The problem with the rail industry is that over the last 35 years I have been a lumber broker the railroads have abandoned hundreds of sidings around North America.
For example, back in the 1970’s almost every larger lumber yard had a rail siding. Railcars shipped from the west coast or Canada back east or down south. The serving carrier would spot the flatbed or box car at the customers siding. Even if they only received one railcar per month or less.
Starting in the 1980s the railroads started abandoning lower volume sidings. Especially, after deregulation went into effect. So, a lot of the smaller volume yards had to start purchasing by truckload delivery. Reload facilities sprang up in most major cities. A reload unloads the railcar and then delivers to the customer by truckload.
Even several sawmills in more rural areas like North central Idaho no longer have rail service. I purchase from several sawmills whose rail service was abandoned in the last 25 years. They now have to truck their lumber to a place where it is loaded on rail car.
When you start adding all these extra origin reload and destination reload charges, in many cases it is cheaper to just truck directly to the customer.
The railroads really do not like making the milk run to fill up a train before it heads south or east.
They much prefer picking up 100 cars loaded with coal in WY and bring the entire train to the port of Tacoma. Same thing with tankers full of oil. The entire train goes from ND to the refinery without stopping. This is the type of business the BNSF, UP, CN, CPRS all love.
That’s a great post. It offers a good look at how the economies of scale have changed the rail industry in a way that makes it impractical for railroads to serve many customers directly anymore.
“The railroads really do not like making the milk run to fill up a train before it heads south or east. “They much prefer picking up 100 cars loaded with coal in WY and bring the entire train to the port of Tacoma. Same thing with tankers full of oil. The entire train goes from ND to the refinery without stopping. This is the type of business the BNSF, UP, CN, CPRS all love.”
I wonder if that was a singularly one-way decision by the railroads, just to increase profits without a negative-cost basis for doing so, and no other reason, or if it was a combination of increased costs for the smaller load-pickups/drop offs against growing competition from the trucking industry. You’d know better than I if that is off the mark.
Maybe, just another guess, the folks needing/liking the rail option at/near their facility, needed to become the owner operators of those shorter rail haul means (or a consortium of such related companies doing it together), and maybe doing so at no greater cost per unit than the rail freight outfits had been charging. At one point in the auto industry the automakers began buying up some of their suppliers, integrating them directly into their business line - it was cheaper to require Delco to make radios for GM cars than competing with other car makers willing to bid more for Delco equipment. Maybe the lumber industry in the 1980s needed to get into the short haul rail business themselves?? Maybe I am wrong.