Blog June 13, 2018

Rail vs. Truck Shipments

By Germán Alonso 
June 13, 2018 | 4 min read


Over long distances, shipping by rail will be cheaper, faster and less carbon-intensive than trucking. Almost any consumer good, including temperature-controlled foods, can be shipped by rail.

So, how do you know when it is a viable shipping method for you?


Let’s assume you are shipping a full container. Despite this simplification there are still several factors to consider:

1. Distance.

a. If the shipment will travel less than 500 miles, then its nearly impossible for rail to beat trucking.
b. If the shipment will travel more than 500 miles between origin and destination, then you must consider the trucking costs to get the container from the origin to the intermodal terminal and then from the destination terminal to the ultimate destination.

2. Number of railroads involved.

If different railroads own the origin terminal and/or destination terminal, then your railroad will factor the extra costs in the rates.

3. Who owns the container?

If you have to rent/lease a container from the rail company to ship your goods, this will affect your pricing.

4. Schedule.

Like all transportation methods, the faster the delivery, the higher the premium.

5. Shipment commodity.

Rates are affected if your commodity requires additional services like refrigeration or heating. There are also some restricted or prohibited commodities, such as hazardous materials.

6. Number and frequency of shipments.

The bigger the volume you transport with the rail company, the better the rate and conditions you could negotiate in your contract.

These factors are combined to derive a cost to ship by rail. Keep in mind, however, that the calculations are so complex that pricing shipments cannot be done at the snap of your fingers. Instead, you’ll need to reach out to railroads to get further information.

Reach out to the LIDD team to learn more about warehouse slotting and optimizing your warehouse operations.

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