Rail transport volumes are definitely up.
“Freight rail is vital to our economy and our future,” said President Obama recently, commenting on a recent rail dispute in the US. This clear message is echoed by Clarence Gooden, SVP Sales & Marketing for Florida-based CSX Corporation, which operates around 21,000 miles of tracks across 23 states in the US and Canada.
In early November, at a time when virtually all economic indicators were negative, an interesting statistic appeared. The American Association of Railroads (AAR) reported that the amount of freight carried on US railroads during October was the highest it had been since October 2008. Coal shipments were up by 1percent, motor vehicles and parts by 11 percent, while petroleum and petroleum products were up a full19.4 percent.
“Rail transport volumes are definitely up,” says Gooden. “In October, we transported around 32 million vehicles more than usual by rail, so I believe the future for rail looks good.”
Gooden attributes the rise in vehicle shipments to the US’s aging car population and greater public interest in more fuel-efficient smaller cars as energy costs rise.
“With rail you can move one tonne of freight 500 miles on one gallon of fuel,” says Gooden. “Higher energy costs, highway congestion issues and a price-sensitive market are converting freight transport from truck to rail. River transportation will grow too, but not at the same extent as rail.”
Educating the public, he believes, will be key to promoting the environmental advantages of rail transportation. “There is a growing awareness amongst the public and commercial sector in the US about using rail transportation. Compared to five years’ ago, logistics companies like Wallenius Wilhelmsen Logistics (WWL) are definitely becoming more open to using rail in addition to truck transport.”
WWL is increasingly working together with companies like CSX to move vehicles in as environmentally efficient a way as possible on behalf of its customers. In September 2011, WWL was awarded by the AAR for its rail transport activities in Tuluca, Mexico, and at the Honda in-plant facility in Lincoln, Alabama.
Some challenges for the rail industry, however, remain, according to Gooden. “The first thing is the consistency of government policy. Secondly, we need to stay in a deregulated environment.” He elaborates: “Before the rails were deregulated by the Staggers Act in 1981, the rail industry in the US was in a terrible state with many companies nearing, or in, bankruptcy. After ‘Staggers’ rails have earned the capital to reinvest in their infrastructure.”
In the US, the rail network is mainly held by private corporations, almost exclusively for freight transportation.
“As long as we stay in a deregulated environment, companies like us can make enough money to reinvest in the rail infrastructure,” says Gooden. “For example, CSX will reinvest around 18 percent of its revenue back into infrastructure projects, such as the new railcars to transport vehicles which we will introduce in 2012. We will also invest in a new inter-modal terminal in North West Ohio linking North Carolina, Virginia, and Ohio both east and west to the transcontinental rail system, in an initiative called the National Gateway to double-stack containers and efficiently move them to market.”
For rail transportation to continue to grow in the future, a favourable government policy and these kind of investments by the private rail operators will be essential. While automotive companies such as Nissan, Toyota and GM use rail for shipping parts and components, the rail operators need to ensure that they can meet their customers’ needs if they want to develop their business. Right now, they face another hurdle: as transport volumes grow and revenues increase, railway employees are looking for a pay rise. Only recently, there was a big dispute between the US’s largest rail freight operators and unions representing the sector’s employees.
“There’s a commercial in the US: ‘This isn’t your father’s railroad’,” says Gooden, who’s worked in the rail industry for 42 years and seen its transition. “Technology has had a huge impact on efficiency. Rail has cast off its image as a traditional, conservative, somewhat old-fashioned industry and is very forward-looking. In ten years’ time, if things stay on the path we are now, we will have a very diverse business. There will be a desire from the public for greener transportation. If we stay focused on consistency and government policy and deregulation, the only way is up.”
About Clarence Gooden
Job title: Executive Vice President Sales & Marketing, Chief Commercial Officer CSX Corporation
Family: Wife and daughter
Background: Has worked for CSX Corporation for 42 years. Started out in the operations department before moving into sales and marketing roles for the company’s different business units; appointed Executive Vice President & Chief Commercial Officer - Sales & Marketing for the Group in 2004.
Motto: “Do the right thing, do it the best you can”; “Treat others as you want to be treated”
About CSX Corporation
CSX Corporation, based in Jacksonville, Florida, is a leading US company specialising in traditional rail services and the transportation of intermodal containers and trailers. Its network covers around 21,000 miles of track in 23 US states, the District of Columbia and the Canadian provinces of Ontario and Quebec. The company has direct access to all Atlantic and Gulf Coast ports as well as the Mississippi River, the Great Lakes and the St. Lawrence Seaway, and has alliances with western railroads to serve the Pacific ports.