MIM 534 Global Logistics Mode presentation ~Rail~

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MIM 534 Global Logistics
Mode presentation Rail

• Presented by
• Cody Philpot, Travis Christensen, Varick
  Schwartz,
• Ai Tokumatsu, Ya-Yu Tu

2
Rail Advantages

• Affordable
• fuel efficient
• low labor cost
• Reliable
• Extensive infrastructure
• already serves major raw materials sites (mines,
  smelters, refineries)
• already exists in many parts of the world
• Versatile
• can move containers, animals, automobiles and
  commodities
• can move large or bulky items and hazardous
  materials
• Environmentally friendly and sustainable

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Rail Disadvantages

• Not as secure for valuable or small items
  (remember Jesse James?)
• Slower than truck or air
• Often has to stop multiple times to switch cars
  or load product
• Some track is remote and inaccessible, in case of
  need for repairs or track clearing
• Restricted to contiguous land masses
• Pricing Variability
• company rates not publicly available
• customer can be held captive if product source
  only sits on one companys line
• Monopoly / Oligopoly industry structure and
  pricing as result of deregulation
• Cannot travel into newly developed geographies or
  custom destinations
• Difficult to load compared to truck or plane

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Investor Perspective

• Comparison with trucking industry (main
  competitor)
• fuel costs per ton moved are lower
• can continue to learn from trucking by passing
  fuel increases on as surcharges
• market niches exist in coal, large equipment,
  hazardous materials, commodities and containers
• Costs
• much of infrastructure fully developed
• new locomotives and cars are increasingly
  available through lease
• Warren Buffett
• influential investor started large capital influx
• Transportation trend towards increasing rail
  volume
• deregulation allows room for price increases and
  improved margins

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Types of Railcars
TYPE OF RAILCAR TYPE OF FREIGHT SPECIAL FEATURES
Boxcar Boxed, crated, palletized Most common type worldwide
Refrigerated Boxcar Perishable Specialized for various foods
Container Stack Ocean Containers (Stackable) 20, 40, 45, 48, 53 sizes
Flat Car Oversize (loaded from side or top) Machinery, equipment, etc. Various lengths, include multiple tie-downs
Tanker Bulk liquids, including hazardous or corrosive Product specific linings and coatings available, nozzle-fitted
Hopper Car Free flowing dry bulk commodities, covered or uncovered Can be loaded from top and unloaded from bottom
Gondola Scrap metal, industrial minerals Specialized for steel industry
Center Partition Lumber, plywood, building materials Center partition to secure loads
Auto Carrier Automobiles Adjustable Decks, Internal ladders
All information this page from Dictionary of
International Trade, 7th edition.
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Rail Companies Resources

• Predominantly United States Class I Rail
  Operators
• Burlington Northern
• CSX Corporation
• Norfolk Southern
• Union Pacific
• Predominantly Canadian Class I Rail Operators
• Canadian Pacific
• Canadian National
• United States Rail Organizations
• Department of Transportation Surface
  Transportation Board
• Alliance for Rail Competition
• National Industrial Transportation League
• Consumers United for Rail Equity
• Rail Price Advisor
• North American Railcar Operators Association

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Railroad Logistics in Japan

• Japanese railways are predominantly used for
  public transportation.

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Railroad Logistics in Japan

• Railroads share 0.8 of logistics in Japan and
  the share is decreasing
• Trucks and ferries share 84 of logistics in
  Japan.
• Main cities are located close to each other.
• Train requires multiple stops and reloads.
• Modal shift
• Shift change from trucks/airlines to trains or
  ships.
• Trains are cheaper and environmentally friendly.
• Reduces CO2 level by 55.
• Hitachi, Sumitomo, major Japanese companies are
  shifting their logistics to trains.

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Q A

• Thank you!!