Don't be surprised if the railroads step up their attacks on trucking.
The nation's railroads are very much occupied these days with the recent wave of merger activity and consolidation, but don't expect that to lessen their campaign against trucks. The competition with trucks has narrowed down primarily to piggyback traffic, that is, whether a truck or a locomotive will pull the trailer between cities. This intermodal traffic represents the future for the railroads, and they are going to protect it however they can.
The problem for the trucking industry is that the railroads know that they are more effective fighting in public forums, in a political fashion, than they are in direct competition in the marketplace. The rails have more common interests among themselves. Their message is much more unified. And they are willing to have a less-than-intimate relationship with accuracy.
On the other hand, the trucking industry is not good at presenting a unified front. It is diverse, fiercely competitive, and has few common goals towards which all parties are willing to work. It's only natural that the railroads want to focus more on public relations than on cost per mile or turns per week.
The central issue for the rails right now is, of course, size and weight limits: keeping trucks from being able to pull longer and heavier trailers. Any further increase in size and weight limits would increase the efficiency and competitiveness of over-the-road trucking. For example, if trucks were allowed to haul twin 45-ft. trailers, the costs for an over-the-road move would be about even with a 1,000-mile piggyback haul. Since trucking's service levels are so much higher, the advantage would clearly shift away from piggyback travel.
The rails can't lose that advantage. Intermodal traffic represents about 20% of total revenue for the railroads and is also the key to future growth. The staple commodities for the rails, such as grain and coal, will average only about 3-4% per year growth in tonnage. Intermodal traffic is the only way for the rails to avoid being left further behind as transportation requirements change.
This dependence is itself something of a dilemma for the railroads, because intermodal traffic is such a cyclical business. One of the key lessons of the '93-'94 capacity crunch for truckers, and the corresponding boom period for intermodal traffic, was that the intermodal option will primarily be a swing resource for truckers, rather than a base resource that is used to capacity all the time.
The sheer size of the intercity trucking segment -- about $200 billion in revenues -- totally overwhelms the piggyback movement of trailers on rail. If the trucking industry gets tight for drivers and equipment, and shunts even 1% of the total over-the-road traffic to intermodal, the railroads become swamped and can't handle the business. When the trucking industry then increases its own capacity and takes back that intermodal traffic, rail intermodal facilities remain underused. This cyclical behavior means that the railroads are investing in facilities that will be at capacity for a relatively short period every few years, making further investment in intermodal facilities more risky.
Nevertheless, intermodal is the railroad's best shot for the future. Intermodal revenues for railroads are about $8 billion per year, and growth expectations (depending on who you ask) usually range about 10-15% per year for the next decade or so. The rails are certainly hoping to get a bigger piece of the over-the-road business, but they absolutely can't afford to lose any of their current piggyback traffic to trucks, or even show much of a slowdown in the long-term growth rate of intermodal traffic.
That's why the public relations campaign against trucking is so important for the rails. If the trucking industry gets to run twin-45 trailers on some interstate highways, that's a moderate benefit to truckers, but a potential disaster for the railroads. It is the success itself of the trucking industry, and the dominance that trucks hold over railroads, that ironically makes a minor change in size and weight laws a major determinant of the railroads' future.
