Rail freight: Complete guide [+ Get SOCs at the best rate 2024] (2024)

LinkedInFacebookX

Considering using rail freight to ship your cargo? In this blog, you’ll get the complete picture of the rail freight market, plus advantages and challenges in the industry. What’s more, find out how you can get your hands on SOC containers at the best rates, along your desired routes on Container xChange.

Rail freight is fast, reliable, and much more environmentally friendly than ocean or air freight. However, it’s not without its setbacks. Routes are still quite limited, and with an increase in rail traffic in the past few years, making sure you have enough containers at all times can be tricky. Plus, there’s the added stress of repositioning your equipment empty.

If you struggle to find containers to lease when you need them most, don’t give up just yet. On Container xChange, we’ve got all types of SOCs available at completely negotiable rates.

On our platform, you can lease containers for one-way moves and avoid empty container repositioning altogether. With over 50,000 containers available in 2,500+ locations around the world, you’re bound to find what you’re looking for. To add to this, all of our suppliers are vetted, and payments on the platform are 100% safe and secure.

How about you give it a go yourself to see just how easy it is to find the equipment you need? Simply type in your requirements and hit ‘search’, to browse available containers right now.

Table of Contents

How does rail freight work?

Rail freight transportation involves the use of railroads and trains to transport cargo via land. It can be used for entire journeys, or to transport goods part of the way along a route where ocean or road freight isn’t possible.

Rail is used to transport the following:

  • Agricultural goods
  • Vehicles
  • Chemicals
  • Raw building materials
  • Coal, oil and wind turbines
  • Wood logs

Freight trains can haul bulk cargo, standardized shipping containers, or rail cars/goods wagons designed for a particular type of freight. Let’s learn more about the containerization of rail freight in the next section.

Rail freight: Complete guide [+ Get SOCs at the best rate 2024] (1)

Containerization of rail freight

The majority of the cargo transported by rail is still handled as bulk cargo – goods transported unpackaged, in large quantities.

But since the introduction of standardized container sizes, rail freight is using containers more than ever. Why? Because cargo from various shippers can be placed into one container, saving time on loading and unloading.

Now let’s look at how containers are used in rail freight transportation:

Standard containers: Thanks to ISO regulations, 20ft and 40ft dry containers must always have the exact same dimensions, no matter where they are in the world. This has simplified the transportation of shipping containers over varied gauge sizes to a great extent.

Incompatible gauge sizes (the distance between the two rails of a track) used to make transshipment between countries difficult. But now, shipping containers can be loaded and unloaded from rail flatcars without being opened, making transshipment faster and more efficient.

Double-stack containers: To put it simply, double-stack containerization means putting two shipping containers on top of each other. This way, special railroad cars – called well cars – can carry almost twice as much cargo.

This is how it looks:

Rail freight: Complete guide [+ Get SOCs at the best rate 2024] (2)Piggy-back: As we all know, railroads always end at some point. Plus, there are railways to destinations that trucks can’t reach. To tackle these issues, a form of combined transportation – the rolling highway – or ‘piggy-back’ service exists.

This means that trucks can drive onto a railroad flatcar and drive off when the train reaches the endpoint.

Now that we have seen how containers are used in rail freight transportation, let’s look at what kind of containers are used by forwarders. You’ll be surprised to know that unlike ocean freight, rail freight forwarders actually prefer shipper-owned containers (SOCs) over carrier-owned containers (COCs).

Why does the rail freight industry use SOC containers?

As with shipping, you might consider using COCs (owned by rail freight forwarders) when moving your cargo via rail. While this may seem more convenient, it comes with its challenges:

Lack of supply

With rail COCs, the supply of containers may be limited, especially at times of rising demand. Since the Covid-19 pandemic, rail traffic has increased significantly, meaning that containers are booked up quickly.

In scenarios like this, getting containers can be tricky. Not finding containers when you need them can seriously slow down your operations, wasting both time and money, not to mention frustrating your customers.

As a result, forwarders use SOCs to maintain an ample supply of containers for their clients. With SOCs, you can find containers at any time. At last, access equipment along your particular route, even at short notice.

Avoiding empty container repositioning

Do you often have containers you need to reposition empty after a rail journey? That’s a huge waste of time, money and fuel.

What if we tell you that you can free yourself of the burden of repositioning by leasing SOCs instead? This is the perfect time to lease containers on Container xChange. Simply move cargo to the required destination and then forget about the equipment altogether – it’s no longer your problem! No more stressing about storage costs or trying to find a shipper to fill your container.

Limited routes = limited flexibility

With COCs, routes can be limited, posing issues for your business. Limited flexibility can seriously hinder your operational flow, and leave your customers unhappy. With SOCs, send containers along the exact routes you need, plus decide for yourself how to get them to and from the rail line.

Rail freight: Complete guide [+ Get SOCs at the best rate 2024] (3)

Want to learn more about SOCs? Click here for a full guide.

How to source SOCs for your rail freight operations

So now that you know why SOCs are beneficial, it’s time to learn how you can source them for yourself. On Container xChange, we’ve got SOCs of all types and sizes, available in over 2,500 locations around the globe.

Once you’ve joined our platform, head on over to our leasing search, type in your requirements, and browse available offers. You’ll be able to compare the rates of various deals so that you can make the best decision for your budget.

Not happy with the rates, terms, or conditions of the deal? No problem – hop onto a chat with the supplier to negotiate. Yes, you read that right, no middlemen involved. What’s more, the rate you decide on is the rate you’ll pay. We won’t surprise you with any hidden costs or added commissions later on.

Once you’ve signed the deal, all payments will be dealt with using the xChange wallet. Keep track of all transactions and make completely safe and secure payments, directly on the platform.

Sounds good, right? So why not start the process today? In no time, you’ll be sourcing SOCs along the routes you need, at rates you’re comfortable with. Click below to begin your journey with us today.

Rail freight: Overview of the market

The rail freight transport market was valued at $247.39 billion in 2020, and is expected to register a CAGR (compound annual growth rate) of about 2% from 2021 to 2026.

In the US alone, the rail freight transportation market was estimated at $58 billion in 2022. And the country currently accounts for 34.4% of the global market share. China, as the world’s second-largest economy, is predicted to reach an estimated market size of $35.4 billion in the year 2026.

Japan and Canada are other noteworthy players in the rail freight market with a forecast to grow 2.8% and 4.1% respectively, between 2021 and 2026. Germany is predicted to grow at approximately 3.3% CAGR, while the rest of the European market will reach $35.5 billion by the end of 2026.

The impact of Covid-19 on the rail freight industry, in general, has been mixed. While the US and South America saw a general decline in the market, Asia and Europe experienced a significant rise in traffic.

Due to the recent war in Ukraine, we also saw large players in the shipping industry, including Maersk, MSC, and CMA CGM, halting all dealings with Russia. This increased the pressure on the rail industry, as shippers scrambled for alternative routes to move their cargo.

Overall, the rail industry can expect to see:

  • Bigger investments in the rail network as a whole
  • Major infrastructure development, including improving and repairing rails and expanding routes
  • The adoption of more digital technology to streamline and simplify processes

Heard of the Belt and Road initiative? We’ll cover this in the next section.

Rail freight: Complete guide [+ Get SOCs at the best rate 2024] (5)

New Silk Road: Freight rail network connecting Asia to Europe

The Belt and Road initiative is a project aimed at connecting China with the rest of the world. This includes developing rail routes between China and South East Asia, Europe and Africa.

Since President Xi Jinping announced the plan in 2013, China has sent more than 11,000 freight trains to Europe and back. In 2018, more than 6000 trains made the journey from China to Europe, a 72% increase compared to 2017.

The project initially aimed to deepen the cooperation between the Chinese and the European markets. So far, it has been reported as successful. Especially during the pandemic, when shipping ports became congested and alternative transport modes were needed.

As of December 2019, 152 countries were actively involved in the Belt and Road Initiative. China has also been heavily investing in Asian and European industries, including banking, automobile, robotics, power utility, solar farms, and ports.

Experts estimate that China will spend up to 8 trillion dollars as part of this initiative until 2049, which is the targeted year of completion. Learn more about the Belt and Road project in this blog.

How much will rail freight transportation cost you?

Yes, rail freight transportation is more expensive than ocean freight. However, in places where transportation through harbors is not possible, rail is an efficient and safe alternative.

To estimate your rail freight rates, you have to take various factors into account. These include:

Rail freight: Complete guide [+ Get SOCs at the best rate 2024] (6)

For a rail freight trip from China to Europe, you’re looking at between US $8000 $9000 for a 40ft container.

In comparison, shipping a 20ft container via ocean freight from China to Northern Europe will cost you only US $1,500. So if time is on your side, ocean freight is a much more budget-friendly option.

That being said, rail freight does have some major advantages over shipping. Let’s check our some of the benefits below.

Benefits of rail freight

There are many reasons to choose rail freight to transport your goods. Here are a few of the main ones:

Fast and reliable:

Especially compared to ocean freight, rail freight is faster. One of the biggest challenges shippers face with ocean freight is long lead times. Take the journey from China to Europe for example. A ship takes between 6 and 7 weeks to travel between these two continents, whereas by rail, cargo can move between China and Europe in half that time.

With regards to road transport, rail freight again comes out on top, as it’s not susceptible to congestion, accidents or road works.

As rail freight is not affected by weather like ocean freight, and congestion like road freight, it’s also the most reliable transport method of them all.

Safe and efficient:

Rail freight is safer than ocean, air or road freight. Just think about it: Accidents on rail are few and far between, and it’s not affected by rough seas or storms. Also, as compared to trucking, rail routes are set. Whereas truck drivers can stop anywhere along a route, putting goods at risk during rest periods.

Lower environmental impact:

Ocean and air freight have a significant negative impact on the environment. Let’s take the distance between China and Northern Europe for example. Air freight emits 139 tons of CO2. The combination of sea and air emits about 77 tons of CO2.

On the other hand, rail freight emits only five tons of CO2. In comparison, it is a drop in the ocean, meaning that rail is by far the most eco-friendly option available.

Challenges in rail freight transport

That being said, rail freight is not without its obstacles. Here are a few of them:

More expensive than ocean freight:

If an important factor in choosing between ocean and rail is price, it might be better to opt for ocean freight. Shipping may take double the time, but it’s roughly half the price of rail transport.

Unsafe for fragile goods:

Rail freight isn’t ideal for transporting glass or other fragile cargo. This is because trains sometimes halt suddenly, or speed up very quickly.

Limited routes available:

Railroads are still limited, especially in rural areas around the world. This means that transshipment may be necessary.

Loading and unloading cargo onto different modes of transport can increase the possibility of delays, loss and theft, as well as being more costly. Depending on the route, shipping goods may be the better option in certain cases.

Get SOC containers at the best rates on Container xChange

Are you ready to get SOC containers at prices you’re comfortable with, along the routes you need? Plus, avoid those empty container repositioning woes for good? Then it’s time to sign up as a member on Container xChange.

Here are just a few of the benefits you’ll enjoy:

  • 50,000+ containers available in over 2,500 locations
  • Work with vetted and reliable partners
  • Safe payment handling with the xChange wallet
  • Negotiable prices and 0% commission on deals
  • No middle-men: Deal directly with suppliers

If our leasing platform is exactly what you’re looking for, click below to sign up for your free demo with our expert team today. You’ll get a sneak peak of the platform, and learn all about how you can lease containers at the best price for your budget, and increase flexibility at the same time.

What does rail freight mean?

Rail freight is the transport of goods on trains via rail, as opposed to air, ocean or road transport. This includes bulk cargo in wagons/rail cars, and containerized transport.

What are the advantages of rail freight?

Rail freight is much faster than ocean freight, cutting journey times by up to half. It’s also much more environmentally friendly than air and ocean transport, releasing much lower levels of CO2.

How much freight is moved by rail?

In the US alone, freight railroads move around 1.7 billion tons across nearly 140,000-miles of track each year.

LinkedInFacebookX

Rail freight: Complete guide [+ Get SOCs at the best rate 2024] (2024)

FAQs

What is the ocean freight trend in 2024? ›

Ocean Freight: The WTO forecasts merchandise trade growth of 2.6% in 2024 and 3.3% in 2025 after a 1.2% drop in 2023. BIMCO expects container volumes to rise 3-4% annually, outpacing the global economy, especially in early 2024.

What is the most efficient freight rail system in the world? ›

Industry Overview. America's freight railroads operate the most efficient, cost-effective network in the world.

Is rail freight cheaper than truck? ›

Rail shipping is much more cost-effective than truck shipping for several reasons. Rail is a much more fuel-efficient mode of transportation. Railcars can also carry much more volume than trucks.

Is rail freight increasing? ›

Demand: The Federal Highway Administration forecasts that total U.S. freight movements will rise from around 19.3 billion tons in 2020 to 25.1 billion tons in 2040 — a 30% increase. Chicago: For 150 years, Chicago has remained the nation's busiest rail hub.

Will freight rates go up in 2024? ›

Because of the impact of higher inflation from driver wages, fuel prices, and interest rates and their downstream effects, FreightRun expects freight rates to go higher in 2024 even if the economy slows down – stagflation is a real possibility.

Are ocean freight rates dropping? ›

Maersk last month warned that container shipping overcapacity would hit profits this year, in contrast to the record earnings achieved in the wake of the pandemic. "Freight rates have fallen significantly since the good years of 2021 and 2022, and have fallen actually to an unsustainable level," Clerc said.

Does the US have the best freight rail system? ›

The Freight Rail Network. Running on almost 140,000 route miles, the U.S. freight rail network is widely considered the largest, safest, and most cost-efficient freight system in the world.

What country moves the most freight by rail? ›

Railways, goods transported (million ton-km) - Country Ranking
RankCountryValue
1China2,882,100.00
2Russia2,602,493.00
3United States2,364,144.00
4India654,285.00
108 more rows

Which country has the best railroad system? ›

It probably comes as no surprise that in a global 2019 survey of railroad efficiency, the top two places went to Japan and Hong Kong, with scores of 6.8 and 6.5 (out of seven) respectively.

How much does rail freight cost in the US? ›

The annual rate of increase for the initial period was $0.126 per ton-mile in 2020 compared to $0.196 per ton-mile in 2023. This is a more than 5X year-over-year increase to move freight for the 500-mile distance with costs rising from $57 per ton in 2018 to $98 per ton.

How can I get cheaper freight rates? ›

Shipping Distance: Longer distances generally result in higher rates due to increased fuel and time costs. Shipment Weight: Heavier shipments can sometimes benefit from lower per-unit shipping costs. Shipping Method: Choosing between Less-Than-Truckload (LTL) and Full-Truckload (FTL) can impact your rates.

What is the disadvantage of rail transport? ›

There are risks and disadvantages of transporting your goods by rail including: routes and timetables available can be inflexible, especially in remote regions. rail transport can be more expensive than road transport. mechanical failure or industrial action can disrupt services.

What state has the most freight railroads? ›

These five states are responsible for a large share of all rail traffic in the United States. Texas tops the list with 208 million tons of rail freight received each year. The Lone Star State is crisscrossed by a large network of railroads, making it easy for goods to move in and out of the state.

Who are the three largest railroad companies in the US now? ›

What is the biggest Class I Railroad?
  • BNSF Railway – $25.9 Billion Revenue, 32,500 route miles, 35,000 employees.
  • Union Pacific Railroad – $24.9 Billion Revenue, 32,100 route miles, 32,100 employees.
  • CSX Transportation – $14.9 Billion Revenue, 20,000 route miles, 25,000 employees.

Will freight trains become electric? ›

This week, Wabtec Corp., a rail technology company, took what it says is a ​“major step” toward electrifying this heavy-duty industry. At a ceremony in Erie, Pennsylvania, Wabtec unveiled the world's first battery-powered, heavy-haul locomotive that will be used for mainline service.

What is the outlook for the shipping industry in 2024? ›

For the year 2024, it is estimated that the maritime shipping market size in dollars will be in the vicinity of US$381.69 billion; in 2029 it is expected to reach US$ 471.81 billion, being, the fastest-growing market: Asia Pacific. The global container fleet has grown in size to meet this demand.

What is the ocean freight rate forecast for 2025? ›

DHL says ocean freight rate inflation might not ease up before Chinese New Year in early 2025, with some forecasts seeing rates reaching to between $20,000 and a Covid era peak of $30,000.

What is the forecast for ocean freight? ›

OFR market demand continues to be higher than previous year. Accenture Cargo predicts a growth of around 5% in the 1st half of this year. We expect Asia outbound lanes to continue to grow above global growth. We expect demand to be strong on Asia outbound lanes for at least the next 3 months.

What is the forecast for air freight in 2024? ›

Estimates for airfreight growth range in 2024 from 2% to 5%, but the continuing influx of passenger widebody capacity, especially in the Asia-Pacific region, as airlines reset after the pandemic is expected to put pressure on load factors and rates.

References

Top Articles
Latest Posts
Article information

Author: Merrill Bechtelar CPA

Last Updated:

Views: 5565

Rating: 5 / 5 (50 voted)

Reviews: 89% of readers found this page helpful

Author information

Name: Merrill Bechtelar CPA

Birthday: 1996-05-19

Address: Apt. 114 873 White Lodge, Libbyfurt, CA 93006

Phone: +5983010455207

Job: Legacy Representative

Hobby: Blacksmithing, Urban exploration, Sudoku, Slacklining, Creative writing, Community, Letterboxing

Introduction: My name is Merrill Bechtelar CPA, I am a clean, agreeable, glorious, magnificent, witty, enchanting, comfortable person who loves writing and wants to share my knowledge and understanding with you.