There are many factors to consider when deciding how to move your goods to their final destination: How far do you need to ship your freight? How quickly does it need to arrive? What are your cost parameters? The answers to these questions will ultimately help you decide which mode of transport will suit your business’s shipping needs best.
This article offers an overview of the benefits of rail freight, comparing it to air, ocean, and road freight. Like these other modes of transport, rail freight is not ideal for every situation. But in many circumstances, rail freight is a speedy, cost-effective, and environmentally friendly option.
Rail Freight Services
Customers with urgent shipments can utilize Agility’s Rail Freight Services covering all the areas of China and Europe. These services include pre- and final assembly, special packaging, re-packing and re-labeling.
Comparing rail transit times to air, ocean, and road transit times
Rail freight is often one of the fastest ways to transport cargo to its final destination. But to fully understand the potential time-saving benefits of rail freight, it is important to consider all the elements that go into calculating the transit time for this and other shipping methods. Currently, it is also important to be aware of the effects of COVID-19 on shipping times.
Calculating transit times
First consider how far your goods need to travel. Then consider the possible routes that your goods can take to get to their final destination. Additionally, you need to think about how factors such as the time of year or traffic congestion can affect these routes. Because there are so many variations in possible shipping methods and routes, transit times between the same two points can vary widely.
As you consider transit times, it is also important to remember that a calculated transit time is an estimate—the amount of time that a carrier or freight forwarder thinks it could take to ship goods to their destination. In other words, estimates can vary greatly from the amount of time it actually takes to ship goods. Unforeseen shipping problems—such as vehicular mechanical failure and sudden schedule changes—can delay transit time and throw off an estimate.
Also keep in mind that the total transit time will include not only the time spent on each mode of transport but also the time it takes to transfer goods from one mode to another. For example, total transit time could encompass the following:
- transporting cargo by truck from a manufacturing site to a rail terminal
- transporting cargo by rail from the rail terminal and customs clearance
- transporting cargo by truck from customs clearance to its final destination
Comparing transit times for different modes of transport
Transit times between ocean, air, road, and rail transportation can vary considerably. However, transportation time doesn’t vary by cargo—once cargo is in a container, the contents don’t affect transit time.
Ocean freight is usually the slowest mode of transport. But route choice can have a major effect on the speed of ocean shipping. The most direct routes can be subject to disruptions from factors such as sea lane congestion or criminal activity and piracy, and alternate routes can require significantly more time.
Air freight shipping, on the opposite end of the spectrum, is usually the fastest. It allows on-demand order fulfillment, greater flexibility, and the shipping of very fragile and perishable goods. However, air freight usually isn’t a good choice for larger or heavier cargo.
Rail and road freight generally fall somewhere between air and sea freight in terms of transit speed. Road transportation is usually fastest for shorter distances, while rail often beats road over longer distances.
Multimodal transport can harness the benefits of both road and rail transport to produce significant time savings over ocean freight. Agility’s transportation answer for a global provider of air treatment solutions shows clear evidence of this. For this company’s transportation needs, Agility found that a combination of road and rail transport was 50 percent faster than ocean freight.
Considering the impact of COVID-19
In this unprecedented pandemic, it’s important to look closely at how COVID-19 has affected transit times. The conventional cost and time comparisons between transport modes don’t always apply in these unusual conditions, considering all the recent disruptions to supply chains.
Air freight, while still often the fastest option, has much lower capacity than it used to. This has driven rates higher and made air freight less reliable.
The pandemic has also impacted sea freight, with higher rates in response to current chaotic conditions. Because of overfull warehouses, some ships have taken longer, slower routes to avoid the problem of finding space on land to store goods. While helping avoid warehousing issues, this has significantly increased transit times in some cases.
Because of these changes, rail freight became a valuable alternative to ocean freight during the pandemic. Rail freight volumes have seen increases in some areas, and intermodal transport options that include rail have also become more popular.
Road transportation, in contrast, has seen more variable impacts. A survey from the American Transportation Research Institute and the Owner-Operator Independent Driver Association found that 87 percent of truck operators in the United States reported shorter traffic delays due to fewer cars being on the road during the pandemic. The same survey also, however, reported some increases in truck loading and unloading times due to the pandemic.
Agility Global Shipping Updates: COVID-19
The latest global shipping and operational outlook as the world copes with Novel Coronavirus (COVID-19).
Comparing rail costs to air, ocean, and road costs
Cost is always a major factor in choosing the best mode of transportation for your business’s cargo. The cost of rail freight in comparison to that of air, ocean, and trucking freight is quite competitive in general. And rail is the cheapest option for some routes.
Cost considerations for route planning
It’s important to think about the full range of costs when you are planning a route. The cost of transporting cargo from one place to another certainly includes the cost of a transport company. But it also typically includes a range of other charges.
These include customs fees, port charges, documentation fees, and insurance (which varies based on the security of the mode of transport). Shipping costs also typically include the cost of a freight forwarder, which manages everything involved in the transport. When making cost-based transport decisions, be sure to consider all of these additional costs before making your choice.
Cost comparison by mode of transportation
Air freight is usually the most expensive transport option. However, it’s also usually the fastest and can sometimes be the only choice for certain routes. For example, air freight might be the only option to reach an island without a major port.
Rail freight costs often compare favorably to other modes of transport. In normal times, rail is generally about 50 percent cheaper than air freight. But like sea freight, rail may not always be an option, depending on the availability of a rail network and the general transportation infrastructure where you’re shipping.
With these rail limitations, truck freight is often the most practical option for short routes, such as those with a distance of fewer than 500 kilometers or so. However, while truck freight can be cheaper for shorter routes, it is generally costlier than rail because of the need for more drivers to move the same amount of freight.
Inventory carrying costs
Rail freight can be a useful option for companies hoping to lower their inventory carrying costs. These costs can influence your profit margins, so considering the impact that transport has on them is important.
Calculating inventory carrying cost
Inventory carrying cost, simply put, is the cost of holding and storing inventory. It includes obvious costs like warehousing expenses, but it also includes less obvious costs. Among these costs are the salaries of employees who keep track of the inventory and keep it secure as well as fees for utilities, insurance, and equipment. All of these expenses can add up quickly.
Aside from these direct costs, you have to take into account the opportunity cost of holding on to goods rather than selling them. This can strain your working capital because inventory can’t make you any money while it’s in storage. Additionally, while it’s in storage, inventory can become obsolete.
Recognizing a hidden cost
Inventory carrying cost is often considered a hidden cost because it’s easy for manufacturers to focus on the cost of manufacturing goods and not the cost of maintaining inventory. It’s important to keep some inventory on hand to quickly meet consumer demand, but holding on to too much can be costly.
Inventory can make up a significant part of a company’s assets, so it’s important to surface all related costs to avoid missing potential savings. Many companies end up lumping carrying costs into a single sum, which hides all the different cost elements discussed above. If you do not look at each element separately, it can be hard to cut costs.
Reducing inventory carrying costs
Though warehousing likely comes immediately to mind when you consider inventory carrying costs, transportation can also contribute to these costs. As detailed above, opportunity cost is an important part of inventory carrying costs. The longer goods are tied up in transit, the longer the potential profit is tied up as well.
Rail transport times are shorter than ocean freight, so the time cost of rail freight is also lower. Rail can offer a good medium option between ocean and air transport. Rail freight saves time in comparison to ocean freight and money in comparison to air freight. Therefore, it can be a good choice for those seeking to reduce inventory carrying costs, offering a reasonably fast and cheap freight option.
A pragmatist’s guide to zero-emission logistics
Getting to zero emissions in logistics is a daunting prospect. Developing zero-emissions fuels and vessels is a critical pathway forward, but this approach has its limitations.
Carbon dioxide emissions
In addition to its advantages in terms of speed and price, rail transport can offer major reductions in carbon dioxide emissions in comparison to other modes of transport. Indeed, rail uses as much as 90 percent less energy than road transport per unit of freight, according to an International Energy Agency report. This report also notes that rail makes up about 7 percent of total freight transport but creates just 2 percent of the total transport energy demand.
Calculating carbon dioxide emissions
It’s not always clear how best to calculate carbon dioxide emissions. Demystifying that process is an important first step to comparing environmentally friendly shipping options. In general, to calculate your greenhouse gas emissions, you need to look at each segment of a shipping journey and add up how much fuel each mode of transportation uses over a given distance and time.
You do not need to do these calculations on your own, though. With the help of a new modeling tool, Agility specialists can assist you in accurately calculating the carbon dioxide emissions for each shipping option you are considering.
Comparing transport trucks and rail transport
Switching from transport trucks to rail transport can reduce carbon dioxide emissions in many cases. According to the World Resources Institute, switching from truck transport to rail or sea freight, or from short flights to rail, could cut carbon dioxide emissions by 20 percent. The same source reports that in the United States, trains move 32 percent of goods but produce only 6 percent of freight-related emissions. Trucks, by comparison, move 40 percent of goods but create 60 percent of emissions.
This is because trains have an advantage over trucks in several areas. They have higher capacity than trucks, so fewer are needed to move the same amount of goods. This translates to less fuel use. Trains can also carry cargo from multiple companies, so it’s easier to find efficiencies and fill a train to capacity. Though it would be difficult to replace trucks with trains for all trips, trains are the more environmentally friendly choice.
Reducing carbon dioxide emissions from all cargo transport
Across the transport industry, it’s important to figure out how to generally reduce carbon dioxide emissions and increase energy efficiency. If current practices remain the same, emissions will continue to go up as the global economy grows, and climate change will become an even more pressing issue. Luckily, however, there are a number of strategies to help cut carbon dioxide emissions across all modes of transport and move toward zero-emissions logistics.
First, finding ways to reduce the use of carbon-based fuels is key. Switching to less carbon-intense fuels, like biofuels or electricity, could make a big impact on emissions. For example, switching a diesel train to an electric train, wherever possible, could be very helpful. Unfortunately, trucks that use greener fuels aren’t being developed as quickly as smaller green vehicles, so more investment in this area could be helpful.
Increasing energy efficiency can make a huge impact on emissions as well. Better information technology can help freight carriers avoid unnecessary journeys and improve fuel savings. Increasing freight loads can also help make each journey as efficient as possible. Smarter planning, in other words, can contribute to greener transportation, even without fuel upgrades.
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Rail freight’s clear advantages
As this article highlights, rail freight has many clear benefits. It’s faster than road or sea freight over long distances, and it tends to be safe and predictable. Rail is also quite cost effective, particularly amid the COVID-19 pandemic. Furthermore, it is one of the most environmentally friendly freight options. While it may not be available everywhere, or practical over all distances, rail freight can be a great choice on its own or as part of an intermodal transportation solution.
Agility can help you find the best solution for all of your freight needs, whether they require rail transport or not. Contact Agility to get quotes, discuss logistics, or find warehouse space.
