Riding the Rails

RAIL HAS TRADITIONALLY BEEN an inexpensive way to ship large quantities of goods. Some shippers have concentrated their expertise on integrating rail and other methods of shipping to construct client-specific networks for the most efficient and economical means of delivery. A case in point is UPS Logistics Group, founded in 1995 as a wholly owned subsidiary of United Parcel Service.

Rail shipments may or may not generally be cheaper than any other form of transportation, says Denny Barts, vice president of UPS Transportation Services and General Manager of UPS Autogistics, which developed in response to the need to deliver vehicles from Ford Motor Co. production to dealerships across the United States. There is nothing simple about the calculations required to determine the most cost-effective shipment method for a customer’s product. Product may be extremely time-sensitive, such as produce moving from West Coast growers to East Coast markets. Some products require special facilities — not all depots can handle automobiles, for instance. Ultimately, says Barts, “we look more at the value of what we’re spending with the railroad and what’s the whole package return for that price.”

Once it has assessed the customer’s needs, UPS Logistics develops a rail network to match the customer’s requirements and negotiates an appropriate contract with the railroads in question. “There’s a big, big checklist,” says Barts. Some networks can be integrated with existing networks; others are large enough or have unique characteristics that give them stand-alone status.

Barts says that U.S. railroads are now better able to focus and streamline their operations because they have largely put difficulties from a tough period of mergers and shakeouts during the last decade behind them. The next jump in efficiency may well be heralded by scheduled networks. Long considered a dream, a Canadian railroad has recently achieved the goal of a scheduled network and is running profitably. Look for U.S. railroads to follow suit, although, as Barts says, “it’s not going to happen automatically; there’s a lot of work involved.”

Technology has greatly enhanced UPS’s efficiency over the last few years, Barts says, although he is quick to credit the carrier’s employees and their expertise for making the technology work as well as it does. “What may have taken eight hours 20 years ago, now we can get done in an hour or two,” he says, adding that UPS’s tracking capability “still boggles my mind. It’s very cool.”

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