Why the Best Freight Forwarders Don’t Mind Paying Slightly Higher Rail Freight Rates

Rail transport has always been a good option for shipping heavy raw materials. Chemicals, metal ore, farm products, construction materials, automotive parts, and energy commodities are transported by rail. Freight forwarders don’t mind paying slightly higher rail freight rates to transport such goods for various reasons. They include –

  • Eco-Friendliness: Every modern-day freight forwarder is committed to supporting eco-friendly transport. Some of the leading freight forwarder alliances in the world have stated their support for green causes. Unfortunately, it’s impossible to avoid ships or air travel when you’re transporting freight on an international scale. That’s why when it comes to local freight deliveries, freight forwarders prefer rail transport. Road transport involves the use of three times more fuel than rail transport. That’s why rail freight is a more environmentally friendly alternative for local deliveries. Plus, it’s more cost-effective.
  • Inland Waterway Issues:Due to the COVID19 pandemic, several disruptions have been caused to transport on inland waterways. Rail freight has a market share of over 30% in the US and 20% in Europe. Before the pandemic, rail lines had to share their infrastructure with passenger trains. Passenger traffic on rail lines has dropped a lot since the COVID19 pandemic. It will take long for passenger traffic on rail lines to return to “normal” levels. This creates a perfect environment for freight trains. On one side, inland waterways are marred with issues like congestions, excessive custom fees, etc. On the other hand, rail lines are freer than ever.
  • No Weather Risks:Maintaining fast delivery times is a must when transporting freight on a local scale. Air transport will always be weather-dependent. Airports are much likelier to cancel flights in this post-pandemic world. Freight forwarders don’t want inclement weather conditions to impact their deliveries. That’s why they choose rail, which is unaffected by weather risks.
  • Ships Have Limited Capacities: Every year – we expect maritime freight capacity to increase. But, larger vessels are currently not being introduced to the market by major shipping companies. The main reason is port congestion. Many shipping companies have their equipment stuck at sea. Unless congested ports in Asia, Europe, and the US are resolved, freight forwarders will keep looking for cost-effective alternatives.
  • Limited Labor Availability:Labor shortages are impacting every facet of the global supply chain. But, major ports are one of the worst victims. Major ports have limited labor availability. These smaller workforces can’t adapt to spikes in demand. That’s why securing cargo spaces on major vessels has been very challenging for freight forwarders.

Perks of Being in Freight Forwarder Associations

A combination of factors determines rail freight rates. They include –

  • Distance covered by the freight
  • Type of goods being transported
  • Dimensions (size, weight, and volume) of the commodities transported
  • Customs clearance fees
  • Insurance coverage

These factors are relatively constant, so rail transport is often the cheapest option for freight forwarders. Plus, many freight forwarders are part of international associations and alliances. Membership in such influential and expansive networks allows them to get the best rates on rail freight.

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