No Stoppin’ This Train

North American railroads and intermodal operators are on a mission to convert truck freight to rail.


The rail sector in the U.S. has continued to enjoy a well-deserved and prolonged period of expansion in recent years, thanks to strategic investments and refocusing on customer service that has garnered attention from intermodal shippers as well as those in a range of sectors and commodities, including time- and temperature-sensitive food and beverage companies.

Admittedly, difficulties in the trucking sector, namely driver shortages and rising fuel costs, have played to U.S. rail carriers’ advantage. But, even if conditions were to change, it’s likely that the market share and customer base that railroads have developed in recent years are here to stay. In fact, the real question is: what future opportunities are railroads creating for themselves?

 

Building on a solid foundation

There have been many significant projects undertaken by North American Class I railroads in recent years, from double-stacking routes to terminal modernizations to new equipment purchases and more, all designed to build a solid foundation for supporting shippers’ demands for dependable, time-sensitive, cost effective, and competitive shipping.

Companies like Schneider National are quick to praise the development. “The CSX National Gateway in Northwest Ohio, for example, has created more origin/destination combinations for us,” notes Steve Van Kirk, senior vice president, intermodal commercial management for Schneider National. The facility, which became operational in early 2011, “was absolutely critical for Schneider Intermodal in terms of opening up new opportunities,” he says.

In June, Schneider National announced that it had reached an agreement with CSX Transportation to broaden its services in Northwestern Ohio. The agreement expands Schneider’s intermodal service to now include two rail ramps in the region: Marion and North Baltimore. Overall, the agreement expands Schneider Intermodal’s service to the Northeast, Southeast, and Pacific Northwest. In addition, improved transits will enhance service capability throughout the U.S. and Mexico while enabling more multimodal options for shippers.

“Our service options enhancement in Ohio follows our brand promise to offer ‘truck-like’ service by creating more creative solutions to move freight,” Van Kirk stated at the time.

Indeed, CSX is also touting the benefits of its National Gatewaay. In July, Clarence Gooden, the company’s chief commercial officer, stated during an earnings teleconference that: “Looking forward, strategic investments, such as the National Gateway initiative and our Northwest Ohio Terminal, position CSX to compete for an estimated 9 million truckload opportunity. These are loads with a length of haul exceeding 550 miles that originate or terminate in our service territory. Our state-of-the-art terminal in Northwest Ohio increases capacity, expands our service offering by enabling connections between new and existing markets, and improves transit times.”

He added, “For example, the container transit times in the West Coast via Chicago to the New York market has improved by over a day. We expect healthy growth to continue long term as new terminals such as Louisville and capacity expansions, including Columbus, Charlotte, and Cincinnati, drive further highway-to-rail conversions.”

In the meantime, it’s not just opportunities in the U.S. that Schneider has its eyes on, there’s plenty of promise north and south of the border, too.

Van Kirk says that Schneider remains bullish on business in Mexico and Canada. “Schneider started its cross-border business with Mexico 20 years ago. Initially, a lot of it was over-the-road. We ran trains down to Laredo, Texas then ran over-the-road into Mexico. But, what we’re doing now is a pure intermodal offering, and we’re really excited about it,” he says.

The current service uses Kansas City Southern Railway for non-stop, borderless service from the U.S. and Canada into bonded rail terminals in Monterrey, San Luis Potosi, and Mexico City.

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