The Role of Rail in Addressing the Supply Chain Crisis

Just like every other player in the supply chain, rail has faced unpredictable ups and downs as it adapts to an array of unprecedented challenges that inhibit the efficient flow of goods throughout the country. Citing rail traffic reports from the Association of American Railroads (AAR), Railway Age notes that although rail traffic was up at the beginning of the year, steady declines have been reported over the last several months.

Commenting on October’s report, AAR Senior Vice President John T. Gray underscored the complexities involved: “For railroads, the supply chain challenges are being felt most keenly in our intermodal terminals where rail customers have been unable to clear their freight as quickly as they and the railroads would like. …The shortages of dray trucks, drivers and warehouse space are significant constraints that drove intermodal volumes down in October. Railroads continue to work closely with their customers and supply chain partners to address these challenges, while maintaining network fluidity and delivering the maximum possible freight volumes safely and efficiently.”

Rail and the Supply Chain

An AAR publication, Balanced Freight Rail Regulation: Defining Our Past & Charting Our Future, describes changes in the industry over the past 40 years in terms of traffic patterns, competition, and global supply chains.

One of the big shifts has been the surge of intermodal traffic over the past few decades. AAR defines rail intermodal as “the long-haul movement of shipping containers and truck trailers by rail,” and notes that “Intermodal is crucial to the growth of e-commerce, which did not even exist 40 years ago. Intermodal has been the fastest-growing major rail traffic segment over the past 25 years.”

This AAR video provides an overview of rail intermodal dynamics within the supply chain.

The AAR publication also describes the impact of the COVID-19 pandemic in terms of supply chain disruptions, which have “highlighted the importance of the reliable movement of goods. Global manufacturers’ reliance on just-in-time delivery, coupled with booming consumer demand, including e-commerce, has meant that minor delays can impact a single product from many angles at once.”

Describing the various dynamics that have led to the current supply chain crisis, the AAR underscores that despite the many changes and challenges it has faced over the years—including the pandemic— the rail industry has displayed resilience:

“The COVID-19 pandemic has shown that railroads will rise to the challenge of economic fluctuations and unpredictable global developments to keep goods moving for Americans. As a report by the Northwestern University Transportation Center found, ‘the U.S. freight rail industry was an essential component of pandemic resilience’ in 2020, ‘demonstrating a high level of adaptability to meet consumer and business demands’ and an inherent value to our nation’s logistics and transportation operations.”

The report, The U.S. Railroads and COVID-19: Keeping Supply Chains Moving, describes the challenging dynamics of the pandemic for the U.S. freight industry: “Manufacturing slowed, consumer purchasing patterns changed, and for many, shopping moved online. The freight industry suffered a sharp decline in shipments, followed by a surprisingly quick rise. The movement of goods by freight rail had to quickly adapt to meet dynamically changing demand and volatile supply patterns. Despite this disruption, freight rail showed a great deal of resilience and reliability.”

For more details, please access the full report.

Demonstrating some of the ways this resilience is being achieved, an AAR supply chain fact sheet cites a number of initiatives that have been implemented to help address supply chain congestion.

Creative Solutions in Rail

Aligning with this spirit of resilience, the following are just some of the creative solutions various rail stakeholders and partners have implemented recently that have been in the news.

October 7th — Union Pacific to test robotic cranes at Chicago intermodal hub: “Union Pacific purchased five autonomous cranes as part of an effort to reduce greenhouse gases and streamline the loading and unloading process at its Chicago-area terminal, according to a recent announcement. …”

October 28th — Union Pacific, Long Beach port, Utah facility combine for new service to ease congestion: “Union Pacific, the Port of Long Beach, and the Utah Inland Port Authority have announced the launch of direct rail service between the Long Beach and Utah facilities to help address ongoing port congestion. …”

November 15th — Georgia Ports Authority caps off Mason Mega Rail Terminal: “Gov. Brian Kemp on Friday announced the Georgia Ports Authority (GPA) has completed the Mason Mega Rail Terminal at the Port of Savannah and now is operating a second set of nine new tracks at the facility. The terminal — which features a total of 18 new tracks — increases the port’s intermodal capacity by more than 30%…”

Of course, another major announcement affecting rail was the recent passage of the bipartisan infrastructure bill in the U.S. House of Representatives, which the AAR praised.

The AAR celebrated once more with the official infrastructure package signing. In a November 15th press release about the signing, AAR President and CEO Ian Jefferies issued the following statement:

“Today, the nation took a long overdue step toward a more competitive, prosperous economic future with President Biden’s signing of the comprehensive infrastructure package. Prioritizing investments and commonsense policy solutions were the results of thoughtful, bipartisan negotiations and the tireless work of many. As we collectively face today’s challenges and build tomorrow’s opportunities, this package will help pave the way for a more modern, safer and resilient infrastructure network.”

The press relates notes that “The Infrastructure Investment and Jobs Act includes nearly $845 million per year for highway-rail grade crossing safety and elimination projects and an average of $5.55 billion per year for discretionary infrastructure grant programs, including $1 billion per year for the Consolidated Rail Infrastructure and Safety Improvement (CRISI) grant program, which provides essential support to short line and passenger railroads as well as state departments of transportation. Finally, the bill includes significant funding for research, development and demonstration projects that will play an important role in creating and further refining technologies that will help railroads to continue reducing their greenhouse gas emissions and further address climate change.”