Rail transportation has historically been cheaper and slower than over-the-road (OTR) transportation. It’s a valuable service for raw materials, freight that is not time-sensitive or freight that is expensive to haul. As OTR costs rise, many shippers look for new opportunities to reduce overall transportation spend, and despite the current rise in rail costs, intermodal is a practical alternative.
Rail Transportation is Experiencing a Slump
Rail companies, since the fourth quarter of 2015, have seen revenues fall. In fact, Q4 revenues for the top 6 rail companies were down by one fifth of what they were in 2014, and could drop by another 20% in 2016. On top of this, rail companies have planned less capital expenditure projects for 2016, due to lower expected revenues.