DOMESTIC CONTAINERIZATION: HOW BIG CAN IT GET? 289 Domestic Containerization: How Big Can It Get? by Daniel S

P OCEEDINGS

Twenty-seventh Annual Meeting

September 22-24, 1986 Seattle, Washington Volume XXVII • Number 1 1986

TRANSPORTATION RESEARCH FORUM In conjunction with

4CANADIAN TRANSPORTATION RESEARCH FORUM DOMESTIC CONTAINERIZATION: HOW BIG CAN IT GET? 289 Domestic Containerization: How Big Can It Get? By Daniel S. Smith*

I. INTRODUCTION ble-stack container cars have nominal platform capacities of 102,000 pounds, allowing 51,000 Domestic containerization is no longer a mere pounds gross for each of two 40-foot, 45-foot, or 48- Possibility; it is an established fact. Besides the ever- foot containers. A lightweight ISO 40-foot container growing volume of domestic backhauls in double has a tare weight of roughly 6500 pounds, allowing a Stack trains, there are trains operated primarily for net loading of 44,500 pounds. A 45-foot container domestic fronthauls. Besides the huge fleet of ISO has a tare of up to 8,500 pounds, allowing a net of marine containers, at least four organizations will 42,500 pounds. The current net weight limit for soon deploy 48-foot long, 102-inch wide containers double-stack container movements is therefore solely for domestic use. Indeed, the recent study 21-22 tons per 40-foot or 45-foot container. released by the AAR is in some ways already out- An examination of the container segment of water- dated, because it is too late for "A Preliminary Feasi- borne trade can shed some light on the con- bility Study" of domestic containerization. Non- tainerizability of domestic traffic. Manalytics main- theless, there are few who would argue that domestic tains proprietary density data for commodities containerization will quickly replace boxcar, piggy- moved in waterborne container service. These den- back, and long-distance truck transportation with a sity data have been derived from a multi-year histor- single new system. Some, especially those who ical database of actual lading records. For our pur- Champion other modes, are unwilling to assign do- poses, the results can be expressed as typical lading mestic containerization any major role. weights for 40-foot container equivalents (tons per As in so many cases, the truth probably lies some- FEU) of each commodity. (These weights actually where in the middle. Domestic intermodal container reflect a container that is 80 percent full, allowing service will have to compete strenuously for its mar- for imperfect storage and dunnage.) ket niche. If there is any lesson to be learned from Table 1 is a list of high-density commodities, the last three decades of transportation progress, it is those for which a full 40-foot container would ex- the need for specialization. No shipper is going to ceed 22 net tons. In domestic container services, buy a rate, service, and equipment package that does these commodities would be weight-limited, since a not meet his individual needs, when there are any 40-foot or larger container could not be filled with number of carriers willing to offer him customized these commodities without exceeding the nominal service. Thus, for the purposes of this paper, the weight limit of existing double-stack cars. The the- definition of domestic containerization is not limited oretical weight limit of the containers themselves is to any particular container or to just double-stack seldom reached because most 40-foot containers are cars. The only requirement is that the existing trailer limited by U.S. highway weight limits for pickup or boxcar be replaced by a container moving without and delivery beyond the port. Twenty-foot containers a chassis. are commonly used for dense commodities in inter- This paper attempts to gauge the potential for national commerce, but reflection shows that to be domestic containerization. To make a reasonable an impractical solution for domestic double-stack guess at the potential for domestic intermodal con- movements since it would compound the weight tainerization in the U.S., we have to define its mar- problem. ket niche. That niche will be determined first by Shippers of the goods in Table 1 will judge rates in demand: the scope of commodity movements for dollars per ton, subject to service constraints. In- which domestic intermodal container service can deed, this list includes many of the major railroad compete. Second, the size of the niche is determined boxcar, covered hopper, and tankcar commodities. by supply: the scope of domestic intermodal con- These commodities are potential candidates for do- tainer equipment and service that the railroads can mestic container service, but container service will efficiently offer. Finally, the niche will be circum- have to compete with other modes on a dollars-per- scribed by competition: the nearby market niches ton basis to get the traffic. Cubic capacity is of no carved out by boxcar service, piggyback, long- account for these commodities: a domestic container distance trucking, or other services now in their must be lighter than the ISO 40-foot container to be infancy. Rough guesses at the boundaries on domes- of any advantage. This may be possible, since do- tic containerization set by these three determinants mestic containers will not have to withstand the will help us answer the central question: How big stacking of marine service—a rare instance of rail can it get? being gentler than another mode. Table 2 lists low-density commodities in four groups, with progressively lower tons per FEU. II. DEMAND Since these commodities fill the container before reaching the net weight limit, they are cube-limited. Contatherizability. A very broad range of com- Shippers of these commodities, especially those in modities can be carried in containers. Existing dou- the lowest groups, will judge rates in dollars per 290 TRANSPORTATION RESEARCH FORUM

cubic foot. Some of these commodities would benefit from larger The first group of commodities on Table 2, ranging containers, 45-foot or 48-foot rather from 17 than 40-foot. A to 21 tons per FEU, would probably be well 45-foot container has 12.5 percent served with more cube than 45-foot containers. A 48-foot long, 102- a 40-foot container of the same inch wide container height and width. has 27.5 percent more cubic A commodity that would load a capacity than a 40-foot container height 40-foot container to of the same 18.7 tons would load a 45-foot and 96-inch width. This reduces the "fill density" to container to its 21-ton limit for double-stack service. about 16.5 tons per FEU, picking up some of the

Table 1 HIGH DENSITY COMMODITY GROUP Greater than 22 Tons/FEU

Asbestos & plasters Jams Sc. juices Auto parts Linoleum Beverages Lumber Bricks Machinery Building products Machine tools Canned goods Nails & fasteners Chemicals Newsprint Cement & lime Oils Coffee, cocoa Paints Cordage Paper bags & boxes Corrugated paper Paperboard . Dried beans, peas Plywood & veneers Dry prepared foods Printed matter Electric motors Resins Engines & parts Rubber Explosives Seeds & nuts Feeds Sewing machines Fertilizers Starches Firearms Sugar Flour Textiles - Glass Vegetable oils Grains Wine Hardware Wood & wood pulp Iron & Steel

Source: Manalytics, Inc. proprietary density database.

Table 2 LOW DENSITY COMMODITY GROUPS

17-22 tons/FEU 10-13 tons/FEU Alu. building products Alu. consumer products Bicycles Clothing Metal drums Computer equipment Paper tissues, towels Cork Records, tapes Dishwashers Wool Furniture Glass bottles & jars 13-17 tonsIFEU Lighting fixtures Agricultural machinery Pottery, ceramics Air conditioning equip. Refrigerators Carpets Tires Cigarettes Wood manufactures Electronic parts Office machines Less than 10 tons/FEU Pharmaceutical products Brooms, brushes Photographic equipment Footwear Plumbing fixtures Light bulbs Rubber products Musical instruments Sporting goods Rugs, blankets Television sets Suitcases, handbags Washers & dryers Source: Manalytics, Inc. proprietary density database. DOMESTIC CONTAINERIZATION: HOW BIG CAN IT GET? 291 next category on Table 2. The ideal container size in tonnage and first in revenue, accounting for 25 for the lightest commodities is not attainable. A percent of all rail freight revenues. Table 4 provides commodity that loads 11 tons per FEU would re- a breakdown of the "merchandise" category. It in- quire an 80-foot container to reach 22 tons: even if it cludes three large commodity groups that are largely could be handled, the tare on such a container would intermodal already: food products, paper products, certainly seriously reduce the achievable net. and mixed shipments. Although Table 4 oil, Existing Rail Traffic. In terms of existing rail subsumes some commodities, such as bulk corn containerization, traffic, domestic containerization can become very that are poor candidates for early as large indeed. Table 3 ranks major rail commodities some excellent candidates are excluded, such in 1982 by tonnage and revenue. "Merchandise" glass jars and bottles. 2 traffic, defined here to include those commodities A comparison of Table 4 with Tables 1 and most susceptible to containerization, ranked second reveals that most existing rail merchandise traffic

Table 3 1982 RAIL TRAFFIC MAJOR COMMODITIES

Commodity Tons Rank Revenue Rank (000,000) (000,000) Coal 515,971 1 $ 6,187 2 "Merchandise" 158,363 2 6,587 1 Grain 104,221 3 1,642 5 Chemicals 89,231 4 2,730 3 Lumber 72,143 5 1,165 7 Ores 69,568 6 386 12 Hazmat 48,805 7 1,414 6 Sonte, Clay 38,229 8 809 9 Primary Metals 31,993 9 952 8 Petro Products 30,502 10 790 10 Waste & Scrap 22,876 11 420 11 Vehicles & Parts 16,782 12 1,711 4 All Other 12,919 13 347 13 TOTAL 1,298,481 $25,876

Source: 1982 I.C.C. Carload Waybill Sample

Table 4 1982 RAIL "MERCHANDISE" TRAFFIC POTENTIAL CONTAINER COMMODITIES

STCC Description Tons Revenue (000,000) (000,000) 0112 Cotton 968 $ 38 012 Fruits & Nuts 1,071 52 20 Foods & Kindred 76,019 2,497 21 Tobacco 473 30 22 Textiles 337 28 23 Fabricated Textiles 70 7 25 Furniture 460 69 262-266 Paper & Products 37,947 1,406 27 Printing Products 12 47 30 Rubber & Plastics 1,632 118 31 Leather Goods 34 1 34 Fabricated Metal 976 67 35 Machinery 990 88 36 Electrical Machinery 1,059 113 38 Instruments 32 3 39 Misc. Manufactures 146 13 41 Misc. Freight 816 59 44 Freight Forwarder 1,555 126 45 Shipper Assoc. 3,989 285 46 Misc. Mixed 29,665 _.L..Q TOTAL 158,363 $6,587

Source: 1982 I.C.C. Carload Waybill Sample 292 TRANSPORTATION RESEARCH FORUM

Table 5 1984 RAIL CARLOADS BY CAR TYPE

TYPE CARLOADS PERCENT Open Hoppers 6,910,454 31 Intermodal Flats 3,766,498 17 Covered Hoppers 3,245,456 15 Box & Refrig. 2,817,604 13 Gondolas 2,423,260 11 Tank Cars 1,254,148 6 All Others 1,655,008 7 TOTAL 22,072,418 100

Source: Railroad Traffic in the United States-1984, ALK Associates, Inc., Princeton, N.J., March, 1986

will be weight-limited if it is containerized. There is industry itself. Major steamship lines have large no need to provide larger domestic containers for fleets of containers, most of which are 40 feet long these commodities. In 1982, movements of STCC and vary in height from 8 feet to 9 feet 6 inches. The 41, Miscellaneous Freight, averaged 20.0 tons per table below indicates the rough magnitude of their unit; a 21-ton capacity container should be suffi- investment. cient. These considerations suggest that there is a large body of freight for which efficient con- Carrier Containers tainerization need larger, lighter domestic not await a Evergreen container. Piggyback far secured a very small Marine Corp. 98,936 has so Sea-Land share of a very large market. Container service, with 91,522 United States lower costs, may have an even larger market, and Lines 67,012 American could potentially expand to many times its present President Lines 34,584 size without relying on commodities that demand Source: Official Intermodal Equipment Register, larger equipment. On the other hand, the average March 1986. load per unit for STCC 44 (Freight Forwarder), STCC 45 (Shipper Association), and STCC 46(Mis- These container fleets are maintained to serve the cellaneous Mixed) averaged between 15.0 tons and carriers' own needs for waterborne trade. The front- 17.4 tons per unit. Existing piggyback apparently hauls are dedicated to international trade, but the carries many cube-limited commodities, and con- backhauls are a different story. The introduction of tainer service may have to offer price concessions, double-stack service to inland destinations, most as it has, to convert most piggyback traffic. notably Chicago, has put the availability of backhaul Looking at current rail traffic from an equipment capacity in the headlines of every industry journal. perspective, we arrive at similar answers. Table 5 One potential source of containers for domestic shows 1984 rail carloadings by car type. Intermodal loading is the container leasing industry. Roughly 60 flatcars, some of which were already carrying con- percent of the world's container fleet is controlled by tainers, accounted for 17 percent of all rail carload- leasing companies. Some of the major leasing com- ings. Since intermodal flats can carry one or two panies are listed below with their approximate fleet trailers, and up to four 20-foot containers, they prob- sizes. ably accounted for much larger share of all railroad- shipper transactions that year. Boxcar and re- Leasing Company Containers frigerator car movements, the other candidates for CTI containerization, accounted 13 percent of the 345,800 for Sea Containers 1984 carloadings. intermodal 262,768 Together, flatcars and ITEL boxcars account 177,134 for 30 percent, which may be taken Flexi-Van as a practical upper limit the penetration 176,460 on of do- Transamerica mestic containerization into current ICS 163,627 rail traffic. XTRA The physical potential for domestic containeriza- 102,072 tion of existing truck traffic is practically unlimited. Sources: International Registry of Trailer, Con- In principle, virtually everything carried in van-type tainer and Chassis Equipment, February truck trailers can be containerized. The penetration 1986, and Official Intermodal Equip- of domestic rail container service into truck traffic is ment Register, March 1986. an issue of competition, rather than a question of demand. Ocean carriers use these containers under a variety of short-term and long-term arrangements. Leased containers are frequently "off-hired" at ports III. SUPPLY or inland points where ocean carriers have difficulty in securing outbound loads. This practice leads to a Equipment. Forty-foot ISO containers are plen- build-up of containers at inland depots, and thus tiful. One source of supply is the ocean carrier provides a reservoir of container capacity for domes- 293 DOMESTIC CONTAINERIZATION: HOW BIG CAN IT GET?

tic movements. Moreover, container leasing com- to domestic containerization. Efficient chassis panies can readily supply railroads, shippers, or provision can be available at every major intermodal third parties with containers for pure domestic hub. If some carriers do not succeed in managing movements, fronthaul or backhaul. Many of these chassis logistics effectively, other carriers will firms or their subsidiaries are already in the piggy- quickly pass them by. back leasing business, and have all the necessary The railcar fleet for domestic container service organization and infrastructure to supply equipment presents no serious restrictions to near-term growth. for domestic containerization. Recognizing that many conventional Trailer Train American President Lines (APL) is largely alone cars are usable or convertible for container loading, among ocean carriers in owning 45-foot containers, the container car fleet can expand almost in- about 4,000 of them. Because it requires changes in stantaneously. The growth in double-stack capacity Ship fittings, this larger size has not yet become has been phenomenal, and the orders placed by BN common. At present, the 48-foot container fleet is and Santa Fe (via Trailer Train) for "common-user" smaller yet. Only APL, Sea Containers, and XTRA fleets present an opportunity for domestic utiliza- currently deploy 48-foot containers, although South- tion. In the longer term, capital that would otherwise ern Pacific has such containers on order. There are have been spent renewing the TOFC fleet can be no plans to use 48-foot containers in international released to serve the need for domestic container trade. Besides the difference in length, 48-foot con- equipment. tainers built for the domestic market are also wider: Services. Double-stack container trains now move 102 inches versus the 96-inch ISO standard. ocean carrier traffic between ports in Southern Cal- Once off the railcar, a container needs a chassis. ifornia, Northern California, and Puget Sound, and Chassis provision had long been considered a stum- the inland hubs of Chicago, St. Louis, Cincinnati, bling block for domestic containerization, but the Columbus, Houston, and Atlanta. Other double- mistake was in tacitly assuming that an entirely new stack trains link the ports of Baltimore, New York, nationwide infrastructure would be needed. As it has Savannah, and New Orleans into the system. All of happened, domestic containerization has grown out these trains can and do carry domestic backhauls. of ocean carrier operations for which the infrastruc- BN's Seattle-Chicago "common-user" trains, Santa ture is already in place at major hubs. The chassis Fe's LA-Chicago "common-user" trains, and API's fleets of major steamship lines and leasing com- Oakland-Chicago domestic train are now available panies are substantial, as listed below. for domestic moves in both directions. The BN and Santa Fe trains deserve special mention because of Owner Chassis their contract arrangements. In both cases, the rail- backhaul capacity Flexi-Van 108,500 road reserves some or all of the Sea for its own marketing. This arrangement puts those -Land 35,291 business, United States Lines two railroads in the domestic container 23,163 present. Their XTRA 18,226 albeit in just one direction for the 5-6 days American President Lines 16,776 trains are open to all shippers and operate Interpool per week with a mixture of conventional and double- 15,589 customers Transamerica ICS 14,436 stack equipment. Among their contract Evergreen Marine Corp. are shippers' agents and freight forwarders who can 12,960 international ITEL 10,124 use the service for either domestic or moves. Sources: International Registry of Trailer, Con- The AAR study concludes that, as a substitute for tainer and Chassis Equipment, February TOFC, "Double-stack can produce significant cost 1986, and Official Intermodal Equip- savings in long-haul and medium-haul markets, par- ment Register, March 1986 ticularly when volumes are large."' By examining state-to-state TOFC/COFC flows, the study found Even more important than the sheer number of eleven markets that could support five-day-per-week chassis in service are the new arrangements being service with 200 FEU double-stack trains. The lead- made to promote high utilization. A chassis that ing market is Illinois-California, which, according spends its time under in-service containers is a good to the study, could support five double-stack trains investment; a chassis parked empty is not. Bur- per day. The full list was: lington Northern introduced the neutral chassis pool at Cicero Yard in Chicago in 1985. Operated by Transamerica ICS, the pool supplies chassis Double-stack to all Flow containers unloaded at Cicero, obviating any need to Trains per day match containers with particular chassis, eliminating IL-CA 5.1 delays when containers wait for chassis or vice- IL-PA 2.3 versa, and greatly improving chassis utilization. CA-TX 2.0 Santa Fe has started neutral chassis pools in Chicago NJ-IL 2.0 and Los Angeles, and the practice is expected to IL-TX 1.5 spread rapidly. Manalytics' interviews with ocean WA-IL 1.4 carriers reveal eager acceptance of neutral chassis CA-LA 1.3 pools. One ocean carrier expects to reduce its own GA-FL 1.3 Chicago container depot costs by 80 percent by IL-MA 1.1 using the neutral chassis pools instead. IL-MD 1.1 The introduction of neutral chassis pools together KS-CA 1.1 with the computer-based tracking and dispatch sys- tems appearing throughout the transportation indus- The study also identified nine other major flows try can remove chassis logistics as a stumbling block that could support more than one half train per day: 294 TRANSPORTATION RESEARCH FORUM

Double-stack container trains, and types in its Flow SP mixes the two Trains per day Oakland-Gulf service. We can use containers to im- cannot FL-FL 0.9 prove intermodal economics even where we MO-TX 0.9 optimize. CA-NJ 0.9 IL-MN 0.8 VA-FL 0.8 IV. COMPETITION IN-CA 0.8 containerization do IL-OR 0.8 Costs. What does domestic PQ-IL for the railroads' long-term ability to compete for 0.8 -stack IL-CO 0.6 merchandise traffic? Unquestionably, double container operations give the railroads a cost advan- Source: Domestic Containerization, A Prelimi- tage over conventional piggyback or COFC withot!t nary Feasibility Study, AAR, February any reduction in service (if chassis pools and termi- 1986. nals are properly managed). Table 6 gives estimates of the cost in major categories for a Los Angeles- The study estimates a total of 4,565,743 annual Chicago round trip of 200 trailers or containers. units moving in these corridors. This is a conserva- These estimates were produced using the Manalytics tive estimate, based as it is upon the assumption that Rail Cost Model for variable linehaul costs. An double-stack container service will merely substitute industry estimate of $23 per lift was used to estimate for TOFC/COFC in the longest and largest cor- variable terminal costs (each round trip entails load- ndors. This can best be taken as an indication of ing and unloading at each end, a total of four lifts for where domestic container service will start, and each of the 200 containers or trailers). These esti- where it will spread. mates do not include the costs of trailers, containers, Conventional wisdom restricts double-stack do- or chassis, which are presumed to be owned or mestic container service to long-haul, high-volume leased by shippers or third parties. corridors. This wisdom is open to question on sev- By these estimates, double-stack container serv- eral points. First, the need for long hauls is based on ice offers a 21 percent overall cost reduction over the assumption of higher terminal costs associated conventional piggyback, and a 7 percent savings with chassis logistics. As discussed above, the intro- over conventional COFC. The savings in fuel, duction of neutral chassis pools at major hubs will equipment and equipment maintenance, and mainte- dramatically reduce chassis logistics costs to the nance of way are directly attributable to reduced tare point of near equality with TOFC terminal costs. It weight and aerodynamic resistance. (The often-cited must be remembered that a double-stack train of any 35-40 percent savings for double-stack service usu- length has lower linehaul costs than a piggyback ally does not consider terminal costs.) train carrying the same traffic volume. Double-stack Short of another dramatic improvement in tech- container service should therefore be able to pene- nology, the fuel, equipment, and incremental main- trate farther into price-sensitive markets than tenance costs are not amenable to significant further piggyback. reductions. The High Productivity Integral Train Although double-stack trains maximize its advan- may reduce fuel usage by another 4-8 percent,2 but tages, containerization need not wait until there are after the progress made by double-stacking there are double-stack trains on every corridor. COFC offers diminishing returns to further tare reductions. useful cost savings over TOFC, using either conven- The remaining entries on Table 6 suggest that the tional or lightweight cars. BN mixes conventional potential for further dramatic railroad cost reduction COFC freely with double-stack cars on its Seattle is more likely to lie in labor productivity than in

Table 6 LOS ANGELES-CHICAGO ROUND TRIP COST ESTIMATES 200 Trailers or Containers

Fuel Labor Equipment MofW Terminal Total % Savings Piggyback $37,700 $19,800 $53,500 $36,900 $18,400 $166,300 - COFC 32,500 19,800 49,400 35,400 18,400 155,400 -7 Double-Stack 21,400 19,800 43,500 28,300 18,400 131,400 -21 Double-Stack 8-hr, 4-man 21,200 8,700 42,300 28,300 18,400 118,900 -29 crews Double-Stack 2-man crews 21,400 9,900 43,500 28,300 18,400 121,500 -27 Double-Stack 8-hr, 2-man 21,200 4,300 42,300 28,300 18,400 114,500 -31 crews

Source: Manalytics, Inc. Rail Cost Model. These estimates are intended to convey relative cost magnitudes, and do not correspond to any specific commercial operation. 295 DOMESTIC CONTAINERIZATION: HOW BIG CAN IT GET?

under- cupy a market niche determined by the same technological advance. To illustrate this point, cost competition as s.imulations were run scheduled at lying forces of demand, supply, and with crew changes other trans- intervals of roughly 8 hours, rather than at traditional determine the success or failure of any portation service. division points. Overtime was included for times in review excess The potential demand is quite large. Our. of 8 hours, and overmileage allowed for dis- equipment tance in excess of commodity characteristics and rail of 300 miles, both at current industry traffic rates. This loadings suggests that 15-30 percent of all rail approach would eliminate more than half for the crews between can be efficiently containerized. The potential Los Angeles and Chicago, at a purposes, labor cost savings of 56 percent and a 10 percent diversion from truck is, for all practical large overall cost savings compared to double-stack con- unlimited by any physical characteristics. A it tainer service with existing manning. Nearly as portion of this traffic is weight-limited, and while domes- much could be saved by reducing crew size from might benefit from the lighter tare of special four to two. The largest reduction would come from tic containers, it could be carried in existing ISO Combining two-man crews with full 8-hour days, a containers at a substantial cost savings over 31 percent savings over conventional piggyback and piggyback. a 13 percent reduction over existing double-stack On the supply side, the present container, chassis, Operations. and railcar fleets are adequate for domestic needs in Acceptance. The ability of domestic container the near future. As domestic containerization grows service to compete with piggyback or truck also at the expense of piggyback, it can benefit from the depends on shipper acceptance of containers. From capital spending that would otherwise have been every indication, this is not a significant issue. The devoted to renewing the piggyback fleet. Efficient experience of Canadian Pacific is instructive: after domestic container service can be provided any- Proceeding far with its conversion from trailers to where that can support efficient TOFC service, and Containers, CP found that many of its customers has the potential to penetrate new price-sensitive were unaware that there had been a change. Con markets. tainers are hardly a novelty in the U.S. Major do- Competition will be keen. Double-stack container mestic shippers are often also importers or expor- service can replace much of the existing piggyback ters, and regularly deal with containers already. service. In spreading beyond those markets it faces Some observers of the intermodal field perceive a price competition from boxcars and service competi- need for ever-larger domestic containers to compete tion from trucks. The success or failure at these two with trucks. Much has been made of the growth in extremes of the market will probably depend more truck size limits, with 53-foot trailers appearing in on the railroads' ability to manage and market do- some areas. Yet, as suggested by the preceding ta- mestic container service to meet shipper needs than bles, most traffic for which rail is likely to compete on any technical characteristics of container service. is weight-limited. Moreover, the urge to standardize In particular, reductions in labor costs have the po- on a single large box flies in the face of the need for tential to take domestic containerization much far- specialization. Every other type of rail equipment— ther into price-sensitive markets. box cars, hoppers, gondolas, covered hoppers, tank- Domestic containerization will not recover highly cars, flatcars, and even auto racks—are produced in service-sensitive traffic for the railroads. Regardless a variety of sizes and capacities to suit specific of ramp-to-ramp transit times or fuel efficiency, rail- commodities. Trucks themselves come in a be- roads cannot compete with trucks for shipments that wildering assortment of sizes. The strongest trend in depend on custom-tailored, high-speed, door-to- trucking is the infusion of 28-foot "pup" trailers, door service. Railroads can compete for movements designed for smaller shipments or heavier lading. that are primarily price-sensitive, and for move- The trend in shipment size is downward, reflecting ments where substantial price reductions can be reduced inventories and tighter production and dis- traded for marginal service reductions. Domestic tribution control. container service is a superior competitive tool for Rail is a cost-efficient mode and can compete railroads, offering piggyback service quality at costs with trucks on a dollars-per-ton or dollars-per-cubic- 20-30 percent lower. If railroads are to have any foot basis. Shipment sizes are variable, and will vary future at all in merchandise traffic, they will have to to take advantages of the most efficient transporta- take maximum advantage of domestic containerization system. Experience with backhaul solicitation tion. on existing double-stack trains has demonstrated that a surprising range of shipments can use 40-foot ENDNOTES containers when the price is right. * Manalytics, Inc., San Francisco, California. 1. Domestic Containerization, A Preliminary Feasi- V. CONCLUSIONS bility Study, Association of American Rail- roads, February 1986, page 77. Domestic containerization is no longer an experi- 2. Fuel Use Simulations of High-Productivity Con- mental novelty. It has arrived, but its future is by no tainer Trains, Daniel Smith, 1985 TRF Pro- means assured. Domestic container service will oc- ceedings, page 238.