United States: Transloading Extends The Economics Of Rail To More Customers

Paul R. Hitchcock is a Senior Policy Advisor in our Jacksonville office.

Companies that use bulk products as inputs to their manufacturing or processing business often look to rail service as a way to reduce their transportation costs. Yet, many are not located adjacent to rail lines and there is no way that the railroad can operate into their facility. Bulk transfer services  or "transloading"  provided by a railroad, one of its affiliates, or an independent contractor can bridge the gap, combining the long-haul economics of rail with the convenience of just-in-time delivery by truck.

The practice of transferring product from one transportation mode to another probably dates back to the time of the Phoenicians, when goods beginning to move in long-distance trade were hauled by wagon or pack animal to ports where they were loaded into trading ships. Today, the same basic principle has been elevated to a highly specialized, technologically sophisticated tool in the modern logistics chain.

Hundreds of products from high-end chemicals to municipal solid waste can now be handled in this fashion. Plastic resins, high value liquids, and dry bulk products are some of the most often transloaded materials. Providers of transfer services welcome opportunities to tailor their services at a particular site to customer needs.

Transfer to or from railcar can be done by the employees of the transfer facility using the facility's own vacuum or pumping transfer equipment. Or, the customer can use a self-service approach where it or its motor carrier uses transfer equipment on board the truck to effect the transfer.

Some novel arrangements can be designed. Asphalt, for example, can be manufactured hundreds of miles away at a refinery and moved by rail to a transfer facility. It begins its trip in a hot, liquid state, but has begun to cool and solidify by the time it arrives. The transfer facility has the capability of producing steam and circulating that steam through pipes that jacket the asphalt tank car, returning it to a liquid state in which it is ready for use.

One facility in the northeast receives unit trains of fuel-grade ethanol and has the capability to transfer to pipes which carry the ethanol to storage tanks. From there, the gasoline additive is transferred into barges which carry it to a gasoline blending facility that has water, but no rail, access.

Since customization is the guidepost for this business, there is no "typical" bulk transfer facility. Still, a commonly encountered operation is several acres in size adjacent to a rail line and with good access to the local highway network. It is paved, fenced and lighted, with an office and certified truck scale on site. (The scale weighs trucks in and out for billing and inventory control purposes.) Several side tracks connect to the lead track that the railroad uses to enter the facility to pick up and deliver cars.

Most products in transload service move in private cars, that is, rail cars that are owned or leased by a producer or consumer of the product. This means that the receiver can store product temporarily at the terminal without paying demurrage to the serving railroad. However, to limit the number of cars on-site, the terminal operator will often place a cap on how long a car can stay on the facility's tracks, and will commonly assess a track occupancy charge after some allowed free time.

Bulk transfer services are growing more and more sophisticated. Information services may be added on to the basic transfer operation. The terminal operator may apply cargo seals, prepare the truck bill of lading for the outbound movement, maintain the customer's inventory, purge the tank using inert gas, take samples of product on arrival, and even provide testing of the samples taken.

As supply chain management becomes increasingly more important to the success of a business, bulk transfer between railcar and truck offers opportunities to cut costs, outsource functions, and improve reliability.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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