1 / 6

INFORMS Conference – Phoenix October 2012

RAS Roundtable Analytics and Intermodal Opportunities from a Busine ss Perspective Bruce Patty Former AVP of Equipment Strategy and Planning Pacer Stacktrain. INFORMS Conference – Phoenix October 2012. Introduction.

arin
Download Presentation

INFORMS Conference – Phoenix October 2012

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. RAS Roundtable Analytics and Intermodal Opportunities from a Business PerspectiveBruce PattyFormer AVP of Equipment Strategy and Planning Pacer Stacktrain INFORMS Conference – Phoenix October 2012

  2. Introduction • Most of us are used to working on models that deal with operational issues at railroads • Locomotive Scheduling • Train Scheduling • Meet/Pass Planning • The opportunity that I want to discuss briefly today is another kind of analytical model, one that involves the economics of alternative approaches for being a player in the intermodal market • Addressing this question correctly is as critical to the success of a company as any they make in this arena

  3. Background • In the domestic intermodal market, there are two primary ways that one can gain access to equipment in which to move freight • Own (or long term lease) your own containers and negotiate rates with the railroads • UP, CSX, JB Hunt, Hub, Pacer, APL, etc. have followed this model • Use the containers provided by a wholesaler who has also negotiated rates with the railroads • Most IMCs have followed this model • If you are a new entrant to the domestic intermodal market, how do you determine which approach is best for you?

  4. Factors to Consider • To determine which approach is best, several factors must be considered for each approach • Cost of acquisition of containers – lease vs. buy, including accounting treatment • Maintenance costs • Value of the equipment upon retirement • Risk of obsolescence • Repositioning costs if network flows are not balanced • Storage costs when equipment is in excess of what is needed • Charges to use equipment provided by wholesalers • Rail rates • Access to equipment during peak periods • Chassis costs

  5. Railroad Strategies • One of the key factors to take into account is that the two western railroads, UP and BNSF, have taken radically different approaches to this issue • BNSF • No longer has a domestic intermodal equipment fleet • Provides line haul rates to companies who do have container fleets, regardless of the size of the fleet • Has outsourced the chassis provisioning to TRAC Intermodal • Does not directly provide the capability to an IMC who wants to move freight intermodally -- does not have its own domestic container program • Union Pacific • Has two large domestic container programs, EMP and UMAX • Only IMCs with large container fleets, Hub and Pacer, are offered line-haul rates • At most locations, owns and operates its own chassis fleet • The net result of these two approaches is that the decision as to which railroad one works with goes hand in hand with the decision as to whether or not to have your own container fleet

  6. Conclusion • Assuming the trend continues, more and more freight will be moved via intermodal, and trucking companies will need to determine how to respond • In order to make the right decision with regard to equipment, they’ll need access to models which will allow them to understand the tradeoffs of the two divergent approaches • This will be an opportunity area for the people in this room because of the interaction of the various factors and the complexity of the models

More Related