Market Overview

Rail Shippers Seek Transload Sites Even As Volumes Still Weak

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Rail Shippers Seek Transload Sites Even As Volumes Still Weak

Transloading, the process of moving product from one mode of transportation to another, is critical to freight shipping across the entire transportation network. Interest in transloading is tied to general demand for product as shippers seek ways to bring their goods to market. 

For many companies, transportation represents the largest portion of logistics costs. Combining multiple methods of transportation offers shippers cost savings, flexibility and the opportunity to expand their business and market reach. This is why expertise and efficiency are paramount when choosing a transloading service provider. 

Martin Lew, chief executive officer of railcar leasing and storage marketplace Commtrex, said the purpose of transloading is to transfer product as efficiently as possible in order to meet the demand for all manner of goods — coal, grain, consumer products and more. 

"Most domestically shipped products and all internationally shipped product will involve some form of transloading at some point before reaching their final destinations," Lew said. 

Transloading is vital to keep product moving along the supply chain. A product that sits in a railcar or truck is not generating revenue, and transloading often allows for more efficient use and productivity of the rail equipment.

"There are many reasons a product would need to be transloaded. Consider an automobile manufactured in Ohio that is destined for a dealership in Colorado. The brand-new vehicle will not be driven to the dealership; rather it will be shipped via rail flat car, loaded onto a haul-away truck and finally arrive at its destination," Lew said. 

"The combination of rail and trucking is optimal in this situation because rail offers long-haul economics while trucking provides the short-haul flexibility," he added. 

Transloading is one of the core growth areas for Class I railroads such as CSX and Canadian Pacific (CP). Senior management at both railroads have been consistently communicating that they are investing significant resources into their businesses. 

TRANSFLO, a unit of CSX and the operator of the largest transloading network in the U.S., handles more than 300 products, including chemicals, food-grade products, crude oil, waste materials and dry-bulk freight. CP's transloading unit facilitates the movement of consumer packaged goods, industrial products, dry and liquid bulk commodities, oversized freight, machinery and many other products. 

"The transload sites that will see the most growth will be the sites designed to work efficiently with the railroad and trucking industry while providing value and full pipeline visibility for customers," said Morgan Kernohan, director of transloading at Canadian Pacific. "Each commodity requires a different method of shipping, from the type of equipment moving the product to the regulations regarding safe handling."

Short line railroads Genesee & Wyomng and Patriot Rail also offer transloading, as do third-party service providers such as Savage and OmniTRAX. 

"The Commtrex Exchange directly connects shippers with over 1,400 transload locations across the U.S. and Canada, not including mobile and project-specific transloading locations," Lew said. "Commtrex has the most comprehensive database of transload facilities available."

Commtrex's heat map shows search interest for rail transloading. (Photo: Commtrex)

While rail freight volumes are still weak, shippers are nonetheless keeping an eye on transloading facilities to be ready for the next upturn in the market, Lew said. In the last three months, Commtrex has seen more than a 200% increase in transloading searches.

"Even though rail traffic has been declining for the past several months, the amount of search activity for transloading locations within the Commtrex Exchange has been increasing." 

He attributes the continued uptick in activity to shippers looking for ways to move freight more efficiently and increase productivity across the various modes of transportation. "When demand for commodities is down, shippers need to extract savings from the delivery costs of the commodities and products they are shipping," Lew said. 

Volumes moving through transloading sites follow overall rail freight, with some sectors more challenged than others. Coal transloading facilities are seeing weaker volumes due to declining usage. Frac sand transloading sites are seeing a market shift as oil drillers switch away from sand sourced from mines in Wisconsin to mines closer to shale fields in Texas.

Lew said much of the search has been concentrated in rail hubs such as Houston, Chicago and Stockton, California; near metropolitan centers such as New York, Charlotte, North Carolina, and Atlanta; and near oil and gas production such as Calgary and Edmonton, Canada.

These trends are reflective of the demand for the specific commodities being delivered, produced or manufactured in these geographic regions. For example, the U.S. Gulf Coast has become the epicenter for petrochemical growth, with over $60 billion in petrochemical investments being made. The region is outpacing the Middle East in a shift that is expected to accelerate as shale producers extract more natural gas in nearby reserves.

Lew said that some shippers using transloading also use the cars for in-transit storage. A large portion of the plastic pellet traffic moves through transloading facilities in this way.

Another dynamic that is increasing the need for additional transload infrastructure is Mexico's growing demand for refined fuels. There are several U.S.-based companies, such as USD Group, Savage, Koch and KCS, that are making major investments into transloading, terminaling and rail infrastructure to facilitate the burst of petroleum product rail shipments.

With Mexico's demand for refined petroleum fuels is projected to grow by 40% over the next 25 years, these investments will continue to increase over time.

Commtrex, the leading online marketplace for rail shippers, and the Commtrex Rail Services Directory lists over 1,400 North American transload sites. Below are the current Commtrex top 10 transload locations based on searches and user feedback in the Commtrex Rail Services Directory:

1. Site: Bayport Container Terminal
Location: Pasadena, Texas
Class I connections: Union Pacific 
Services offered: dry bulk, liquids, packaged goods, rail-to-truck transloading and inventory management, hazardous material handling

2. Site: Chemical Transfer Co. Inc.
Location: Stockton, California
Class I connections: BNSF, Union Pacific
Services offered: liquids, hazardous liquids, hazardous material handling

3. 3. Site: MidAtlantic Transloading Inc.
Location: Virginia Beach, Virginia
Class I connections: CSX, Norfolk Southern
Services offered: dry bulk

4. Site: Superior Bulk Logistics
Location: Midland, North Carolina
Class I connections: CSX, Norfolk Southern, with connection to Aberdeen Carolina Western Railway
Services offered: dry bulk, food grade, liquids

5. Site: Greens Port Industrial Terminal
Location: Houston
Class I connections: BNSF, Kansas City Southern, Union Pacific Services offered: dry bulk, liquids, oversized, other

6. Site: MHF Services
Location: North Bergen, New Jersey
Class I connections: CSX, Norfolk Southern
Services offered: dry bulk, packaged goods

7. Site: Titan Lansing Transloading
Location: Levelland, Texas
Class I connections: BNSF, Kansas City Southern, Union Pacific
Services offered: dry bulk, food grade, liquids, oversized, packaged goods, frac sand, crude oil and hydrochloric acid

8. Site: Norfolk Southern TBT
Location: Edwardsville, Illinois
Class I connections: Norfolk Southern
Services offered: dry bulk, food grade, liquids

9. Site: Transloading Logistics
Location: Stockton, California
Class I connections: BNSF, Union Pacific
Services offered: dry bulk, food grade, other

10. Site: OnPoint International
Location: Edison, New Jersey
Class I connections: CSX, Norfolk Southern
Services offered: dry bulk, food grade, liquids, packaged goods other.

Editor's note: Commtrex has a business agreement with FreightWaves that includes editorial coverage.

Image by Peter H from Pixabay

Posted-In: Freight Freightwaves Logistics Railroads Industry Supply ChainNews General

 

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