5 Strategic Ways to Use a Shortline Railroad
Rail car owners, shippers, related parties: Want to improve your rail supply chain? Consider getting creative with a Short Line Railroad. Not sure where to start? Here are five suggestions on how to incorporate a short-line into your supply chain.
1. INVENTORY POSITIONING AND STORAGE-IN-TRANSIT (SIT)
Inventory Positioning and SIT is a very common strategy in the plastics industry. Plastics pellets are made in large batches to keep manufacturing costs down, and are loaded into rail cars. Afterwards they are transported to a storage-in-transit yard where the inventory waits for a customer.
Can Inventory Positioning and SIT work with other commodities? I like to think so, with lumber and LPG/Butane coming to mind.
2. JUST-IN-TIME BULK TRANS-LOADING
A production facility was preparing for a scheduled 6-week maintenance shut down which would have depleted their inventory of product in their on-site storage tanks - possibly resulting in product shortages for their customers.
Acting with foresight, they loaded dozens of rail-cars with product and positioned the inventory on a short-line close to their facility, significantly adding to their total storage capacity. Rail-cars were then trans-loaded into high way trucks gradually over the shut down, and no product shortages were experienced.
3. RAILCAR SERVICING
Whether you have a one-car, or a 300-car project, servicing your rail cars on a short-line may result in having your cars back in service much faster when compared to sending your rail cars to shop. There are dozens of services that can be performed on a short line, but the basics are:
- Re-stencil projects.
- Tank Car Cleaning.
- Mechanical inspections, and;
- Light to medium repairs.
4. POSITIONING PRIVATE LOCOMOTIVES
A locomotive leasing company trying to enter a market may choose to store several locomotives on a short-line in their target region, giving them a strategic advantage vs. their competitors who have not done so. When a customer needs a unit, they are near by and available.
And you never know, the short-line itself might need more power.
5. UNIT TRAIN AND RAILCAR STORAGE
When shipping on rail, a situation may arise where you need to park your rail cars in storage from time to time. Ensure you have a storage plan to avoid costly Class 1 demurrage.
Short-lines are a cost effective solution for any type of rail car storage, but shippers need to be aware of potential limitations. Some examples of short-line limitations are First-In-Last-Out, weight restrictions, and limited power.
Are you interested in incorporating similar strategies for your own railcar fleet? If so, let's chat about how we can deliver this value for you. We've made it easier than ever to offer turn key railcar solutions to you anywhere in North America. Want to discuss your next project or any other idea you may have, please contact me on my cell phone 306-270-3589 or email [email protected]
I absolutely encourage you to reply with your thoughts: Do you agree or disagree with me?
As always, thanks for reading - take care.
About MGH Railcar Services Limited
Based in Saskatchewan, Canada, MGH Railcar was established to provide regional services for railcar fleets. The company specializes in freight car management, repair, and quality, as well waste management, and metal recycling; providing a wide range of services from railcar repair management, mobile and drop off scrapping, inspection services, acquisition support services, training, and railcar storage management. For more information please visit www.mghrailcar.com.
VP, Business Development