If all goes as expected, a new refrigerated unit train with a capacity for 200 loads of fresh produce will travel between California and Illinois beginning in late February.
Operated by McKay TransCold, it will be called TransCold Express and will utilize the Burlington Northern Santa Fe Railway. McKay TransCold is a third-party logistics firm based in Minneapolis that will provide multi-modal logistics solutions to its customers.
This dedicated rail service will initially operate once-a-week shipments from both eastbound and westbound hubs, with a goal of doubling that service as the need arises.
Jason Spafford, vice president of business development for the firm, said that initially a 50-car train will depart the city of Selma in the San Joaquin Valley on Wednesday afternoons headed for Wilmington, IL, which is about 30 miles south of Joliet. At about that same time, the westbound train will leave the Wilmington terminal headed for Selma. Spafford said the trip will take about 96 hours.
Consequently, fresh produce headed for Illinois will arrive Sunday night and be trans-loaded and ready for delivery to final destination as early as Monday morning.
Each refrigerated car can handle about four loads of produce. Spafford said the service will provide car-load, truck-load and LTL pricing. McKay TransCold is quoting the service as both door-to-door and ramp-to-ramp, meaning that firm can handle the transportation at both ends or either end, depending upon the needs of the shipper and the receiver.
What makes this service somewhat different than others that have surfaced in recent years is that the westbound haul is the initial driving force.
Over the years, several railroad transportation options have surfaced, but often the cars or intermodal equipment end up going from east to west empty, creating a situation where the eastbound produce haul must carry the entire cost of the program.
Spafford said this is definitely not the case with this service.
"We are a trucking company first and foremost," he said. "We didn't even consider this service without having a full train both ways. That's not an option."
He allowed that the company may not have matching loads going each way at first, but that is the goal.
"We are just about at capacity going westbound," he said.
TransCold Express already has commitments from several food companies for almost all of the westbound shipments. Spafford said eggs, cheese, frozen pizza and other refrigerated food items will make up the bulk of the movement from Illinois to California.
Going west to east, TransCold Express expects the train to be filled mostly with fresh produce, but Spafford said as representatives secure commitments, other food items - most notably wine - might be included in the mix.
Spafford said McKay TransCold has had initial talks with West Coast shippers, but wanted to secure the contract with the railroad and the westbound freight first.
That having been done, he said the firm's representatives are now on the ground talking to shippers and will also be touting the service at the upcoming Produce Marketing Association Convention in New Orleans. He expects that firm commitments for the eastbound produce hauls will be taken as 2013 moves into its final quarter.
Spafford said that the executives at McKay TransCold are fully aware that fresh produce is different than a manufactured good, but the firm still believes advance commitments are possible and doable.
In a press release, Randy McKay, chief executive officer of McKay TransCold, said, "We have worked closely with the BNSF team to craft a program that will fill a niche in current modes of transportation. It was important to bring a service to the market that added value and focused on overall supply chain solutions."
It is McKay's contention that this new service couldn't be timelier given current challenges in the trucking industry, with new hours-of-service regulations. He said an added benefit of the service is that the train is 70 percent greener compared to trucks, with one railcar equaling up to four truckloads. This important benefit measurably decreases companies' carbon footprint.
In the same press release, Dave Garin, a BNSF group vice president, said, "Transcold Express represents a new milestone in refrigerated train service on our network. Our network provides an ideal solution for perishable shippers to achieve superior supply chain performance because of BNSF's commitment to service performance and reliability."
McKay TransCold believes that for produce shippers, the Illinois arrival location will provide competitive service to Wisconsin, Michigan, Indiana, Iowa, Ohio, Kentucky and the East Coast, including Pennsylvania, New York, New Jersey, the Carolinas, and select Canadian markets including Toronto.
Spafford estimated that the freight rate should be at least 15 percent less than a corresponding over-the-road haul. He said the firm's business model revolves around securing commitments rather than just operating on the spot market.
Speaking to this point was Andrew McKay, the firm's director of logistics, who said, "We aren't really interested in being a spot market only option. We can provide that extra capacity, but we are also interested in establishing relationships that can grow and offer very competitive year-round pricing. I think you're going to see something a little different from us."
To round out the management team, the McKays recently hired Craig Carlson as senior vice president of produce marketing and strategy.
Most recently, Carlson served as a senior vice president at U.S. Foods and also has many years of retail experience, including as senior director of produce at Walmart.
"After 35 years as a senior retail executive, I'm happy to be part of an organization that is supporting the industry with an innovative solution that delivers the supply chain efficiencies needed to take us into the future," said Carlson. "We are talking to customers and developing programs to provide easy and comprehensive solutions that will satisfy their West Coast produce transportation needs."