Pratik Joshi, -- http://www.tri-cityherald.com -- November 11, 2007
Jennifer Dietrich used to spend days trying to find trucks to ship her sliced fresh Washington apples to East Coast buyers.
The marketing specialist for Cashmere-based Crunch Pak said it was a hassle to arrange for trucks to carry small loads to different locations in the East. But about a year ago, Railex offered an integrated solution to Dietrich's transportation headaches.
Now each week, the company's trucks haul more than 2,600 cases of sliced apples from the Crunch Pak facility to Wallula. The boxes are then loaded on a dedicated train headed for Rotterdam, N.Y., and five-days later Railex trucks distribute the merchandise to Crunch Pak customers throughout the East Coast.
Since Railex began operations in October 2006, its guaranteed on-time delivery railcar service has shipped more than 10,000 truckloads of Washington cherries, apples and wines; Idaho onions and potatoes; California oranges; Oregon pears and Portland nursery plants and flowers.
And Railex cars have brought about 2,500 truckloads of beer, juice, seafood and potatoes back to the West Coast.
Railex operates the weekly train services simultaneously from its Wallula and Rotterdam facilities. So, when one train is being unloaded in Washington, the other train gets loaded up in New York.
Railex is changing the delivery industry, said Paul Esposito, the company's senior vice president. "We're a rolling warehouse," he said.
It's an innovative concept that seems to be growing, said New York-based transportation industry analyst Tony Hatch. He said the combination of trucks for shorter hauls and railcars for longer hauls will help cut emissions and reduce road congestion.
After a year in business, Railex is poised for growth, said Jim Kleist, general manager of company operations in Washington. He said the company recently increased the number of railcars from 55 to more than 65, and the goal is to have trains running twice a week from Wallula by the end of the year.
Esposito said the company plans to start a similar transportation and warehousing facility in California next year that will be connected with the Wallula and Rotterdam centers.
Rising diesel costs, high freight insurance and a chronic shortage of long-haul truck drivers make the Railex approach a perfect marriage between trucking and rail, said Don Newton. He recently retired as manager of railroad operations for J.R. Simplot Co. in Boise, which has used Railex to ship fresh potatoes from the East Coast.
He said rail transportation is more economical than trucking for hauling goods beyond 1,000 miles, so such intermodal transport should become more popular.
Kleist said although a Railex train runs at more than 85 percent of capacity to the East Coast, the train is less than half-full on its westward return.
Hatch, who has been an independent analyst for about 25 years, sees this as a temporary phenomenon. He said the transportation industry is in flux now, with truck industry earnings down 30 percent and rail industry earnings up only marginally.
Hatch said shippers are looking for better deals wherever they can get them, and the intermodal system being popularized by Railex will catch on in the long run.
But getting the word out about Railex hasn't been easy, Esposito said. "We banged on a lot of doors," he said, describing efforts to reach big and small companies eager to break into the Northeast market. He said it was challenging to convince Washington producers to try a new way to move perishables across the nation.
Ads in the trade media and participation in industry shows helped Railex gain visibility, Kleist said, but word of mouth publicity was most useful.
Kleist said shippers' initial skepticism evaporated as the company made good on timely deliveries and followed a regular schedule.
Railex's train leaves the Wallula facility every Thursday and reaches New York by Tuesday. Such timely delivery has long been a problem for the rail industry, and people shipping perishable products risked having their railcars getting sidetracked while their loads rotted.
Railex's temperature-controlled railcars also are equipped with satellite tracking systems that allow shippers to track their products. The train gets priority handling on dedicated lines and stops only for refueling and crew changes.
Railex also accepts small shipments and offers a warehouse facility that small businesses can use for temporary storage while they seek buyers in the Northeast, where more than half of the nation's population lives, Kleist said.
Initially, part of the challenge was managing the loading of the railcars, Kleist said. Goods come in packages of various shapes and sizes, and it's critical to maximize the use of railcar space without damaging products. Railex designed special racks and used airbags to ensure the safety of goods.
"Railex is about care, custody and control," Kleist said.
Crunch Pak's Dietrich said her customers in the East are happy because they are getting undamaged fruit. And she said when one case got crushed, Railex informed her and immediately repaid her. "I didn't have to invoice them."
Esposito said the Port of Walla Walla has been very helpful. Besides developing infrastructure for the facility, the port helped in marketing.
Esposito declined to reveal the privately held company's revenues, but said Railex also is planning another facility in Florida.
Railex's success can be seen as part of a rail revival, said Karen Bonaudi, assistant executive director of the Washington State Potato Commission.
She noted state potato growers also are using a new Washington State Department of Transportation Produce Railcar Pool, but it covers a different market segment than Railex and its conventional boxcars can take 11 to 20 days in transit.
But for shippers such as Dietrich, the advantage of Railex is in its comprehensive door-to-door service.
"I wish they had trains twice a week instead of just one," she said.
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