Rail Shippers Tool Kit Getting to Know You

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Rail Shippers Tool KitGetting to Know You

• Libby Ogard
• July 16, 2007

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Northern Wisconsin, Upper Peninsula, MIRail Study

• Midwest Regional Short Line Railroads Annual
  Conference
• July 16, 2007

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Current State of Truck and Rail Transportation
Network

• Rail and truck capacity becoming tight for the
  first time since 1979
• Rate rising for both modes
• Trucking industry is using rail for intermodal
• Coals and grain resurgence
• Industrial products outpacing US GNP
• Long lead time for rail infrastructure
  improvements

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Transportation Trends

• Increase in transportation volumes
• Decrease in
• Infrastructure capacity
• Equipment

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Railroad Trends

• Long period of inadequate Return On Investment
  (ROI)
• Record profits and investments in 2006
• Most capital intensive industry
• 15 of capital spending for new capacity
• Raising costs
• Concentration on main corridors

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Declining Rail Car Capacity

• Class 1 Railroad Cars
• 1960 1,658,292
• 1980 1,168,114
• 1990 - 658.900
• 2000 560,154
• Net loss 1,098,138 cars

• Short Line Railroad Cars
• 1960 32,114
• 1980 102,161
• 1990 - 103,527
• 2000 132,448
• Net Gain 100,334 cars

Overall the rail industry has lost 997,904 rail
cars in the past 40 years. Bts 2003 New rail cars
have more capacity per car, 1 rail car gt 3
Semi-trucks. Rail roads have improved use of
cars but fewer cars less system versatility and
resilience to handle smaller markets
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U.S. Railroad Performance 1964-2002(Index 1981
100)
Productivity Increases
Volume
Staggers Act Passed Oct. 1980
Revenue
Price
Source AAR
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Wisconsin Central Sale Created A Change for
Wisconsin Rail Users

• Service Frequency
• Car availability
• Activity Based Costing
• Customer Service

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Regional Focus Changed
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CN Purchase of WC

• New North American Network
• Significant impact to the region
• Elimination of 4 Intermodal terminals

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Downward Spiral
Lower rail volumes
Rail Carriers
Shippers
Service deterioration
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Reversing the Trend
Higher rail volumes
Rail Carriers
Shippers
Co-operation
Increased investments and service
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Northern Wisconsin and UP Michigan Rail Study -
Background

• Federally funded rail study
• Initiated by regional shippers and economic
  development agencies
• Dissatisfaction and concern for continuing rail
  service in the region
• Transfer from regional to national carrier
• Commodity mix
• Shipping quantities
• Diversion of rail traffic to other modes

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Study Area
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Objectives and Methodology

• Objectives
• Find methods to increase regional use of rail
• Create potential for regional economic growth
• Methodology
• Practical approach
• Collect stakeholder input
• Encourage cooperation between groups
• Identify and develop beneficial tools and
  processes

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Growing Rail Freight Study Action Plan

• Evaluate rail infrastructure and hold Stakeholder
  meetings
• Assess the current rail service and condition of
  rail lines
• Share ideas for addressing concerns communicate
• Shipper/carrier/government associations
• Develop new or expand existing associations
• Survey to ascertain rail issues
• Examine possible solutions and provide
  recommendations based on findings
• Develop data base of supply chain providers and
  other support business
• Catalog and disseminate companies and education
  programs
• Create Model of Rail Development GIS System
• Stimulate future and expanded rail usage
• Regional economic development

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Shipper Meetings

• Individual interviews with Rail and Shippers
• Included Shippers, Rail, Government Agencies
  active participants
• 9 meetings at 8 locations
• Research team an impartial facilitator
• Power Point presentations
• Questions answers
• Open dialog

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Stakeholder Meeting Outcomes

• 171 participants total
• Positive Involvement
• Public environment to present viewpoints
• Presentations enabled to validate trends
• Direct communication between Carriers, DOTs, EDAs
  and shippers
• Research Focus
• Adjusting and reprioritizing study activities
• Encouragement to participate in shipper survey
• Organizing additional communication opportunities
• Immediate outcomes in log transportation
• More focus on railroads in transportation
  discussion

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CN Response

• 525 Bulkhead flat rail cars were refurbished
• 200 were provided to the round wood market in
  Michigan
• Market down turn followed
• Equipment did not meet utilization expectations

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Study Findings

• Inadequate data
• Current rail facilities
• Future demand supply
• Challenging to motivate stakeholder participation
• Limited understanding of rail industry and
  operations
• Only negative publicity sees daylight
• Need to improve communications and information
  transfer
• Education Rail User Tool Kit

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Question 24 If you are unable to provide a back
haul shipment for the carrier making a delivery
to you, do you coordinate with other local
companies to provide a back haul for the carrier?
Action Item III Survey to ascertain rail
issues 43 Companies Responded
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Question 4 Product Type(Percentage of
Respondents)
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Action Item IV

• Develop tools and data base of supply chain
  managers and other transportation support
  business
• Catalog and disseminate third party provider
  companies and education programs
• Work with extension offices to set up programs
• Provide model of rail costing decision tool for
  shippers

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Rail User Tool Kit
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Tool Kit

• Definitions
• Maps
• Contacts
• Resources
• Case Study

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• A Transportation Case Study

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Rail History
Medford,WI
Inbound
Inbound
Outbound
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Existing Rail Fleet Inadequate

• Rail pooled equipment was in poor condition
  which lead to a decision to design a custom fleet

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Lumber Car
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New Equipment Specifically Designed to Weather
Shield Spec
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Action Item V

• Create Model of Rail Development GIS System
• Stimulate future and expanded rail usage
• Regional economic development tool
• Modeled on proven systems in other states
• http//www.dot.state.pa.us/
• Pennsylvania Rail Freight Properties Directory

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Ashland Subdivision
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Example Town of Mellen
Base maps indicate the purple-shaded track
We found that these two sidings no longer exist
at all
and these sidings and spurs do exist, but are
not shown at all on the maps.
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Conclusions

• Stakeholder meetings effective forum to educate
  and discuss issues
• Importance of multi-way facilitated
  communications
• New as well as current customers vital to rail
  health
• Rural areas with natural resource based economies
  dependent on rail service
• Rail service in Northern Wisconsin and UP
  Michigan can not be taken for granted

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Recommendations

• Improve communications Long and short term
  plans for carriers and shippers
• Rail Carriers expand outreach to seek customer
  input
• Tools are needed to support Supply Chain
  Management
• Support shippers and rail carriers interaction
  with regional communities
• Formally recognize the external costs of
  transportation

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Recommendations

• Explore the feasibility of adding Transload
  Centers
• Short line or regional railroad options
• Promote economic development by enhancing rail
  access

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Rail Service and Infrastructure Conundrums

• How do you justify expenditures if traffic
  volumes are low?
• How can volumes grow if shippers feel rail will
  not provide suitable service?

Use it or Lose it
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Acknowledgments

• CN Railroad and short line railroads
• Shippers and shipper associations
• Wisconsin and Michigan DOTs
• Economic Development Agencies in the Region

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For More Information

• Libby Ogard
• President
• Prime Focus LLC
• 918 Fox River Drive
• DePere WI 54115
• 920-217-7222
• logard_at_new.rr.com

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UW-Superior Website for Tool kit and Study
http//www2.uwsuper.edu/trans/