Dive Brief:

• Trains are getting longer, sometimes topping out at roughly three miles, the Omaha World-Herald reported last week.
• Longer trains provide a more flexible and efficient transportation system, in which savings gained are passed on to customers, according to the railroads. Several workers' unions are sounding the alarm on this new practice, however, based on safety concerns.
• As the Federal Railroad Administration (FRA) does not regulate train length limits, unions argue that oversights are likely. Yet, railroads insist increasing length does not create create an inherent danger, and claim to provide their workers detailed safety training.

Dive Insight:

The rail freight industry — still in the midst of recovery from an economic recession — is actively searching for ways to return to profitability. In general, the industry is attempting to cut costs and increase revenues, a feat doubly achieved by raising train lengths.

When it comes to raising revenues, the industry has benefited from an economic shift toward intermodal transport to offset the decline in carload shipments. Rising trucking costs are leading shippers to turn to intermodal transport, embracing transport flexibility as a means to save costs, JOC.com reported in February. Now, railroads are looking to increase both their consistency and speed to retain that business.

Longer trains help railroads achieve this goal by allowing them to transport more and at a cheaper rate. But it also helps the carriers cut costs in the long-run, given economies of scale.

In fact, the growth of extended trains parallels vessel expansion within the ocean cargo transport industry, where industry consolidation and the enlargement of the Panama Canal spurred bigger ships, resulting in greater capacity per voyage and lowered expenses through fewer calls. The necessity of keeping costs down, therefore, powers the more-is-less method of cargo movement, which ultimately, at least in the case of rail, reduces costs not only for shareholders, but also within the supply chain.

However, if the comparison with ocean shipping holds true, it should also concern shippers. In their mission to cut costs and raise revenues, shifts to capacity may transform the balance of power between shippers and carriers. Fewer service routes mean shippers may, in the long-run, see constraints on their options and be forced to acquiesce to higher rates for preferential or less-frequented routes. Longer trains may also increase the time cost of unloading cargo, adding delays to the process. When some of these disruptions happened in ocean shipping, shippers began to rely more on air cargo. 

The Omaha World-Herald report highlights what could be the beginning of a trend as the rail industry seeks to boost their profits. However, to retain business, carriers must ensure the quality of their customer service does not suffer in the process.