What Can be Done About the Nations Freight Capacity Crisis?

The U.S. faces a stark choice: expand the country's capacity to move freight or put a brake on economic growth. Industry experts explored the expansion route at a symposium at MIT’s Center for Transportation and Logistics in Cambridge, Mass., this past May.

Short-Term Solutions

Smoothing the various cargo volume peaks would help reduce congestion. For example, the Port Authority of N.Y./N.J. sees better vessel scheduling as a low-cost, short-term solution for boosting berth capacity. Some carriers are working to stagger sailing dates to avoid simultaneous arrival of too many ships on the West Coast. One company is changing its sales force incentives and staggering quota periods in an effort to flatten the peaks. Shipping and logistics group APL highlighted the collaborative PierPass program in the port of Los Angeles/Long Beach that uses a peak hour surcharge on local cargo movements to help drive the use of more off-peak movement.

Routing Asian goods to East Coast ports eases the burden on West Coast terminals, but this is a short-term fix since the Panama Canal is becoming a bottleneck. Current proposals to expand the Canal would offer more permanent relief.

Mid-Term Solutions

Better asset utilization could add capacity to the system, as evidenced by acres of empty containers in freight yards and excessive deadhead miles. The Port Authority of N.Y./N.J. is working to increase terminal capacity by reducing the number of empties, improving chassis management, and reducing dwell-time. These projects are relatively cheap, but it takes time to implement new processes.

Freight velocity is a critical metric for improving the capacity of the transportation network. Low velocities create demand for more infrastructure to handle the same freight volumes. Although each mode has some upper limit on velocity, most freight moves at less than maximum velocity. According to APL, high-priority intermodal freight moves at about 24 to 30 mph, and low-priority freight moves an average of 20 to 22 mph.

Carriers complained that grocery stores are notorious for tardy handling of deliveries, which delays the trucks. Yet the stores complain that they often don't know when the deliveries will occur and thus can't schedule labor for unloading. Better advance notice and delivery windows would help both sides to accelerate unloading. Better real-time data on congestion could help carriers make more accurate predictions of arrival times.

Toyota is a strong proponent of correcting internal company processes that might sub-optimize or waste transportation resources. The company takes account of transportation costs during the design phase of new car development. For example, if a component can be physically shortened to improve cubing of a trailer, Toyota will consider the design change.

Long-Term Solutions

In the long-term, the costs and reliability of long distance freight transportation could affect sourcing strategies. Whether the escalating cost of transportation might drive companies toward domestic or more local sourcing is as yet unclear. Some automakers seem to be increasing domestic content, and companies might be less likely to move more production offshore because of today’s high energy costs. Government and carrier respondents in MIT’s infrastructure study recommended more intermodal and rail yard facilities in their list of top five priorities for easing the capacity crunch.

A promising development is on-dock rail: dropping shipping containers directly onto railcars without any intermediate drayage or terminal yard stowage. This can boost a terminal's productivity per acre by 50%, according to the port of N.Y./N.J. The technique does require new infrastructure with rail extensions alongside berths. CSX cautioned that on-dock rail only works if the containers are sequenced.

The more effective use of existing capacity offers some opportunity for improvement. But these large projects take time and exacerbate congestion before relieving it. More investment in rail systems is critically important, and the railroads are devoting resources to much-needed expansion measures, such as double-tracking in congested segments of the network

Overall, solutions to the nation’s chronic freight capacity problems will include a range of measures such as more collaboration, better system visibility, and the sharing of costs and benefits. Perhaps the most serious threat to an expanded freight network is inaction, since it will take years to implement meaningful, long-term remedies.

Source: MIT’s Center for Transportation and Logistics

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