When Rail Transport Is the Best Option
Rail freight is a good choice when shipping large volumes of cargo over long distances, both domestically and across borders. With low fuel costs, it is a cost-effective alternative to other modes of transportation. Here are the cases when rail transport is a good choice and the factors that determine rates.
When to Use
For European logistics operators that are moving cargo inland from port facilities, rail freight is a good alternative. This is especially true for countries with busy inland routes that cause delays. It is also best to use when large volumes are shipped in bulk, especially when time is a factor. While air transport is faster and used over long distances, it is not suitable for large volumes. Because of weight and size limitations, air freight cannot be used for oversized cargo.
Rail transport is also a good choice when shipping raw materials such as metal ore and coal and farm and grain products such as barley, rye, rice, wheat, soybeans, and corn. Other types of cargo that are often moved by rail include construction materials, chemicals, automotive parts, and fertilizers.
This mode is also suitable for shipping essential items such as lumber, cement, steel, plastic resins, and energy commodities. In addition, road transport uses three times more fuel, making rail freight both a cost-effective and environmentally friendly alternative.
Finally, it is a preferred option when customers require exact delivery time. Air transport, for example, is weather dependent, and airports often cancel flights in inclement weather such as storms, heavy snowfall, and hurricanes.
Factors That Determine Rates
A combination of factors determines rates, including distance, type of goods, dimensions, size, and volume, customs clearance, and insurance coverage. Obviously, distance is a key factor, making rail transport the cheapest when goods are moved over long distances. Dimensions of cargo include the weight and size of the commodities transported. Nature of the goods is another factor, i.e. whether shipping fragile, flammable, toxic, or hazardous goods.
While rail is a cost-effective option to ship vehicles and automobile parts, it is clearly not the best for low-volume, high-value commodities, diamonds being one example. Rates also depend on proximity to delivery and pickup locations or where the nearest railway station is found. When cargo crosses borders, customs clearance is another consideration as import and customs clearance fees may be due.
The railway line or shipping company completes a railway bill, including details such as quantity and packaging, terms of loading and payment, and consignee and shipper contact information. An insurance coverage may also be required, which depends on the type of cargo transported.
Other factors that influence rates include market and intermodal competition and public policy. Demand is also crucial. Large population centres have vast markets where demand for commodities is higher, driving per-mile costs down.
Like other modes of transportation, the choice of rail freight is a trade-off between quality, safety, price, and speed. If time is not a factor and price is the most important consideration, then sea freight would be the best choice.