June 2008
Washington program taking off two years after it was created

Washington state growers have used rail to move their fresh and processed produce throughout the United States for years, but a program started almost two years ago is helping to develop a market for third-party rail logistics management.

The idea for a railcar pool program has evolved since the late 90’s, when shippers had trouble finding refrigerated trucks and drivers. The attempt at organizing a rail system was a partnership with Amtrak, but that ended about five years ago when Amtrak eliminated its program that allowed produce and other products to be carried with its trains. Washington produce groups, including the Washington State Potato Commission, petitioned the state to create a rail pool program for produce shippers, what was created nearly two years ago was the Washington Produce Railcar Pool.

The rail companies operating in Washington had been phasing out smaller railcars in favor of larger transports, which most produce shippers wouldn’t be able to fill. So the state looked for a third-party management company to manage the equipment and customers, and found that in Rail Logistics.

There was still a need for railcars as a number of the existing fleet of railcars was getting old and the rail lines weren’t replacing them,” said Jeff Schultz, operations and rolling stock manager for the Washington State Department of Transportation’s State Rail and Marine Office.

Rail Logistics manages the rail pool program for the state. The state leases 30 refrigerated trains from the company -– with the option to lease more if needed and contracts out the management of those cars to the Overland Park, Kan.-based logistics firm. Each railcar holds the equivalent to roughly three trailers.

In addition to the cars, Rail Logistics also offers program users customer service contact, including a direct line to a person that can help them track loads, a Web-based tracking system that can give real-time information from the GPS-tracked railcars and temperature and fuel information from inside the cars.

The program was slow getting started, but has been increasing. There are about 12 Washington growers and shippers that use the railcars to move produce throughout the United States and into Canada on a regular basis. Those producers include a frozen berry processor in northwestern Washington and potato growers from the Tri-cities area.

Because it’s a Washington program for its growers, the railcars return to the state after delivery, which Rail Logistics has been able to use for backhauling produce that is exported from Washington or needed by Washington growers, including a railcar of seed potatoes this year.

“The advantage to the state of Washington is the cars always come back to Washington. It’s almost like their own personal pool of cars,” said Mike Begnaud, manager of the railcar pool program for Rail Logistics.

Using Rail

The rising fuel surcharges affecting shippers using trucks also are affecting rail transport. Rail users see a “double bite” from fuel surcharges from the rail lines and an additional fuel surcharge for the fuel needed to operate the cooling system on the railcars, Begnaud said.

The shippers using the program are finding it less expensive to use rail, but there are other advantages. As sustainability becomes a marketing tool for shippers and retailers, using rail can help a company reduce its carbon footprint and use a “greener” shipping method.

“One of the big things is it’s certainly more environmentally friendly to use rail,” Begnaud said.

The railcar pool program has room to expand in Washington, and Begnaud said Rail Logistics has taken the time since the program started to learn about the shippers and their needs. The next step is to learn about the customers of the shippers to see how they can make the program work more effectively for them. One way that Rail Logistics has identified the pool program is to brand the railcars. The produce cars are all painted a light blue color and say “cold train” with a picture of a train on the side. That has helped identify the program and will make marketing it to users more effective, Begnaud said.

The state and Rail Logistics met with program users and potential users in Bellingham and Pasco at the end of May to talk about the future of the program. Peak season meetings are required by the contract between the state and Rail Logistics, but the meeting also provided a forum for shippers to provide input into how the railcar pool program is working.

The meeting was to discuss the history of the program, where it was heading and the upcoming program evaluation, Schultz said. In his nine months with the railcar pool and the nearly two years it’s been around, no one has taken a close look at the program, so that will be a project for the coming year. It’s clear the Washington program has helped jumpstart a market for third-party rail logistics providers, but they’ll have to look at the state’s involvement in the future, Schultz said.

“One of the questions we’re going to have to look at is, should the public sector remain a part of things or should the state step aside?”

If rail starts to take off in other states, there would be less need for state involvement. And that would be just fine for Washington, because the state would have done its job in helping growers and shippers find new ways to get products to market and increase the profitability of businesses in the state.”

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