.H. RobinsonWorldwide, said that to make up for the lost time, some shippers have opted for transportation with more deterministic, but also more expensive, trucks. "If they have to wait days or weeks to get the product from the port to their warehouse, they're looking for the fastest way, and that means trucking the whole time." He said.

Jonathan Gold, the National Federation's vice president of supply chain and customs policy, also said retailers want to make sure they don't get stuck in delays again. "So they will start to shift to mitigate the risk of potential slowdown disturbances," he said. ”

Find another way out of supply bottlenecks

Trucking volumes on the spot market from Los Angeles to Chicago grew 130 percent year-over-year in early February, the busiest inland route in the U.S., according to industry consultancy DATSolutions.

High demand, in turn, drives up the cost of trucking. BedBath & Beyond said it raised some prices and adjusted its discount strategy due to "pervasive freight and supply chain resistance." Dean Croke, chief freight market analyst at DATSolutions, said spot prices on the Los Angeles-Chicago route grew 59 percent year-over-year, or $1.04 per mile.

Still, rail officials say there are signs that demand for multimodal freight is also rebounding. Tom Williams, group vice president of BNSF Railroad's Consumer Goods business unit, said the volume of multimodal cargo from container ships heading to the U.S. increased by 25 percent compared to the beginning of the year.

Still, officials warn that if there isn't enough equipment, truck drivers, warehouse space and workers to handle the cargo, the rail system could become congested again.

Elise Gosch, assistant vice president of multimodal sales at Union Pacific, said: "We need the entire industry chain to be able to process it at the same rate so that we don't get stuck in the trap where trains keep coming and warehouses can't process it quickly." ”

At present, supply chain congestion in the United States is still not improving. Of all 20 U.S. ports monitored, only New York and Savannah were labeled green, with Los Angeles and Long Beach being rated as the least efficient, according to a heat map compiled this month by freight analysis firm Flexport. According to Project44, the average freight latency from China to the west coast of the United States in 2021 is 114% higher than a year ago.

Given this situation, in addition to shifting to trucking, this year, some purchasing managers in the United States have tried to order goods in advance and consider buying through ports along the Gulf Coast or East Coast, and even consider air freight. In recent weeks, ports in Houston, THE United States, and Charleston, South Carolina, have also been jammed with container ships.

Julie Gerdeman, chief executive of supply chain risk analysis firm Everstream Analytics, said its customers are ordering buffer inventories for the next peak, while also considering port imports moving to other regions. "We have some customers who, even in the face of a margin hit, are making the decision to add more inventory." She said.