Diesel Prices Boost Freight Use

ABINGDON, Va. – It’s not your imagination: There really is more freight rumbling down the railroad tracks these days.

As diesel prices rise, the movement of agricultural products, coal and intermodal freight – or containers that can be shifted between truck to rail – has increased, particularly in the past two or three years, said Robin Chapman, spokesman for Norfolk Southern.

“As diesel fuel becomes more expensive, the rail alternative becomes more competitive, and so some of our biggest customers are trucking companies,” Chapman said.

“Our big trucking customers … have told us they would love to use us more if we had the capacity to provide more trains,” he said.

Hernan Vera is group director of sales and marketing of U.S. supply chain solutions for Ryder, a large transportation logistics provider based in Miami.
He said fuel prices are “causing many retailers to rethink everything.”

That means the number of deliveries being made, the method of transportation and everything in between. In some cases, the solution is rail.

“Right now, there is a cost difference, there is a savings going to rail,” Vera said, “but there’s a tradeoff: You don’t have the flexibility, and it takes more time to get the product to your customer.”

Some folks in Southwest Virginia and up and down Interstate 81 are seeking to tackle that problem and create a new type of rail service. Their project, called “Rail Solution,” is getting more attention as fuel prices continue to rise.

They see a public-private partnership as the way to make transportation efficient for freight and passengers, said Rees Shearer, chairman of the group and an Emory resident.

“We feel like for the future of the United States and certainly for the future of the corridor along Interstate 81 in Virginia, we need to be thinking beyond the pavement,” Shearer said.

Among the issues he said are driving the need are fuel prices, land prices and the potential effect on the sagging economy of a speedy alternative to highway trucks in the high-traffic corridor between Knoxville, Tenn., and Harrisburg, Pa.

“What we envision is what’s called a steel interstate … not grandmother’s railroad,” Shearer said.

“It is a high-efficiency, higher-speed railroad that would provide service on a regular basis, scheduled and truck time competitive. In other words, you can offload your truckload in Knoxville and it would arrive in Harrisburg to be picked up by another truck at the same time roughly as if you had just driven straight through,” he continued.

To do this, he said, the rail infrastructure would need rebuilding, much like highways would in preparation for increased truck traffic.

Chapman said Norfolk Southern is also working on a rail system improvement plan, called the Crescent Corridor, to increase capacity to meet customer needs. The project involves double-tracking sections of and adding passing sidings along the company’s rail line, which parallels the interstate.
Much of the traffic moving between New Orleans and New Jersey is moving by truck, Chapman said.

“And a lot of that could move by rail if we had the capacity to handle it,” he said. “One impact that people are likely to see from this is fewer trucks on the highway, or at least not as much growth of trucks on the highway as the economy grows, by shifting some of that traffic off the highway onto rail.”

Vera said as fuel prices continue to increase, so does the viability of a concept like Rail Solution. But it will take intense coordination among railroads, businesses and government.

“It would take ... a lot of planning. Now, will the benefits of that planning and coordination be worth it? I think it could be if everyone works together,” he said.

“I think as the price of fuel continues to go up, everything is going to continue to be looked at,” Vera continued. “I think we’re at a level now that we’ve never had contingency plans, and we don’t have contingency plans for $6- or $7-a-gallon fuel … and I think what would not be viable at $4 a gallon would absolutely be viable at $7 a gallon.”

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