US RAILWAYS have reduced rates for smaller shippers to attract new business during a period of weak demand, reports New York's Journal of Commerce.
Union Pacific and COFC Logistics, acting as a wholesaler for BNSF Railway, have made adjustments to contractual rates for low-volume shippers, known as aggregate rates, effectively revising the prices established in January and February.
UP has implemented a 3.5 per cent rate reduction across over 200 lanes in the United States for the remainder of 2023, while COFC has decreased rates by an average of five per cent across 32 lanes.
These actions come as the Journal of Commerce Intermodal Savings Index (ISI) indicates that the average shipper is now saving less on rail compared to a year ago.
The contract market index shows that shippers are currently saving 24 per cent when using rail instead of truck transportation, down from 35 per cent in the previous year.
Although intermodal contract rates have seen a decrease in 2023, with the average rate dropping 15 per cent to US$1.60 per mile in May (including fuel) compared to a year ago, truckload contracts have also experienced a decline.
Truckload contracts averaged $2.08 per mile on the same lanes in May, down 25 per cent year over year, narrowing the gap between the two modes of transportation.
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