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Double Stack Container Systems: Implications Junp 19Q0 for U.S e facie? U.S. Department Double Stack Container U.S. Department of Transportation of Transportation Federal Railroad Systems: Implications for Maritime Administration Administration Office of Policy U.S. Railroads and Ports Office of Port and Intermodal Development Final Report FRA-RRP-90-2 June 1990 This document is available MAR-PORT-830 90009 for purchase from the National Technical Information Service, Springfield, VA 22161 NOTICE This document is disseminated under the sponsorship of the Department of Transportation in the interest of information exchange. The United States Government assumes no liability for its contents or use thereof. Technical Report Documentation Page 1. Report No. 2. Government Accession No. 3. Recipient's Catalog No. FRA-RRP-90-2 MA-PORT-830-90009 4. T itle and Subtitle 5. Report Date Double Stack Container Systems: Implications Junp 19Q0 for U.S. Railroads and Ports 6. Performing Organization Code 8. Performing Organization Report No. 7. Authors) Daniel S. Smith, principal author 9. Performing Organization Name and Address 10. Work Unit No. (TRAIS) Manalytics, Inc. 11. Contract or Grant No. 625 Third Street DTFR53-88-C-00020 San Francisco, California 94107 13. Type of Report and Period Covered 12. Sponsoring Agency Name and Address Federal Railroad Administration Final Report Maritime Administration U.S. Department of Transportation Washington, D.C. 20590 14. Sponsoring Agency Code 15. Supplementary Notes Project Monitor (s): Marilyn Klein, Federal Railroad Admin. Andrew Reed, Maritime Administration 400 7th St., SW - Washington, D.C. 20590 16. Abstract This study assesses the potential for domestic double-stack container transportation and the implications of expanded double­ stack systems for railroads, ports, and ocean carriers. The study suggests that double-stack service can be fully competitive with trucks in dense traffic corridors of 725 miles or more. There are opportunities to substantially increase double-stack service in existing corridors and to introduce double-stack service in secondary corridors, in outlying areas near major hubs, and for refrigerated commodities. To meet the challenge of providing and marketing a reliable, high quality, door-to-door service, railroads may have to take unaccustomed steps into marketing and customer service, or become strictly line-haul carriers. Ports must accommodate international double-stack growth, but they will be only indirectly affected by domestic containerization. Intermodal affiliates of ocean carriers will retain their leadership role in domestic containerization, while the ocean carriers themselves concentrate on international movements and markets. The products available from this contract include the Executive Summary, the Final Report, and the Bibliography. 17. Key Words 18. Distribution Stotement . DoCUment is double stack container systems; available to the public through the railroads; ports; ocean National Technical Information carriers; intermodal. domestic Service, Springfield, Virginia 22161 containers 19. Security Classif. (of this report) 20. Security Classif. (of thi s page) 21« No. of P ages 22. Price unclassified unclassified 321 Form DOT F 1700.7 ( 8 - 7 2 ) Reproduction of completed page authorized TABLE OF CONTENTS Page I. BACKGROUND 1 A. STUDY BACKGROUND AND PURPOSE 1 B. THE DEVELOPMENT OF DOUBLE-STACK SERVICES 1 C. KEY ROLES IN DOUBLE-STACK DEVELOPMENT 7 D. STUDY APPROACH 13 II. EXISTING MARKETS AND SERVICES 17 A. RELEVANT 1987 TRAFFIC FLOWS 17 B. CURRENT DOUBLE-STACK SERVICES 29 C. RAIL DOUBLE-STACK TECHNOLOGY 35 III. CRITERIA FOR DOUBLE-STACK OPERATIONS 39 A. DOUBLE-STACK SERVICE CRITERIA 39 B. COST CRITERIA FOR DOUBLE-STACK SERVICES 51 IV. DOUBLE-STACK NETWORKS 70 A. HYPOTHETICAL 1987 DOUBLE-STACK NETWORK 70 B. HYPOTHETICAL 1987 DOMESTIC AND INTERNATIONAL COMPONENTS 73 C. HYPOTHETICAL 1987 TRUCK DIVERSIONS 74 D. NETWORK OVERVIEW 78 E. HYPOTHETICAL 2000 DOUBLE-STACK NETWORK 80 V. IMPLICATIONS FOR RAILROADS 84 A. VOLUME AND DIRECTIONAL BALANCE 84 B. RAIL INTERMODAL TERMINAL REQUIREMENTS 86 C. RAIL EQUIPMENT NEEDS 89 D. ECONOMICAL AND FINANCIAL ISSUES 92 E. OPERATIONAL ISSUES 97 F. CHANGES IN TECHNOLOGY 107 G. MOTOR CARRIER DEVELOPMENTS 111 H. CHANGING RAILROAD ROLES 118 VI. IMPLICATIONS FOR PORTS AND OCEAN CARRIERS 121 A. COMPATIBILITY OF DOMESTIC AND INTERNATIONAL DOUBLE-STACK SERVICES 121 B. PORT ISSUES 132 C. OCEAN CARRIER ISSUES 147 TABLE OF CONTENTS (Continued) Page VII. THE INTERMODAL INDUSTRY AND DOMESTIC CONTAINERIZATION 154 A. OVERVIEW 154 B. THE RELATIONSHIP BETWEEN PORTS, OCEAN CARRIERS, AND RAILROADS 154 C. TRENDS IN MULTIMODAL OWNERSHIP 159 D. MARKETING AND THIRD PARTY ISSUES 162 E. INSTITUTIONAL ISSUES 169 F. PROSPECTS FOR INDUSTRY-WIDE CONVERSION 175 VIII. OVERALL CONCLUSIONS 183 APPENDIX TABLES 1-9 TABLE OF TABLES Table Description Follows Page 1 Relevant Truck Traffic 22 2 1987 Truck and Rail Data by Region 23 3 1987 Truck and Rail Balance Ratios 24 4 1987 Import/Export Summary by Inland Region 26 5 1987 Import/Export Summary by Coast 26 6 Intermodal Fleet 35 7 Double-Stack and Spine Comparisons 36 8 Weight Capacity Comparisons 37 9 Annual Container Volumes for Double-Stack Services 42 10 Rail Line-haul Cost Estimate, Los Angeles-New Orleans 59 11 Rail Line-haul Cost Estimate, Los Angeles-Oakland 59 12 Drayage Zones and Costs 63 13 Total Double-Stack Operating Costs 64 14 Truck Repositioning Miles 66 15 Rail and Truck Mileages 67 16 1987 Major Double-Stack Corridors 70 17 1987 Intermediate Points 72 18 1987 Domestic Double-Stack Network 73 19 International Double-Stack Network 73 20 1987 Major Double-Stack Corridors with Truck Diversions 75 21 1987 Double-Stack Network with Truck Diversions 76 22 1987 Intermediate Points with Truck Diversions 76 23 2000 Major Double-Stack Corridors 82 24 2000 Intermediate Points 82 25 Double-Stack Traffic Sources 84 26 Potential Terminal Capacity Shortfall 88 27 Rail Equipment Needs 91 28 Domestic Container Payload Penalty 99 29 International Cargo Flows by Rail, 1987 and 2000 126 TABLE OF FIGURES Figure Description Follows Page 1 Rail Intermodal Volumes 6 2 1987 Double-Stack Flows 18 3 1987 COFC Flows 18 4 1987T0FC Flows 18 5 1987 Intermodal Flows 19 6 1987 Selected Boxcar Flows 20 7 1987 Intermodal and Boxcar Flows 20 8 1987 Truck Flows 21 9 1987 Rail and Truck Flows 24 10 Inland Regions' 29 11 1989 Actual Double-Stack Netword 29 12 Southern California Double-Stack Traffic Patterns 44 13 Truckload Transit Time 49 14 Truckload and Intermodal Transit Times 49 15 Truckload and Intermodal Transit Times and Drayage 51 16 Double-Stack Equipment Costs 54 17 Truckload Repositioning Miles 66 18 Truckload Repositioning Percent 66 19 Drayage and Competitive Length of Haul 68 20 1987 Hypothetical Double-Stack Network 70 21 1987 Hypothetical Double-Stack Volumes 72 22 1987 Hypothetical Domestic and International Flows 73 23 Geographic Drayage Patterns 75 24 Divertible Truck Traffic 75 25 Hypothetical Double-Stack Network with Truck Diversions 76 26 Northeast Truck Routes 76 27 Complete Hypothetical Double-Stack Network 79 28 Hypothetical 2000 Double-Stack Network 82 29 Hypothetical 2000 Double-Stack Volumes 82 30 Net Directional Imbalances 85 31 Recent Stack Car Types 124 32 Shipper Perceptions of Intermodal vs. Truck 163 33 User and Non-user Perceptions of Intermodal 163 34 Shippers Preferring Double-Stack to Piggyback 164 35 Changing Intermodal Roles 171 36 The Emerging Intermodal Industry 172 I. BACKGROUND A. STUDY BACKGROUND AND PURPOSE Rapid growth in double-stack container operations has brought the rail indus try to the verge of large-scale domestic containerization. The container capacity of the double-stack fleet has increased from 400 container spaces in 1983 to an estimated 30,000 in 1989, while conventional trailer slots dropped by over 20,000. In that same period, rail transfer facilities have been condensed from over 400 ramps into a system of about 215 high-volume mechanized hubs capable of supporting frequent double-stack service in most major rail corridors. The necessary infrastructure for a domestic container system, seemingly unattainable just a decade ago, is largely in place. Market forces are already in motion to cross that verge and create large- scale domestic double-stack container services in some markets. Domestic container services are routinely marketed by railroads, ocean carriers, and third parties. Yet the wholesale replacement of other intermodal services with double-stacked containers is not a certainty. There are operational, economic, and institutional issues to be resolved. The issue is not whether there will be domestic containerization: it is here. Rather, the issue is whether there will be an identifiable domestic double-stack network. We believe the answer is "yes11: the forces are already in motion. The ques­ tions are: Under what circumstances? Where? How large? And how do we get there from here? This study was undertaken by the Federal Railroad Administration and the Maritime Administration to assemble a comprehensive picture of double-stack systems, to determine the potential for domestic double-stack container transportation, and to identify the implications of expanded double-stack systems for railroads, ports, and ocean carriers. The study was performed by Manalytics, Inc. and subcontractors ALK Associates, Transportation Re­ search and Marketing, and TF Transportation Consultants. It answers six major questions: o What is the status of double-stack container systems? -1- o Under what conditions can domestic double-stack
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