Using Rail to Transport Waste—Quantifying the Economics

Understanding your transportation options and realizing cost savings are paramount. Once you’ve put the puzzle pieces together, you may be surprised at the cost savings waste-by-rail will help you realize.

Darell Luther

Using rail as an option to transport waste seems foreign to many local collection and disposal companies. The concept of railing out waste is particularly odd for municipal solid waste (MSW) or construction and demolition debris (C&D) material that is collected for a municipality and disposed of at a local landfill. Why would a company look beyond a local option when the local landfill is readily available and convenient? The answer to this question is best answered by the one resounding question we consistently receive, “at what point do the economics favor transporting waste (MSW and C&D) by rail?”

This is a multi-faceted question that needs to be broken down into its component parts to fully understand the parts and to quantify and qualify the answer. Somewhere between collection and disposal lie the factors that determine the economics.

The Big Picture

The big picture of waste disposal simply consists of pricing your waste disposal options at various disposal sites and then determining the logistics components of transporting waste-by-rail from your site to a selected disposal site or sites. If pricing remains economical, waste-by-rail begins to look like a viable option. The method of collection remains the same. It’s what you do with the waste thereafter that changes.

After collection you have a choice of handling and transport options. You can either process (bale, separate, segregate or compress) or leave the material in bulk form as collected. The method of handling (process or bulk) after collection then determines your selections available for rail transportation options.

If you process your waste in a form that allows it to be easily handled, e.g. baled, you have the option of another truck transport to a rail trans-load site. If waste is not processed, it is generally transported direct to a rail trans-load site directly from collection. Either way, it’s just a matter of economics and access to land for processing and transfer and to a railroad site that has the capability to trans-load the waste.

During the discovery phase of waste processing, bulk handling and transfer options, you’ll also want to be working on the rail portion of the movement. Locate a rail site that is suitable to your requirements and that offers competitive rail rates to the chosen disposal site or sites.

Much like a semi-complex jigsaw puzzle you’ll find that by putting together separate sections of the puzzle and then bringing those sections together you’ll find a solution that yields the best overall economic results.

Piecing Together the Puzzle

Putting Together the Origin Site Puzzle

Start geographically in your local area to determine where you can obtain rail access. What you are looking for is a place to either trans-load processed or bulk waste or a yard where you can set up a processing facility that has direct rail access. The ability to transfer processed or bulk material direct from collection is often a better economic solution as it entails one less step in the logistics process. However don’t rule out processing your material at a yard off-rail and using a trans-load facility to access rail. If you can access two competing rail lines that’s even better as dual access to rail often yields better pricing.

To find a physical rail site the best place to start is with the industrial development group at the railroad. Each Class I railroad has such a department as do many smaller railroads. U.S. Class I railroad industrial development contacts can be researched via their Class I Web site at www.bnsf.com,www.uprr.com, www.nscorp.com, www.csx.com, www.kcsi.com, www.cn.ca, andwww.cpr.ca. Oftentimes, railroads will only be able to assist in a limited fashion due to their restricted resources and lack of in-depth knowledge of the local area. Don’t despair. If you aren’t having any success with the railroad the next call should be to a local Chamber of Commerce, real estate office, county commissioner or industrial development group for your area. Many times local planning and zoning departments also have advanced information on potential processing and transfer sites.

Putting Together the Rail Puzzle

Somewhat consecutive with finding a processing and transfer site, you will also want to start the rail requirements research. This primarily consists of determining the rail rate, what type and quantity of railcars required, what is the primary route of shipment over which rail line(s) and where exactly are you going to ship your product to (location or track specific) at the destination. With this information in hand you can determine the price of shipping waste by rail.

We find that the most logical place to start is to first obtain rail rates so that you have the knowledge of any pricing options before finalizing an origin site plan. For instance, if you obtain rates for processed and bulk waste, you will have an initial idea of pricing to plug back into the total cost model to determine which option is most economical and or least restrictive in bringing to fruition.

The best way to obtain indicative rates is to look at the individual Web sites for the rail route your shipments will travel over. Most railroads publish public tariffs that will give you an idea of cost between processed and bulk commodities and rules and regulations for shipment of waste commodities. Rail pricing is by Standard Transportation Commodity Code (STCC) and the five-digit STCC for garbage waste is 40291. Other STCC can also be researched on the railroad Web sites. You’ll need STCC information to obtain pricing from the railroad Web sites. If a railroad doesn’t present an online pricing option you can call a marketing or sales representative. Depending on the railroad, they are either located in Emerging Markets or Industrial Development groups.

After obtaining the rail rate(s) be sure to read the rules and regulations that apply to your shipments. Pay particular attention to private versus railroad car requirements and rates as you’ll generally notice a significant cost differential, fuel surcharge and switching fees, Open Top Loading rules such as railcar covering or tarp requirements, railcar sealant and odor control (if applicable), environmental requirements and railcar storage, demurrage and OT5 requirements.

Putting Together the Destination Puzzle

Oftentimes, the destination puzzle is easier to construct than the other major parts of the puzzle. If you’re researching a destination landfill or a C&D site, it’s generally because the tipping fee is significantly less than a local option. If the site is on rail, it’s just a matter of coordination of the rail shipments to the landfill. If the site is off rail, you can use the same process used in finding an origin site and one additional resource, the landfill operator. Generally, they want your business and will assist with finding a rail trans-load site.

Tipping Fees Drive Rail Option

Tipping fee costs are what drive the longer haul rail option. Consider that the higher priced tipping fees are in major population centers primarily along the east coast and in Washington State. There are also bubbles of higher tipping fee costs in areas that only have a public (municipal) landfill option that use tipping fees to offset other program costs such as recycling, etc. Albeit not an exact science, MSW tipping fees generally range from $0-$25/ton; $26-$50/ton; and $51/ton and over range. If you’re in the higher range you probably want to explore your rail waste transport options.

In an industry where every dollar counts and transportation is the one largest cost factor, understanding your transportation options and realizing cost savings are paramount. Once you’ve put the puzzle pieces together, you may be surprised at the cost savings waste-by-rail will help you realize.

Darell Luther is president of Forsyth, MT-based Tealinc Ltd., a rail transportation solutions and railcar leasing company. Darell’s career includes positions as president of DTE Rail and DTE Transportation Services Inc., Fieldston Transportation Services LLC, managing director of coal and unit trains for Southern Pacific Railroad and directors positions in marketing, fleet management and integrated network management at Burlington Northern Railroad. Darell has more than 24 years of rail, truck, barge and vessel transportation experience concentrated in bulk commodity and containerized shipments. He can be reached at (406) 347-5237, via e-mail at [email protected] or visit www.tealinc.com.