Railroad VS Trucking and the High Diesel Prices in 2006
By: Lance Winslow
Let’s face it high diesel prices take a toll on our economy and when this occurs there is a significant maneuvering of distribution assets to maintain efficiencies. Right now FedEx and other trucking companies have increased prices over 5.9% to make up for this.
With Diesel up even in the last week some 18 cents per gallon, we can see more “piggy back” (truck trailers on top of flat or tub rail cars) to lower costs of over the road trucks. Additionally with a shortage of drivers more rail seems to be a smart play. The dynamics of the transportation mix is an ebb and flow constantly jockeying for additional percentages one way or the other. I think you will find all this fascinating. The flow of Fuel is a big consideration in Rail Efficiencies;
http://worldthinktank.net/wttbbs/index.php?showtopic=15
As oil prices hit $70 plus dollars per gallon we will see a larger shift towards rail transportation, yet in many areas there is a back load and max’ed out schedule and thus we cannot take as much by rail as we would like. This means each item shipped will be indeed at a higher price. Higher prices will indeed also slow demand for products and thus less products will be produced to fulfill less demand. But as far as transportation goes, the most efficient method will prevail and it looks to be as if rail transportation is proving its worth to our nation currently.
Lance Winslow