At the same time that rail congestion led to the suspension of Cold Train Express Intermodal Service this summer, two new refrigerated rail services were just getting started.
In June, Minneapolis-based McKay TransCold began offering a refrigerated, dedicated boxcar unit train dubbed Transcold Express, which runs each week between Wilmington, Ill., and Selma, Calif. Meanwhile, Tiger Cool Express LLC, Overland Park, Kan., started intermodal services from multiple locations in southern California to destinations in the Midwest and East Coast in February.
Representatives for both companies said that the congestion that plagued Cold Train on BNSF’s northern lines has had little effect on the southern BNSF and Union Pacific routes that their equipment travels on.
“Since we started in June, we’ve been ahead of schedule on our rail movements,” said Jason Spafford, vice president of business development for McKay TransCold, which offers four-day service from California to Illinois.
On-time deliveries for shipments on BNSF’s Northern Corridor fell from more than 90% in November to less than 5% in April due to surging more oil and coal shipments. Thomas Finkbiner, chief executive officer for Tiger Cool Express, said rail shipments of oil from North Dakota on BNSF’s Northern Corridor have increased from 20,000 tank cars three years ago to more than 400,000 this year. And unlike major southern rail routes in the U.S., that northern route isn’t double tracked.
“That makes it difficult for high-speed trains to keep transit times,” said Finkbiner, whose company uses Union Pacific lines for the vast majority of its business.
Congestion, however, could migrate from one rail network to another as shippers and receivers look for alternatives, he said. Finkbiner said BNSF’s intermodal shipments have fallen 0.5% in recent weeks, while Union Pacific traffic has increased at least 10%. So far, he said, that increase had not affected his company’s schedules.
Tiger Cool launched with 200 containers, and Finkbiner said the company’s goal is to expand to 2,000 containers within five years. He said the company is on pace to make $20 million in its first year of operations.
“Produce is the last long-haul, $100 billion market that intermodal hasn’t penetrated,” said Finkbiner, who added that more than 95% of fresh produce was delivered by truck last year in the U.S.. “Trucks will get tighter. Drivers will get harder to find. It’s a migraine headache for shippers and receivers. This is an alternate long-haul capacity.”
Finkbiner said his company can move produce from the West Coast to the East Coast within six to seven days, compared to four days for a truck using a driving team or five to six days with a single driver. One incentive for rail customers, he said, is cost.
“The price point we try to be at is 15% less than trucks,” he said. “If you can’t go as fast as a truck you can’t be as expensive as a truck.”
McKay TransCold, meanwhile, is an evolving company that used to be a small tucking and brokerage firm before selling its trucks in 2012. For the past three years, the company has been moving to a new business model, which includes rail, truck brokering and freight forwarding. The company offers cold storage in California and plans to offer similar service in Illinois in the future.
The company’s trains arrive in both California and Illinois each Sunday with deliveries to customers on Mondays and Tuesdays before the trains head back the other way again on Wednesday. In addition to rail service, the company’s logistics services can help customers get their product to its final destination, even if that’s not in California or Illinois.
“Coming from a trucking company, we understand how tight trucking is right now,” Spafford said. “We deliver from Illinois to places like Virginia and the Carolinas because it’s more effective than using a truck the whole way. We have retailers who have never used rail, but they’re starting to. For 800- to 900-mile trips, it makes sense. People are understanding it’s important.”
And although some in the transportation industry might see rail and trucks as competitors, Spafford said the two go hand in hand.
“You can’t have a rail service and have it end there,” he said. “It has to go someplace.”
The bad news for Washington shippers — and their long-distance customers — is that neither McKay TransCold nor Tiger Cool won’t be replacing Cold Train in Washington.
“It’s not something we’re interested in now,” Spafford said. “We’re focused on service between California and the Midwest.”
Roger Pepperl, marketing director for Wenatchee, Wash.-based Stemilt Growers Inc., said the grower-shipper moved about 5% of its apples and pears on the Cold Train.
“It is a real negative for transportation,” he said. “Truck demand will go up for sure.”
Representatives for Rail Logistics, the Overland Park, Kan.-based company that operates Cold Train, did not respond to interview requests.