Intermodal Truck/Rail Container Transportation for North Dakota Products

This study provides a snapshot of truck/rail container intermodal shipping in and out of North Dakota. Cost estimates for an intermodal facility were presented. The study also revealed benefits of intermodal transportation and problems associated with intermodal shipping to and from North Dakota because there is no intermodal facility located in North Dakota. The study analyzed potential and existing intermodal traffic through review of other studies, survey and examination of the Commodity Flow Survey from the U.S. Department of Commerce.

The Commodity Flow Survey conducted by the Commerce Department was analyzed to estimate possible container shipments from North Dakota. The CFS survey displayed that North Dakota shipped an estimated 88 million tons by all modes in 1997. The Commodity Flow Survey estimated that the portion of all freight that was truck/rail intermodal was 1.1 percent nationally. If North Dakota's truck/rail intermodal freight potential was the same as the national trend, then it could be estimated that North Dakota could have a potential of more than 48,000 TEUs or 20-foot containers for truck/rail intermodal shipments. Factors determining the proportion of shipments that could use truck/rail intermodal include the type of freight, distance to an intermodal facility, rates for shipments, lift costs, or total landed costs of shipments. However, because North Dakota's farmers are searching for new ways to market and identity-preserved commodities, larger portions of the agricultural products are being shipped directly from the farmer or marketing company in much smaller lots or in containers or semi-trailers.

Because of North Dakota's natural resource-based economy, some adjustments must be made to the CFS numbers. Products such as coal and petroleum traditionally do not use truck/rail intermodal service. Thus, an estimation of potential shipments should eliminate the coal and petroleum-based shipments. When ruling out this freight, only 53.3 percent of the freight was eligible for truck rail intermodal leaving North Dakota. The next step was to use only the portion of identified freight movements that were shipped adequate distance to best use the economies of rail. Only movements of more than 500 miles were used, which was 17.5 percent. Using this method it was estimated that more than 490,000 tons of freight potentially could move in containers over truck/rail intermodal. The estimated shipments could equate to more than 24,500 containers annually if intermodal loading facilities were available along with acceptable rates and service levels.

Lower transportation costs are realized with container intermodal shipping by using each mode for the portion of the trip for which it is best suited. Agricultural products are not eliminated because there is evidence that many agriculture products are being shipped in smaller lots as identity-preserved products. Such products would likely used truck/rail intermodal service. The following figure shows land cost comparisons shipping from Fargo to Tacoma. The truck costs represent a 100 percent backhaul. This means the cost is only attributable one way. Trucking is more costly by 42 percent at $68 per ton. The transloading charges would increase it another $12 per ton, the intermodal option is much less costly.

A survey developed for the study identified containers now being shipped in and out of the state. This survey asked about a company's freight and expected growth. The survey results estimates that 8,999 containers leave the state annually (Table 1). The southeast portion of the state represented some 63 percent of all traffic and more than 90 percent of all truck/rail container intermodal traffic. Two main factors contributing to the majority of container traffic originating in the southeast are location of an intermodal loading facility, and the size and number of businesses located in Cass County and surrounding areas. The south central area of the state identified the next most traffic. There were many more respondents from southeastern and south central North Dakota than from the rest of the state. Of the 195 respondents, 85 were from southeastern North Dakota and 28 were from south central North Dakota.

Table 2. Intermodal Survey: State Totals

A spreadsheet model was developed to estimate costs associated with starting an intermodal loading facility in North Dakota. The model in this study has many useful features. Costs can be estimated for different equipment configurations and sizes of facilities. The base case estimated and investment of more than $2 million and operating expense at more than $400,000 annually. Sensitivity analysis provided insight into investment decisions where proportions of annual operating costs increased at a much lower rate than proportionally larger investment costs. This leads to the conclusion that under-investing may limit capacity of the loading facility limiting potential of handling larger volumes.

The survey indicates that most potential container intermodal traffic would originate in the southeast portion of North Dakota, therefore the greatest potential exists for a successful facility in that area. The truck/rail container intermodal shipping problem in North Dakota is circular in nature. Problems exist in the form of rates and service. Rates are high and service levels low because there is no volume, and there is no volume because rates are high and service levels are low.