The Last Mile: Railroads are keeping their customers mystified

Nov. 7, 2005
I could swear I've heard rail shippers walking around singing Leon Russell's "Tight Rope" lately. The line they seem to repeat is, "Up on the tight rope,

I could swear I've heard rail shippers walking around singing Leon Russell's "Tight Rope" lately. The line they seem to repeat is, "Up on the tight rope, one side's hate and one is hope." But if you listen to a host of "experts" commenting on the 25th anniversary of the Staggers Act that deregulated the rail industry, they're singing a love song. Who's right?

Looking over some of the verbatim comments in the latest Freight Pulse study (see cover story, "Higher costs aren't dampening shipper confidence"), I found a shipper who managed to summarize most of the negative arguments when he wrote: "My company is more irritated than ever with the way [the railroads] treat customers — not just with the pricing practices, but all other facets of customer service. We feel extremely alienated from them. Their words about wanting to satisfy customers are false and misleading. If I had options, I would exercise them immediately, if not sooner."

While shippers gave the railroads slightly better marks for service than they did in the previous survey, gaining two-tenths of a point doesn't seem that significant when the ranking still hovers below six on a 10-point scale - put another way, a score of 58% vs. 56%. On "delivery when expected," the scores range from a low of 44% to a high of 68%. Service reliability for less-than-truckload carriers, on the other hand, range from a low of 69% to a high of 76% of scale --roughly 20 points higher than rail.

Asked why intermodal volumes are rising, shippers are clear it's not due to improved service. Most respondents attribute it to Asian imports; the response "intermodal service has improved" garnered only a 4.8.

There seems to be no disagreement that flexibility has helped the rail industry survive, but the fewer, larger railroads serving U.S. shippers seem less responsive, judging by shipper comments. Without the dramatic rise in offshore sourcing that has raised the level of containerized imports, would the rails be seeing revenues and profits at current levels?

The railroads face some serious challenges in the near term to fund infrastructure maintenance and expansion and to find ways to improve efficiency and service.

When it comes to agility, the railroads seem to have shed ounces and gained pounds in the 25 years since deregulation. It may be that the most vocal shippers are those who are dissatisfied with rail performance and value. If they see railroads as the mode you love to hate, that other vocal minority who have declared deregulation a success may be overemphasizing hope.

So, when it comes to rail, we're all just trying to keep our balance, and most shippers appear to be performing without a net.

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