Trucking versus intermodal freight transport… which does better and why? That has been the debate for some businesses lately. In fact, the trucking industry suffered a bit of a loss due to the increase in intermodal freight transport last year.
Why? The major reason the popularity of railroad shipping increased is due to diesel prices. Because diesel prices were higher, truck and van transport methods became less attractive for shippers. Now that diesel prices are dropping once again, the trucking industry’s prices are more advantageous. So now, the trucking industry is taking back some business!
The numbers were as follows: the diesel cost went from about $3.35 per gallon at the end of October to just under $3.00 now in mid-January. So, domestic intermodal shipping is now only cheaper than trucking if those rail miles are inexpensive enough to balance out the extra costs of handling and drayage.
Basically, when the price of fuel goes up, the breakeven point goes down. Railroad shipping is less appealing when the costs of fuel are down.
There are a couple other reasons that contribute to the advantage of the trucking industry, too. Railroad shipping service has improved throughout the years, with better speed, reliability, and tracking. But – it works best for larger loads and heavy cargo. Those can’t be moved as easily by trucks.
With the diesel prices dropping, it is no longer worth the price to use the railroad industry for loads that can fit in trucks.
So, it seems that 2019 is starting at the advantage of the trucking industry! We’ll see if the industry can keep the lead in the shipping business throughout the year. Do you think they can hold onto the business lead?