What About Intermodal Rail?
Few supply chain functions are as necessary and emissions intensive as transportation. Transportation connects everything from source to consumption, and transportation is also one of the greatest sources of carbon emissions in the US. Particularly destructive are light duty vehicles and long-haul freight.
Fortunately, electrification is cleaning up passenger cars and light duty vehicles. Long haul freight, though, is completely different and a much greater challenge. Electrifying long-haul trucking will take at least another 10-12 years of research and development and cost well over $30B to build out, not to mention overcoming many other sustainability issues, many of which are still being uncovered.
Many experts believe that if we can’t solve the transportation emissions problem, we won’t win the climate-change war.
The truth of the matter is that we don’t have a near-term solution to cleaning up long-haul freight.
With such a long, expensive path ahead for electrification, why not pay more attention to intermodal rail?
This conventional solution is less expensive, more sustainable, and readily available. And safer - rail separates freight from pedestrians and passenger cars. (Disneyworld does this with underground tunnels...separating freight is good for the Magic Kingdom; why not for the rest of us?)
The unfortunate reality is that after decades of use, intermodal handles less than 2% of America’s truck-sized shipments, and its market share has declined ~15% since 2018. Volume is down 7% since the 2018 peak, in a thriving economy.
On first blush this is totally illogical. With everything going green, and trillions ($) of infrastructure investments authorized by a divisive government, shouldn’t fuel-efficient intermodal be thriving?
On deeper inspection though, intermodal’s decline unfortunately makes sense (but wait, there’s hope yet!).
I’ve spent the last year engaged with one of the world’s largest non-profit organizations re-thinking intermodal as a sustainability strategy. Together with an esteemed group of rail, technology, and policy experts, we took a deep dive into the underbelly of the intermodal ecosystem, studied recent technology and policy changes, and explored how to expand it.
The short story is that with a few changes to the intermodal business model, it could greatly expand, and transportation freight could change forever.
Rail could join forces with electrification and truly clean up transportation.
The research will soon be released publicly, but until then I will describe our findings and recommendations with a series of posts, hoping to mobilize change.
I’ll begin the story today by answering the most important question: Why should we care about Intermodal rail? Two reasons:
· It’s off-the-charts good for the public.
· It’s much more energy-efficient than trucking.
Rail is a great public good. Rail is 28 times safer than trucking (as measured by accident-related deaths and serious injuries), and significantly less expensive to deploy. Leading rail industry consultant OliverWyman recently reported on the impact of American rail decline – if IM share (vs. truck) continues it’s current decline, by 2050 it would translate into:
• Over 16,000 additional highway deaths and over 660,000 additional serious injuries.
• 17,600 more miles of roadways built and over $332B in increased public highway maintenance expense.
• ~800 square miles of added solar capacity investment at a cost of over $170B.
Rail consumes 75% less energy than truck. What this means is that as fuel sources evolve, from diesel to electric or hydrogen cell, regardless of fuel source rail will always consume much, much less energy.
In the rush to electrify everything, consuming less electricity is arguably our next great sustainability challenge. I’m a strong believer that all freight will ultimately become electrified, simply because there is so much money behind it and our incredible ability to innovate.
So yes, I believe we’ll eventually electrify long haul trucking, but I also believe the most efficient supply chains will choose intermodal rail in many applications simply for it’s efficiency.
We just need to tweak the model. Intermodal conversion is much quicker and less expensive than long-haul electrification, with immediate benefits.
That’s it for now. In later posts I will get into other parts of the story, including intermodal’s limited scope (and why), critical missing pieces necessary to expand the intermodal ecosystem, the mysterious state of intermodal competition and regulation, game-changing technology currently in the works, tools shippers need to expand intermodal, and a vision for intermodal growth for the next 15 years.
Thanks for reading.
Sources:
Long-haul freight electrification challenges:
“Decarbonizing Medium-& Heavy-Duty On-Road Vehicles: Zero-Emission Vehicle Cost Analysis”; NREL, March 2022
“Charging Infrastructure Challenges for the US Vehicle Fleet”; ATRI; December 2022
“Path to Hydrogen Competitiveness. A Cost Comparison; Hydrogen Council, analysis by McKinsey & Co.; January 20, 2020
Intermodal decline: Gross Transportation Consulting. To clarify; recently when discussing intermodal trends, GTC considers IM to be stagnant, not declining. Declining is my personal view of the data.
Emissions modeling source is Argonne National Laboratory’s lifecycle emissions model for vehicles https://greet.es.anl.gov/index.php
The Why and How; Rail Share Gain vs. Truck; Adriene Bailey, OliverWyman; March 20, 2023