Rail transload facilities play a vital role in many companies’ shipping networks. These facilities allow shippers to realize benefits from a combination of rail and truck. Perhaps you’ve used the same transload facilities for some time, and you’re wondering about other opportunities. Or perhaps you’re reassessing your shipping plan to accommodate new receivers, new products, or taking a closer look at recent price increases. When selecting a rail transload facility, you may have more options than you think. There are several factors that can help you choose a rail transload facility.
Background of Rail-to-Truck Transfer Terminal
Rail transload facilities have not always existed. While North American railroads expanded significantly in the middle and late 19th century, and trucking was popularized in the early 20th century, these two modes didn’t meet until the 1960’s with the FlexiFlo™.
Over 50 years ago, the New York Central Railroad was the first rail carrier to experiment with rail-to-truck bulk transfer terminals, which they trademarked as FlexiFlo™. The marketing tagline for the FlexiFlo™ terminals promised shippers that they could “receive the low-cost benefit of long-haul rail transportation, with the speed and flexibility of local truck delivery”.
Today, transload terminals offer these same benefits, with a wide range of locations operated by major railroads, shortline railroads, and other logistics businesses. Choosing among or between them is sometimes straightforward, since there may be few, or even just one option. In other cases, selecting a rail transload facility can mean lower rail rates, shorter truck shipping routes, and better options.
Selecting a Rail Transload Facility
Choosing the right rail transload facility generally involves three major factors; distance to receivers, rail lines available, and the transloading facilities equipment. Gathering necessary information about each of these factors can help you balance them, and choose a rail transload facility with maximum benefits.
Distance to Receivers
Combining rail and truck transportation using a transload facility gives you the cost-saving benefits of multimodal shipping. When comparing costs per ton mile by truck and rail, rail has the potential to cut costs in half. This means minimizing transportation by truck can dramatically reduce costs. With that in mind, it’s important to choose a transloading facility as close as possible to your receivers. However, it’s also important to consider volume in this equation.
A good rule of thumb is to choose a transloading facility as close as possible to your primary receiver, as this normally yields the lowest cost. However, if a transloading facility closest to your primary receiver brings you much farther away from your other receivers, more detailed calculations may be needed.
Serving Rail Carriers
Many transloading facilities are served by a single rail line. These facilities give shippers few options, and this makes many shippers subject to captive rates. Other transload facilities give shippers access to more than one line-haul rail carrier. In some cases, it may be economical to move to a farther transloading facility if it is possible to negotiate competitive rail rates. Even having this option can help in negotiation alternative pricing with your existing rail carrier.
As you consider transloading facilities in your area, take a closer look at rail carriers available. A relatively minor route shift can give you access to other rail carriers and more competitive rates, especially in congested areas.
Transloading Facility Materials and Equipment
Bulk transfer terminals typically accommodate various dry and liquid commodities such as plastics, chemicals, fuels, food-grade products, minerals, aggregates, lumber and municipal waste. Safely and efficiently moving these materials to and from rail cars and trucks requires specialized equipment. It is important to ensure that your transloading facility can accommodate the products you’re shipping, especially when working with hazardous materials.
Some transload facilities specialize in certain materials. Though it isn’t common, these facilities may refuse shipments that pose particular risks to other shipments. For example, transloading facilities may refuse explosive or radioactive materials due to a high level of liability and risk to other shipments. In these cases, alternative shipping methods will be required.
Selecting the right transloading facility is an essential component to a cost-effective overall bulk terminal strategy. This can help you negotiate more competitive rail rates, get closer to your largest receivers, and protect your shipments with top-quality equipment and safety measures. To compare transloading facilities in your area and locate new potential routes, take a look at our transloading facility map, or contact our experts about a transloading plan.