Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
A leading shipper group said today that rail customers would save between $900 million and $1.2
billion a year in freight costs if the federal government adopted the group's proposal governing reciprocal
switching between the nation's four major railroads.
The National Industrial Transportation League (NITL), in unveiling a 160-page report supporting
its July 2011 proposal, said new switching rules would provide badly needed service alternatives to
so-called captive shippers, companies that cannot use another mode of transportation or even another
railroad to move their traffic.
Under reciprocal switching, a railroad, for a fee, switches carload freight to another railroad to give
a captive shipper access to facilities it might not otherwise reach. The switching charges are paid by the
receiving railroad. The customer pays the originating railroad, which would build the switching fee, and
perhaps an additional amount, into its overall charges to compensate it for the revenue foregone by switching
the traffic to its rival for carriage.
The NITL proposal would allow a captive shipper or receiver to gain access to a second rail carrier if the
customer's facility is located within a 30-mile radius of an interchange where regular switching occurs. Only
true captive customers—defined by NITL as a business with no alternatives from other railroads or other modes—
could qualify. The switch would not occur if the affected railroad could prove the practice would be unsafe or is unfeasible
or harmful to existing rail service, the shipper group said.
NITL said the 30-mile interchange distance is not "set in stone," adding that captive customers can qualify for
switching opportunities if they have, or can develop, a viable interchange with two Class I carriers within a reasonable
distance of the shipper's facilities.
The cost-savings forecast by NITL was based on a government formula known as the "Revenue Shortfall Allocation Method,"
or RSAM. Developed by the Surface Transportation Board (STB), the federal agency overseeing the rail industry, the formula
measures the average mark-up a railroad would charge all of its "potentially captive" traffic to earn what the agency would
deem to be adequate revenue on the movement.
NITL hired a consulting firm to analyze the STB's confidential database of waybills to assess the economic impact on
shippers and carriers. The group also retained a second firm to assess the switching environment in Canada, where the
practice is required by law. Bruce Carlton, NITL's president and CEO, said in a press briefing today that the Canadian
model has been in place for decades and has worked well for shippers and carriers.
The four U.S. Class I railroads analyzed were CSX Corp., Norfolk Southern Corp., Burlington Northern Santa Fe railway,
and Union Pacific Corp.
Under the 1980 Staggers Rail Act that deregulated the industry, the STB can order the creation of reciprocal switching
agreements so captive shippers can have access to the services of a second railroad. However, Carlton said no captive
shipper has ever gotten access to competition under the current rules, adding that it is why new rules are needed.
Carlton said the NITL proposal is not a bid to re-regulate the rail industry. He called it a focused and balanced effort to
provide captive shippers with enhanced service alternatives. He said the railroads would benefit because the lower rates that
would be spawned by the switching rules would result in more shipper traffic. Carlton added that railroads would be motivated
to keep more of the traffic that might otherwise be switched. That would mean little, if any, switching would take place, he
said.
The group has been pressing the STB for 18 months to begin a rulemaking into the case. The board declined to do so but
created a docket (Ex Parte 711) to accept information from interested parties on the NITL proposal.
Holly Arthur, a spokeswoman for the Association of American Railroads (AAR), declined to comment, saying the AAR would
wait until early next week to respond. The railroads have argued that shippers have alternatives to get their goods moved
and that they have adequate redress. The association says that a move towards mandatory reciprocal switching would degrade
service levels, add costs that would eventually be borne by shippers, and be tantamount to re-regulating the industry.
Lawrence H Kaufman, a long-time rail executive, consultant, and writer, said that the "math doesn't work" to support the
NITL proposal, predicting that the railroads won't go along with an approach that effectively takes money out of one of their
members' pockets.
One possible scenario, according to Kaufman, is that the originating railroad will raise shippers' rates to high levels in
order to recoup foregone revenue. This in turn would cause angry shippers to descend on Capitol Hill to demand Congress address
the issue of sky-high rail charges, which could put the industry on a slippery slope toward re-regulation. That scenario, he
believes, would suit NITL just fine.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.