Superhighways – How Rail Will Change Road and Ocean Logistics

October 27, 2015

rail logistics

 Warren Buffet had a vision when he bought BNSF, one of the largest freight railroad networks in North America, for $26.5 billion back in November 2009. Since Buffet bought the railroad network, annual revenue has risen more than 55% and earnings have more than doubled to $3.8 billion.

Long have the railroads of America been buoyed by the coal industry. CXS, a leading supplier of rail-based freight transportation in North America, recently announced that it had to cut 300 jobs as a result of immense declines in coal shipments. As a whole, the industry is seeing a 10% year-on-year reduction in traffic. It is clear, the rail industry is longing for change. 

Welcome to Superhighways and rail logistics. The China to Europe Superhighway, cross border excursion (the Trans – Eurasia) stretches more than 13,000 kilometers between Yiwu, south of Shanghai to Madrid. The first train departed on November 18, 2014 . It carried 82 containers and arrived on the 9th of December. Chinese leaders are looking to invest in high speed rail for freight. This would make a substantial impact on the current domination of ocean container trade. 

superhighways

Just as the Chinese have, Buffet is forging ahead with his own Superhighway. A critical move, as it relates to west coast containers traveling east, linking the busy port of L.A with Chicago. The second line of the 2200 mile route is not far from completion. The 64 hour trip will allow BNSF to target a market that is dominated by trucks. Rail is making a push into that 550 mile or more threshold where it can be a viable player and penetrate a market where its current participation is around 19%.

If we think about cross border logistics and global e-commerce, rail is about to make a citable impact in a number of markets. For retailers, e-commerce companies, and forwarders, competition in the transportation space is growing.  How will this change the landscape of logistics, transport and information?  

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