Friday, January 6, 2012

Cost Per Ton Mile for Four Shipping Modes

The graph below was created using Google’s chart tools.

The vertical bar graph shows the costs per ton mile for shipping freight on four transportation modes – truck, rail, air, and water. The costs per ton mile amounts are computed from US Department of Transportation data for 2002. The costs per ton mile were computed by dividing the 2002 data for the total costs of shipping freight in each of the four modes by the total ton miles shipped for each of the four modes.

The total costs for shipping freight in 2002 are provided in a Department of Transportation study. Click here to go to this study.

The total ton miles shipped for each of the four modes are provided in another Department of Transportation study. Click here to go to this study (PDF file).

From the data in the graph, shipping freight by air is about 10 times as expensive as by truck, which is about ten times as expensive as by rail.

The data suggest that whenever possible shipping by rail can save companies significant costs. Also, improved rail infrastructure and greater use of that infrastructure could be an important national strategy for cost savings.

Although this is 2002 data (the most recent that could be found), the comparative costs between the four modes likely remain the same for more recent data.


Cost Per Ton Mile for Four Shipping Modes

15 comments:

  1. The complete business logistics support may go beyond the last leg of goods movement such as empty runs of trucks. Empty runs can also happen when an empty truck is sent to pick up merchandise at a certain point of the supply chain.

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  2. The labels on the graph make for some confusion. From the left hand scale, it appears that truck costs are $0.37/mile, but the label says 0.37 cents, or $0.0037/mile. Same for rail and water costs.

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  3. It would be interesting to add pipeline transportation into the comparison. Oil, gas and water are all typically transported by long distance pipeline, which is cheaper than rail.

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  4. The $4.63/ton-mile air freight cost estimate does not survive close scrutiny. If it were true, it would cost $1400 to transport the amount of freight equivalent to a 80 kg person one way from New York to Paris. In reality, you can get a round trip ticket for half that amount (and passenger transportation is clearly more expensive than transportation of an equal quantity of potatoes or TVs.)

    It is possible that the error occurred because you divided $27 billion in total transportation costs (including domestic, international, and mail) by 5.8B ton-miles (domestic only, excluding mail).

    Here's a different DOT link that estimates total domestic freight+mail traffic at 14B ton-miles in 2002:
    http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_01_49.html
    And here's the source for the $27B figure, but this time broken down into $20B domestic + $7B international: http://www.uwa.com/supply_a_005.pdf

    This would put the air cost at 14/20=$0.70 per ton-mile, and the cost of shipping the 80 kg person equivalent from NY to Paris at $320 one way, much more in line with typical airfares.

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  5. Thanks for great information you write it very clean. I am very lucky to get this tips from you.
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  9. It seems counter intuitive to me that water is more expensive than rail. Of course, in some cases carrier charges round trip for equipment utilization purposes, which brings the head haul more than double the back haul. Rail is in similar situation, if the special equipment is required one direction and not back. For true efficiency standpoint water is half the cost of rail.

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  10. This comment has been removed by the author.

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  11. Here is more recent US Department of Transportation data, e.g. value of shipment and ton miles, for various transportation modes. The data is for movement of goods within the United States. This more recent data is consistent with the results shown in the graph above.

    http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/commodity_flow_survey/2012/united_states/table1.html

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    Replies
    1. I don't get it. The following link http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/commodity_flow_survey/2012/united_states/table1.html

      indicates for trucks $10,038,086 for the 2012 value (million $). That is $10,038,086,000,000 -- Ten trillion dollars.

      At another link: http://www.businessinsider.com/trucking-industry-infographic-2013-4

      It indicates Value of shipped goods is $139,463,000,000.

      That means it cost ten trillion dollars to ship 139 billion dollars of goods. That is not good business.

      Am I missing something?

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  12. I'm having problems with the DOT data too. Units must be the problem:
    Rail @ $0.31/ton-mile, Inland water @ $1.78, Truck @ $7.94, air @ $62

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  13. I see what I did wrong. This is goods value and I'm looking for freight mode cost. Numbers make sense now.

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  14. Ocean shipping would the best option. Here are few effective ways in which you can save cash on world wide overseas shipping.

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