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August 6 2018

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August 6 2018 | The Journal of Commerce 39 Land lines boxes to handle the same amount of freight in May than it would have needed if trains were running as fast as they were in January. That probably understates the problem. When train speeds decline precipitously as they have this year, that doesn't just mean slow trains, it means late trains. Lack of schedule reliability wreaks havoc with produc- tivity across the board. Trains begin bunching up, which generates peaking problems in terminals. Unexpected slack periods between trains waste ca- pacity because resources are lined up for work that is stuck out on the rail. Delivery appointments are missed, resulting in customer dissatisfaction but also tying up containers and chassis that now must await the next available appointment slot, which might be days later. Fleet owners are responding to the situation by adding boxes. Based on what we know, our best guess is that we will see net additions of around 7 percent this year. Addition- ally, planned retirements of old units that are due this year may well get pushed back into 2019 to help the industry through the autumn peak. Nevertheless, as the industry was already running full tilt during the fourth quarter of 2017, it's hard to see how gains could exceed 7 to 8 percent by the time peak season rolls around. But it doesn't matter how many boxes are in the fleet if they can't get delivered, and that's where drayage comes in. The long-haul dray sector is in trouble. Now that ELDs are the law of the land, carriers are simply unwilling to take on longhaul drays that push the envelope of what can be achieved within the limitations of the hours-of-service regulations. At the same time, the eastern rail- roads are trimming lanes connecting secondary terminals, mandating increased use of longhaul dray to access the intermodal network. When shippers can't find drayage when they need it, the delays tie up containers and chassis and suck capacity out of the system. What can shippers do? What can a shipper do about all this? First and foremost is to give yourself the slack that the carriers can't currently provide, by moving the goods earlier. There is a sign that this has occurred. Using preliminary June data from PIERS, sister brand of The Journal of Commerce within IHS Markit, imports for the second quar- ter of 2018 were up only 1.2 percent over 2017. That pales in comparison with the first-quarter gain of 7.5 percent. So, did we see volume up- streamed/front-loaded to the earlier quarter? Perhaps, but what does that mean going forward with regard to peak-season volume? A second action, to invoke a somewhat overused but still mean- ingful phrase, is to do everything you can to be a "shipper of choice." Carriers will make sure to earmark their scarce capacity to those true partners that place an appropriate value by making sure to keep the drivers and equipment moving. The days when shippers could count on carriers to pull the fat out of the fire when things get tight ap- pear to be over. Surge capacity will be very costly, if it is available at all. This will make it even more dišcult to meet the ever-increasing service demands of today's e-commerce influenced buyers. JOC Contact Lawrence J. Gross at and follow him on Twitter @intermodalist. 0 50 100 150 200 250 300 350 Jul-16 Sep- 16 Nov- 16 Dec- 16 Feb-17 Apr-17 May- 17 Jul-17 Aug- 17 Oct-17 Dec- 17 Jan- 18 Mar-18 May- 18 Jun- 18 US drayage demand index is high and volatile Source:, Gross Transportation Consulting © 2018 IHS Markit Drayage Demand Index of major US drayage markets where 100 = Average When train speeds decline precipitously as they have this year, that doesn't just mean slow trains, it means late trains.w

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