LCL freight service today

QB 52.32 wrote:

One "modern day" case study of how well railroad network economics meshes with LTL network economics was UP's late-80's purchase of national LTL trucking company Overnight.

I believe the company you're referring to is Overnite Transportation, formerly of Richmond, Va, and now part of UPS.

When I started my carrer in motor carrier transportation in the fall of 1972, Overnite was about halfway up the list of the top 100 truckers as listed by the trade organ Commercial Car Journal, and was considered one of the biggest success stories. However, most of the established truckers of the day (almost all of whom would fall victim to deregulation in about ten years), wouldn't inerchange with Overnite, since it was non-union. It was, at the time, subject to the same economic regulation and limits on its operating authority as its unionized competitors.

At the time of its acquisition by UP. Overnite still operated primarily east of the Mississippi and Missouri, and while I never was able to learn much about its operations, it seems likely that UP may have sought it primarily for delivery of intermodal traffic involving a UP rail haul. UP's sale of Overnite to UPS has a paralell in Fed Ex' 2001 acquisition of Harrison, Arkansas based American Freightways.

When I worked in package freight in 2008, UPS was the only one of the three major players which possessed enough "clout" to effectively use a rail-based network. Fed Ex grew out of a firm originally oriented around higher-value overnight shipments, with an air hub in Memphis as the central feature, and German-based DHL attempted unsuccessfuly to develop a domestic US operation as a feeder for the international business where it remains dominant. Both of the latter two ran highway-centered operations.

Yes, thanks, I meant Overnite. If the sole intention was to deliver UP intermodal loads, seems like a strange marriage of a bricks-and-mortar LTL business with the different operation of delivering truckload-quantity intermodal loads, especially considering that alternatives existed and were utilized by other rail carriers. Whatever UP's operational (as opposed to financial) intentions, they apparently never quite materialized.

FedEx's highway-based ground package network comes from the legacy of their purchase of RPS (Roadway Package Service) and their system of utilizing non-unionized driver teams pulling twin or triple 28's. Tough for intermodal to penetrate given the cost and speed/reliability of the non-union teams.

Otto, I was responding to your comments about the demise of lcl and that we'd all like to see express and lcl "return to the rails." If the discussion is supposed to be centered on the idea of bringing lcl back in its literal form, perhaps you should lock the thread as has been done with other pipe dreaming threads on this site!

It seemed that OVERNIGHT as far as my experance shows did very little if any interchange with UP rail freight. I never saw there trailers on the rails

FormD wrote:

It seemed that OVERNIGHT as far as my experance shows did very little if any interchange with UP rail freight. I never saw there trailers on the rails

The equipment wouldn't necessarily have to have been involved. When I worked for DHL, shippers would sometimes send a trailerload or more of small shipments to our break-bulk facility as a truckload; we would then sort and deliver the individual packages. Or Overnite might take responsibility for a UP carload shipment broken down for delivery to several consignees, or the reverse.

Also, a lot of people topday are too young to remember when the vast majority of TOFC equipment was owned and identified as the property of the host railroads. Plan I TOFC (the moving of common-carrier truckers' equipment on TTX flats) never gained much of a following back in the 50's and 60's, in no small part because the area around the king pin of a highway trailer often couldn't take the stresses imposed in rail operation. I'm given to understand that those trailers underwent a major redesign in the 1990s when a lot of the traffic returned.

Another factor from the days when common-carrier trucking operated more like the railroads that's forgotten today was that the rigid definition of operating authority among the major players sometimes required the physical interchange of highway equipment. When I worked at the long-departed Jones Motor of the 1970's, we had authority to serve Chicagoland, the northern half of Ohio and a few counties in southeastern Michigan, but that left a lot of gaps, so a trailerload for Columbus or Dayton had to be handed off to local firms Duff and Suburban. Cooper-Jarret faced a similar problem serving Detroit, as did Branch Motor Express at Chicago.

In short, the days before deregulation made for some very interesting adaptations of a broader-based system.

Perhaps that highlights one misperception about trucking , that it is door to door , one truck ride .
Here one of the benefits of trucking that was espoused when deregulation of transport was made , was the advantage of trucking over rail re door to door .
Yet nowdays , most road freight is picked up by a small truck , taken to a depot , transferred to a line haul , then transferred to a local delivery at the other end .

David Benton wrote:i would say this kind of traffic belongs on one railroad , Amtrak .

Amtrak tried that, and it seems that what mostly happened was they increased their costs and delayed their passenger trains adding and dropping freight cars. Movement of LCL traffic today requires through movement between intermodal terminals several hundred miles apart on schedules suited to shippers' requirements, independently of passsenger-train requirements. Traditionally, the type of shipments we are talking about were freight; they moved on freight rates in freight trains, as distinguished from express, which moved at higher rates in passenger trains, or, when volume justified it, in exclusive mail-and-express trains at passenger-train speeds. The "LCL" shipments of today are gathered and distributed over the road and move between intermodal terminals by rail. "Back in the day" the gathering and distribution were done on local freight trains, and those days aren't coming back.

Perhaps that highlights one misperception about trucking , that it is door to door , one truck ride .

Are you talking about truckload or LTL? If LTL, I would imagine only the most naive would have the perception that the vehicle picking up their parcel/pallet would be the same vehicle delivering the shipment... unless it was cross-town. The era of deregulation made seamless truckload shipping. And there is relatively little LTL interlined between carriers anymore due to industry consolidation.

Railroad LCL could have been competitive well into the Interstate highway era if the service quality was high enough. Amazingly, the Bamberger Railroad offered LCL from SLC to Ogden (a mere 37 miles!) right up to the end in 1958. My dad worked for a local SLC warehouse. For stuff going to Ogden, Bamberger was the carrier of choice in large part because Bamberger would help him unload his truck, whereas the UP was completely indifferent to the service, and subsequently lost it.

Well , i guessi'm talking about a smaller country , woth shorter distances , and smaller trucks .
I was just commenting that rail is always slammed for not been door to door , yet i think Road is alot less door to door than people think too .

Since most railroads owned and represented Railway Express Agency (REA), this was the small package side of the LCL business. What I don't know is what was the maximum size of an REA shipment and smallest minimum charge size of an LCL one? As a kid I remember a lion being delivered off a DL&W MU train Stirling, NJ for delivery to Pfeipher's Farm in Gillette. Pheipher was one of MGM Movie's owner and handler of animals. This was 1952 or 53. Being an MU shipment, I assumed it was an REA move that also required a handler/care taker for the animal.

A year later the lion gave birth to a couple of tigons (cross between a tiger and lion). Rare, but it did/does happen.

More: UPS and USPS are indeed large movers of such small freight. There are also a lot of other consolidators that handle such volumes and combine them into full container/piggyback loads. There are a lot of these companies on the West Coast that break down full container loads from Asia and make up smaller distribution loads for retailers throughout North America.

The gradual replacement of REA by UPS as the dominant player in small, sporadic and unusual shipments would make for some very interesting research, but I believe that some of the developments themselves are, possibly by deliberate choice, so obscure as to be called "clandestine".

For openers, let's take note that UPS recorded its earliest success stories in the Pacific Northwest and Intermountain regions, cities like Seattle, Denver and Kansas City. These were places where the cultural divide between those immigrant groups which arrived after 1890 were not as pronounced as in the more thickly-settled industrial hubs of the Eastern Seaboard and Upper Midwest.

Furthermore, let's acknowledge that the immigrant communities in the very large cities were better-situated to develop their own alternatives and to raise some of their own capital, albeit by activities sometimes frowned upon and/or rendered illegal by those more highly-placed.

The late Burton Turkis provided just a slight glimpse of this in his autobiograpical book Murder, Inc, and the 1960 film adaptation, while centered around a fictional Brooklyn "candy store" hypothesized from a number of instances, actually went further in describing the practice. The local "street" power structures wielded a great deal of "say" as to how these small proprietors ran their businesses.

I personally am aware of some fairly strong evidence of this connection arising from my own employment. I worked for a number of years for a large East Coast producer of potato chips and similar snack foods. When the plant burned to the ground in 1944, it was immediately rebuit at several times its former capacity, under wartme conditions of supply of building materials. And two new distributorships, with exclusive rights to an area encompassing all of the present New York City Metropolitan Area, were incorporated at the same time.

Some fifty years later, when the same company fell upon hard times due to an overly agressive marketing strategy, it was sold back to the two "new" distributors, who continue to operate it, but in a considerably smaller market.

The example cited above is, admittedly, very speculative, but all the pieces are in place. My personal hypothesis is that both Railway Express and United parcel Service played only "peripheral" roles in any such activities. But it does go a long way toward explaining why both the origins and daily operations of both firms during those pivotal years are not well documented. And as an acquaintance who grew up in such a neighborhood and studied with me during an abortive attempt at graduate school pointed out, low-level organized crime quit some "enterprises" because they were simply no longer worth the effort.

Like any N. American commodity logistics, except for the heavy-loading and/or high-volume traffic, and reflecting rail transportation's inherent economic and service weakness in the "local distribution"-end of transportation, parcels, mail and LT/CL, inevitably shifted to a highway-based network, no matter the players, and whether or not they were railroad-owned. The other piece of the puzzle when it comes to REA and direct railroad participation in retailing service for small shipment/parcel business is the nature of management intensity necessary to make money in the business. UPS succeeded by intensely managing their business (to the second in some cases!) whereas the freight railroads during the past 50 years have really necessarily moved towards intensely focusing upon cost-containment, re-building/structuring, and now growth, in their own basic operations and away from those businesses that are not core to doing what "railroads do best".

I had occasion to thumb through a Value Line Investment Survey this week and was suprised to learn that YRC Worldwide, the holding company for both Roadway Express and Yellow Freight System, has "tanked".

http://finance.yahoo.com/echarts?s=YRCW ... =undefined

During my undergraduate years some four decades ago, Yellow Freight was held up as the only major trucker which made an effort to adhere to scientific management, Roadway Express and Consolidated Freightways, while successful, were viewed as outsiders who flew (drove?) by the seat-of-the-pants method. The rest of the pack were viewed as also-rans, and as evidenced in the years following deregulation, almost all of them fell by the wayside. Consolidated survived by turning much of its business over to irregular-route subsidiary Con-Way, and allowing the parent company to go bankrupt.

Assuming YRC is no longer recognizable as its former self, that leaves only Arkansas Best (with some help from its merged partner Carolina Freight) as the last survivor of the regular-route common-carrier trucking giants.

http://finance.yahoo.com/q?s=ABFS&.yfic ... %2FhUBp9NE

YRC's debt-for-equity exchange is widely considered a "controlled" bankruptcy, and that the company will survive, albeit with a much smaller market presence. Deregulation certainly turned the LTL industry on its ear. Many of the smaller carriers have now become "super-regionals," for example: Old Dominion, Saia, and Estes Express. Overall, LTL business is off 15-20% this year, depending on the carrier... and growth prospects for next year are pretty gloomy.