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Double Stack Container Systems: Implications Tt Vm 1 Q Q 0 for U.S /' U.S. D epartm ent Double Stack Container U.S. D ep artm en t o f Transportation o f Transportation Federal Railroad Systems: Implications for Maritime Administration Administration Office of Policy U.S. Railroads and Ports Office of Port and Intermodal Development Executive Summary :*>■ , \ FRA-RRP-90-1 June 1990 This document is available MA-PORT-830-90008 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-9Q-1 MA-PORT- 8 3 0—90 008. 4. T itle and Subtitle 5. Report Date Double Stack Container Systems: Implications tT vm 1 Q Q 0 for U.S. Railroads and Ports 6. Performing Organization Cod' 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 Executive Summary 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 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 Statement 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, r 19. Security Classif. (of this report) 20. Security Classif. (of this page) 21 • No. of P ages 22. Price unclassified unclassified 80 Form DOT F 1700.7 (8-72) Reproduction of completed page authorized DOUBLE-STACK CONTAINER SYSTEMS: IMPLICATIONS FOR U.S. RAILROADS AND PORTS ABSTRACT Double-stack container systems have grown rapidly since their introduction as an inland extension of international service, and are on the verge of large- scale domestic containerization. This Federal Railroad Administration/ Maritime Administration study was performed by Manalytics, Inc., and subcontractors ALK Associates, Transportation Research and Marketing, and TF Transportation Consultants. The study describes double-stack systems, determines their potential for domestic container transportation, and identi­ fies their implications for railroads, ports, and ocean carriers. As of 1989, double-stack container service was available in some form on most major rail routes, and most major hub cities. The fleet of double-stack cars has increased rapidly, and now accounts for about 25 percent of total inter- modal capacity. Cost and service criteria were derived to determine where double-stacks could compete with trucks. Double-stack cost advantages are in the line-haul. Cost-competitive double-stack hauls must be long enough for line-haul savings to outweigh terminal and drayage costs, which trucks do not incur, and still offer the lower rates that customers expect. Using an engineered cost method­ ology and favorable assumptions, the study found that double-stack services could compete with trucks on movements of 725 miles or more, with drayage of up to 30 miles on each end. To offer competitive transit times, double-stacks must have a long enough haul to overcome a terminal and drayage'handicap of six hours or more. Comparing truck and double-stack trip profiles suggests that the haul must be at least 540 miles, so the 725-mile cost criterion is the binding constraint. To offer competitive service frequency, the double- stack route must have enough volume for six-day-per-week service at major hubs, and five-day-per-week service at intermediate points. The study applies these criteria to 1987 rai,l and truck data to identify a core network of trirck-competitive double-stack routes, and truck flows that could potentially be diverted. The core network includes much of the existing intermodal traffic* but some significant flows would remain in trailers qr convert to double-stack for other reasons. The, study also applied growth factors to estimate potential year 2000 flows. The hypothetical 1987 double-stack network would include about 5.9 million container movements, of which,1.2 million were already.in containers, 1.1 million were in trailers, 0.4 million were in boxcars, and 3.2 million were in trucks. About 264,000 new domestic containers, 132,000 chassis, and 5,300 double-stack cars would be needed. Most intermodal terminals have adequate capacity, but some investment would be required for expansion of smaller facilities. There will also be a significant cost for improved clearances on some routes. The railroads may incur only part of this capital cost: most equipment is supplied by Trailer Train, ocean carrier affiliates, or leasing companies, and some nonrail participants have financed terminals or clearance improvements. For domestic double-stack services to prosper in competition with trucks, railroads may have to take unaccustomed steps into marketing and customer service, or become strictly line^haul carriers and rely on others for the remaining service functions. For ports and ocean carriers, the implications are mixed. Ports must accommodate international double-stack growth, but will be only indirectly affected by domestic containerization. The North American 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 advent of double-stack container systems,has dramatically altered inter­ modal transportation. New firms have entered, existing firms have new roles, and new alliances have formed. A distinct intermodal industry is emerging. To realize the full potential of domestic double-stack container systems, requires that the intermodal industry must face several challenges that can be summed up as one: provide and market a reliable, high-quality, door-to-door service. If the intermodal industry can do so, double-stack container systems can compete successfully with trucks and sustain a much larger traffic volume and market share than intermodal transportation has yet achieved. - 1 T - Table of Contents Page Abstract i I. Background and Purpose 1 A. Background 1 B. Purpose of This Study 3 C. Study Approach 3 II. The Status of Double-Stack Container Systems 6 A. Intermodal Rail Technology 6 B. Relevant Rail Traffic 7 C. Relevant Truck Traffic 9 D. International Container Traffic 9 E. Rail Intermodal Facilities 9 F. Current Double-Stack Services 10 III. Competitive Double-Stack Container Services 11 A. Cost and Service Advantages over Piggyback 11 B. Cost and Service Competition with Trucks 12 IV. Potential Double-Stack Networks 14 A. 1987 Double-Stack Corridors 14 B. 1987 Diversions of Truck Traffic 14 C. Year 2000 Double-Stack Network 16 D. Network Overview 16 E. Major Trends and Data Adequacy . 1 8 F. Sensitivity to Truck Costs 18 G. The Domestic and International Container Mix 19 H. Double-Stack Equipment and InvestmentNeeds 20 I. Rail Intermodal Terminal Facilities 22 -iii- Table of Contents (Continued) Implications for Railroads 24 A. Double-Stack Service Functions 24 B. Multimodal Ownership or Control 26 C. Operational Issues 26 D. Managerial, Marketing, and Institutional Changes 28 Implications for Ports and Ocean Carriers 30 A. Implications for Ports 30 B. Implications for Ocean Carriers 31 Market Forces and the Double-Stack Network 34 A. Market Forces and Incentives 34 B. The Extent of Double-Stack Conversion 34 C. Market Shortfalls and Public Sector Involvement 37 Major Conclusions 39 Table of Tables Follows Table Description Page 1 Intermodal Car Fleet Status 6 2 Intermodal Car Comparisons 6 3 International Container Flows by Coast 9 4. .. Double-Stack Operating Costs 12 5 1987 Double-Stack Corridors 14 6 1987 Truck Diversion Corridors 15 7 Double-Stack Network Traffic Sources 20 8 Rail Equipment Needs 20 9 Intermodal Hub Capacity and Shortfalls 22 -v- Table of Figures Follows Figure Description Page 1 1987 Container Flows 8 2 1987 Trailer Flows 8 3 ' Selected 1987 Boxcar Flows 8 4 1987 Relevant Rail Traffic 8 5 Regional Definitions 9 6 1987 Truck Flows 9 7 1987 Rail and Truck Flows 9 8 1988 Double-Stack Hubs 9 9 1989 Double-Stack Network 10 10 Rail and Truck Transit Times 13 11 1987 Core Double-Stack Network 14 12 1987 Core Double-Stack Flows 14 13 Drayage Patterns 15 14 Divertible 1987 Truckload Flows 15 15 Combined Double-Stack and Truckload Flows 15 16 2000 Core Double-Stack Flows 16 17 Complete Hypothetical Double-Stack Network 17 18 Changing Intermodal Roles 24 19 The Emerging Intermodal' Industry 29 -vi- I.
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