The freight market continues to tell the same story it has for months—low freight volume. Decreased ocean freight arriving at U.S. ports has a hand in truckload and rail freight also seeing a period of low volume. On top of the current state of the market, a recent report highlights a projected decline in the North American rail freight transportation market by $42.88 billion between 2022 and 2027, a decreasing CAGR of 7.47%.
What does this mean for shippers? Many companies are realizing the opportunity they have with rail, as it gives them mode options for improving the efficiency and cost effectiveness of their supply chains, when supported by the right tools and technology.
In this article, we’re explaining the current state of rail freight and how companies can use visibility data to give their supply chains an advantage.
The State of Rail: Falling Demand
With the interconnectedness of freight, ocean freight volume reliably serves as a leading indicator to the volume trends of truck and rail, and with ocean freight volume trending downward in 2023—down 50% year over year—truckload and rail transport have also felt the weight of this decline. Expected demand is falling and therefore, rates are also slipping, prompting carriers to adjust their annual earnings expectations. They’re looking at 2024 with more optimism based on projections from their customers. Potential rate stabilization for carriers means shippers won’t be able to count on the benefits of lower rates when choosing rail. In other words, shippers may need to recalibrate their strategies in 2024.
However, the larger trend remains—the rail freight transport industry as a whole is expected to decline over the next four years according to the previously-mentioned report. Whether rail freight rates are up or down, companies should take an approach that works regardless of the state of the market.
With the Rail Industry in Trouble, Shippers Invest in Rail Tracking
Shippers only have the current freight market in front of them to make the most of. Smart shippers are using the low demand of 2023 as a chance to build up more effective operations by investing in technology. They are making strategic decisions to streamline visibility and supporting processes for greater efficiency, improved decisions, and better resilience within their supply chains.
1. True End to End Visibility Enables Greater Efficiency
End-to-end visibility gives shippers the control to monitor shipments throughout the entire journey, no matter how many times a container changes hands. This can be especially valuable for rail transport when containers are moved to an inland facility, since marine terminals are less-than reliable at providing information on availability events (like Last Free Day). The resulting gap in visibility can lead to inefficiencies and added costs unless companies are equipped with end-to-end visibility. With a solution that works across the gaps, companies can have transportation ready when and where it is needed and save on demurrage costs.
2. Actionable Insights Optimize Decision Making
By having access to quality real-time data on their rail shipments, companies can derive insights for better decision-making. This starts with understanding the state of their supply chain operations, where the bottlenecks are, and what pieces are operating at peak performance. Then they can adjust routes, schedules, and resources to increase efficiency in any area of the supply chain. Data and insights help shine a light on these opportunities and enable a concerted approach to continuous improvement.
3. Data-Enabled Awareness Increases Resilience Across Operations
The changing, often unpredictable, nature of supply chains means companies need a web of awareness surrounding their port and terminal events, as they influence the rest of the supply chain. This data-enabled awareness is not just about staying informed—it's also about taking it a step further and increasing resilience overall. With detailed, accurate event notifications, shippers can proactively make changes and improvements to ensure a smooth flow from ports to each shipment’s destination. This resilience gives companies what they need to manage disruptions effectively and efficiently when they do arise and even gain an advantage over competitors during these situations.
Get the Full Scope of Container Visibility with VIZION
The best strategies for companies wanting to optimize for the current freight market are the strategies that work in any freight market—investing in tools that increase visibility, insights, and resilience. In any market, companies can discover ways to come out ahead, simply by being more informed, proactive, and able to respond to new information quickly.
For container shipping, this is made possible by the technology of container-level visibility. VIZION API’s real-time container data, pulled and standardized from various sources independent of the carrier, is key to keeping companies informed and proactive—helping to increase resilience and benefit the entire supply chain.
To learn more about VIZION, reach out to us today to book a demo.