1. DRIVERS OF INTERMODAL RAIL FREIGHT GROWTH IN NORTH AMERICA European Transport Conference 2007 Noordwijkerhout, Netherlands Session I International Rail Freight Efficiency I 17 October 2007 John Spychalski Evelyn Thomchick The Pennsylvania State University The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

2. Rail Intermodal Traffic Growth in North America 1990: 6.2 million trailers and containers1990: 6.2 million trailers and containers 2005: 11.7 million trailers and containers2005: 11.7 million trailers and containers 88.7 % increase88.7 % increase The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

4. Growth – Why and How?

5. Government Policy Makers Deregulation – 1976-1981Deregulation – 1976-1981 –Downsizing of rail economic regulation to a vestige –Repeal of all economic regulation of rail intermodal –Total elimination of trucking economic regulation Massive funding of road infrastructureMassive funding of road infrastructure –46,508-mile National Interstate Highway System –Increased truck size and weight limits The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

6. Business Incentives for Intermodal – Railways Business Incentives for Intermodal – Railways Recapture traffic lost to truckRecapture traffic lost to truck Serve shippers lacking direct rail line accessServe shippers lacking direct rail line access Haul international ocean containersHaul international ocean containers –Landbridge –Minibridge –Microbridge The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

7. Business Incentives for Intermodal – Truckers Lower line-haul operating and capital costsLower line-haul operating and capital costs –Rising fuel prices – reduced diesel fuel usage –Wage savings – line-haul drivers –Fewer line-haul truck tractors Driver shortagesDriver shortages Growth in highway congestionGrowth in highway congestion The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

8. Technological “Enablers” Intermodal cars (wagons) –greater capacity, lower tareIntermodal cars (wagons) –greater capacity, lower tare –Doublestack –Doublestack –“Spine cars” Locomotives – higher horsepower, more fuel efficientLocomotives – higher horsepower, more fuel efficient Track capacity and quality upgradesTrack capacity and quality upgrades Side/top-lift trailer and container transferSide/top-lift trailer and container transfer “Car-less” load-carrying units – e.g., RoadRailer“Car-less” load-carrying units – e.g., RoadRailer The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

9. Operational and Business Process “Enablers” Fixed-schedule, dedicated intermodal trainsFixed-schedule, dedicated intermodal trains “Anchor” customers – high-volume, consistent base loads“Anchor” customers – high-volume, consistent base loads Differential pricingDifferential pricing Fewer, higher-volume intermodal terminalsFewer, higher-volume intermodal terminals Third-party marketing firms – railway as wholesalerThird-party marketing firms – railway as wholesaler Information technology applicationsInformation technology applications The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

10. Shippers Supply chain globalisationSupply chain globalisation –“Off-shoring” of manufacturing –Longer factory-to-market hauls More rigorous supply chain managementMore rigorous supply chain management –Inventory efficiency, JIT –Demand for greater transport reliability –Cost savings – intermodal vs. over-the-road trucking The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

11. Expert Panel Rankings Ranking order of importanceRanking order of importance –Globalization –Technological developments –Transportation economic deregulation –Evolution of supply chain management –Changes in trade flows –Government policy The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University

12. Conclusions Panel of experts – conceptual framework components have complex interrelationshipsPanel of experts – conceptual framework components have complex interrelationships Cause-and-effect relationships between components cannot be reduced to simple proofsCause-and-effect relationships between components cannot be reduced to simple proofs The Pennsylvania Transportation Institute and the Smeal College of Business, The Pennsylvania State University