Q: I was taking a road trip with my family and I was astonished at how many freight trucks I saw out on the roads. I mean, judging by the excited squeals of my 2-year-old son, it seemed like we passed one every other minute. My husband tried to get them to honk their horns, but the drivers didn’t take too kindly to the gestures he was making. He swears it used to work when he was a kid.
With fuel prices being what they are, I shudder to think how much it would cost to fill one of those trucks up, and how much fuel it’s actually going through on say, a cross-country jaunt. Isn’t there a more efficient way to get all that stuff from point A to point B?
A: You’re right, there are a lot of trucks on the roads. It’s estimated that there about 15 million trucks on the road in the United States today, and about 2 million of those are tractor trailers. And those trucks carry a lot of freight — 70 percent of all freight transported in the U.S. gets transported by truck freight (judging by the amount of Amazon.com deliveries I’ve gotten in the last six months, that figure sounds about right), amounting to about $670 billion worth of goods.
But trucks can wreak havoc on our environment. According to the EPA, their greenhouse gas emissions are five times as much as other modes of freight transport. And freight trucks cause more and more damage to our roadways every year. For their part, the American Trucking Association has started a campaign called Trucks Deliver a Cleaner Tomorrow highlighting the changes and proposed changes to trucking industry standards to reduce their carbon footprint and greenhouse gas emissions.
However, there are those that say that there is a much more efficient way to move freight across our country, and that’s the railroad. The Association of American Railroads estimates that on average, a freight train can move 1 ton of freight about 484 miles on just one gallon of fuel. That, as well as other factors, was enough to convince the “Oracle of Omaha,” Warren Buffet, to invest in the rails in 2009.
In a deal that sparked much discussion and debate, Buffett bought out the remaining 77 percent of shares that his company did not own of BNSF Railway Co. in 2009. “It’s an all-in wager on the economic future of the United States,” he said at the time. Why? Because, he said, trucks have reached their peak of efficiency, and trains have not. Long-haul trains are three times more fuel efficient than trucks, says Matt Rose, CEO of BNSF. With oil prices climbing and not showing signs of falling anytime soon, that number is attractive to the shipper and, of course, the environment.
Buffett stays contented, even excited with his investment, as BNSF contributed over $1 billion worth of revenue to his company last year.
William Nickle, supply chain and operations management professor at Rutgers University Business School MBA Program, explained it to me further: “One of the biggest differences between roads and railroads is that the infrastructure for trains is financed by private individuals, and the infrastructure for trucks (roadways, bridges, etc.) is financed by the government. A government that is as in debt as ours has not been able to invest enough to revitalize and resolve all of the current issues with the infrastructure the trucking industry relies upon.” Nickle does add, though, that there will always be a need for intermodal transport, such as trains and trucks to take the freight the last leg of its journey to its destination.
For more about the supply chain and how it affects us, watch this video.