Railroads may play large role in 2013 supply chains

on Friday, December 21, 2012

Railroads may play large role in 2013 supply chainsMany companies have been experiencing slow growth as the economy wavers and the "fiscal cliff" approaches, and some business leaders are looking for ways to implement cost savings while still expanding their enterprises and getting their products to consumers. As they are seeking ways to enhance their profit margin and still get merchandise to market, some may be considering changing up their logistical strategy to include railroad transport.

Rail executives anticipate growth
Many in the locomotive industry expect 2013 to be a profitable and busy year for freight trains across the U.S. and Canada. Several executives reported focusing on market diversity, keeping up quality service and remaining productive as their strategies to encourage growth and pick up new consumers in the coming year, according to Progressive Railroading.

Claude Mongeau, president and CEO of rail giant Canadian National Railway (CN), told the source that even though it is too early to make any clear projections, he assumes the rail industry will grow faster than the economy or base markets.

Increased rail shipping expected
The recovery of the U.S. economy will play a large role in the success of railroad operators. As the housing market begins to improve, builders are finding an increased need to procure materials that are often shipped across the country by rail. Similarly, the natural gas boom being experienced in several parts of the nation will call for increased shipping options.

Companies looking to change their logistical operations and make the switch to railroads may choose to do so because it is a cost-effective strategy for their supply chain. Others may be drawn to the potential rail offers in getting their goods to market or to the next link in their supply chains, such as ports or highways.

Improving operations to encourage growth
In a separate interview with The Globe and Mail, Mongeau stressed the importance of being efficient and how prompt and reliable service would also help to increase growth.

Many railroads are making changes to their operations and procedures to encourage businesses to utilize their services and reap the benefits. Progressive Railroading reported that Canadian Pacific recently launched faster transit options connecting large cities. BNSF is expanding its network to ensure it can reach an increased number of destinations and ensure its customers are able to get its products to market.

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