Thanks to overall North American economic strength and a shortage of trucking capacity, Class I railroads are enjoying dynamic growth in intermodal activity and are responding with enhanced services and billions of dollars of investments in infrastructure and technology, as executives envision the upward trend continuing.
Total North American intermodal volumes for the quarter ended June 30 were up 6.2 percent on a year-over-year basis, according to figures released in August by the Intermodal Association of North America. That performance followed a first quarter in which intermodal activity experienced growth of 7.2 percent – even better than the 4.7 percent increase in intermodal loads for the full year of 2017 compared with 2016.
“Continued intermodal volume growth was driven by the domestic market during the second quarter,” said Joni Casey, IANA’s president and chief executive officer, who noted that total domestic intermodal equipment loadings were up 7.7 percent for the period, while international intermodal activity rose 4.8 percent.
“Higher fuel prices, tight over-the-road capacity and a strong economic performance were factors attributed to this advance,” Casey added.
AJOT asked executives of the seven U.S. and Canadian Class I railroads to weigh in on the challenges facing North American rail firms in the intermodal realm and what their companies are doing to respond to meet burgeoning intermodal demand while at the same time looking to boost profitability.
Here’s what they had to say, featured alphabetically by railroad name, with each response wrapped into a concise 180-word package:
Tom Williams, group vice president for consumer products at Fort Worth, Texas-based BNSF Railway Co.:
BNSF is well-positioned to handle today’s intermodal market demand. Tight truck capacity and increasing e-commerce requirements are combining to drive intermodal growth this year, contributing to mid-single-digit year-over-year volume growth in our consumer products business unit through the first half of 2018.
We look strategically at our network to find new ways to move increasing volumes. For instance, Logistics Park Chicago has traditionally serviced international containers, but now we are accepting 53-foot-long domestic containers at that location as well.
We continually work to make movements in and out of our intermodal hubs easier for truck drivers through automated gate systems (AGS for short) and enhancements to our RailPASS app. We recently introduced paperless J-1 receipts to save drivers even more time when exiting our hubs.
We invest back into our rail network as well, spending more than US$60 billion since 2000 on capital expansion and maintenance projects. This year’s projects include triple- and quadruple-track projects at several key points on our Southern Transcon route (BNSF’s main line between Southern California and Chicago) to improve all freight flows, including intermodal traffic.
Andrew Fuller, assistant vice president of domestic intermodal at Montréal-based Canadian National Railway Co.:
A strong North American economy, unprecedented demand for intermodal service and very tight trucking capacity are affecting all Class 1 railroads.
Driven by these challenges, CN at the end of 2018 will have marked its single largest capital investment in the company’s history. More than US$2.7 billion is being invested in capacity growth initiatives, improved infrastructure, positive train control and information technology to safely and efficiently address these market demands.
As part of the record capital program, CN is adding more than 60 miles of double track and 11 new siding extensions, plus making investments in eight intermodal yards. CN will purchase 200 new locomotives over the next three years with options to purchase an additional 60.
All of these investments are supported by hiring of 800 new conductors in the first half of 2018, with 1,000 more expected by yearend. CN’s positive train control program will see investment of US$308 million in 2018 and US$1.4 billion by 2020.
CN has the momentum to meet the growing economic needs of its customers and exporters while increasing value for our shareholders.
Jonathan Wahba, vice president of intermodal and automotive at Calgary, Alberta-based Canadian Pacific Railway:
CP’s intermodal franchise has been a source of strength, with revenues up 10 percent in first half 2018, thanks to growth with existing customers, plus addition of Ocean Network Express to CP’s franchise.
With truck capacity continuing to tighten in anticipation of a strong fall peak, CP expects further growth through yearend in both domestic and international intermodal.
CP continues focusing on technology and improving communication with customers while developing innovative services enabling supply chain efficiencies. Examples include:
Expanded services, including working with interline partners to offer industry-fastest transit times between Vancouver, British Columbia, and Detroit, and single-line haul from Vancouver to the Ohio Valley;
Top-lift station at the Canada-U.S. border at Portal, North Dakota, enables CP to remove Customs-flagged containers from a train without setting out entire railcars and delaying other customers’ containers;
Upgraded temperature-controlled fleet, with CP having acquired 41 Genset containers plus approximately 400 industry-leading 53-foot-long refrigerated containers and 350 heated units;
Vancouver transload allows CP to fill – and move to the waterfront by rail – containers that would otherwise return to Asia empty.
Dean Piacente, vice president of intermodal at Jacksonville, Florida-based CSX Transportation:
While CSX sees a lot of opportunity on the intermodal side, both domestically and internationally, we have two specific goals in mind: 1) improve the overall efficiency of the network and concentrate in the key corridors, and 2) focus on the profitability of the business. CSX is going to pursue a methodical, rational growth strategy that enhances reliability and improves efficiency, creating value for our customers and distinguishing ourselves in the marketplace.
Among the top challenges facing the intermodal realm are capacity and availability of truck drivers, projected growth of urban populations, increased demand for freight and aging infrastructure.
CSX’s intermodal network is well-equipped to meet many of these anticipated challenges through implementation of our new scheduled railroading operating model, advanced operational technologies and infrastructure development, including expanding capacity at three existing intermodal terminals.
CSX’s intermodal business is also benefiting from the close alignment of major port expansion projects and the development of inland ports. Currently, there are two inland ports on our network – in Dillon, South Carolina, and Chatsworth, Georgia – with another project in progress in Syracuse, New York.
Kansas City Southern
C. Doniele Carlson, assistant vice president of corporate communications and community affairs at Kansas City, Missouri-based Kansas City Southern Railway Co.:
Strong North American economies have in 2018 pushed trade upwards, in turn driving rail volumes – notably for intermodal – to increase. Resulting congestion has been further exacerbated by a tight capacity situation on the trucking side, leading to several of the Class Is reaching capacity faster than anticipated.
From a KCS perspective, we have advanced certain key expansion projects, most importantly in Wylie, Texas, where we are adding two additional operating tracks for the intermodal terminal, thereby doubling capacity.
We are also planning to expand our footprint in certain Mexican facilities to be able to cater to the increased intermodal volume.
Additionally, KCS has made major improvements to Laredo border-crossing processes with its Secure Corridor strategy. This creates an environment and operating model in which trains move across the border at Laredo without stopping on the bridge, with the interchange location now shifted to the yard on the Texas side. Doing so enhances border security for cross-border train movement, improves public safety by reducing congestion and traffic delays created by blocked roadway crossings, and improves border fluidity, thereby facilitating increased trade.
Wai Wong, counsel for technology and strategic communications at Norfolk, Virginia-based Norfolk Southern Railway:
As today’s digital revolution unfolds, U.S. freight railroads must keep pace to support economic growth and the demands of a global transportation system. New technological innovations can serve as the engine that drives advances in the rapidly evolving logistics industry. To ensure we capture the full spectrum of benefits for our customers and communities, railroads must take full advantage of this technological momentum.
Norfolk Southern’s primary focus is to harness technology wherever possible to enhance operating efficiencies, customer service and safety. By combining smart technologies with efficient operating practices, Norfolk Southern is increasing network capacity and productivity.
For example, NS was the first railroad to offer the drayage community an easy-to-use mobile app to reduce time spent at our intermodal facilities. We also are installing our next-generation terminal management system, equipped with advanced technologies, to further automate and streamline terminal operations. Additionally, Norfolk Southern is using predictive analytics to schedule preventive locomotive maintenance and monitor rail wear to increase service reliability.
As we develop and deploy innovative technologies, our goal is to support customers’ ever-growing supply chain needs.
Jason Hess, vice president of marketing and sales for premium business at Omaha, Nebraska-based Union Pacific Railroad:
Union Pacific serves more intermodal markets than any other railroad, providing access to major West Coast and Gulf Coast ports and all six Mexico gateways. We combine our network’s strength with ongoing customer communication to develop transportation solutions responding to the ever-changing intermodal markets.
The strong U.S. economy, over-the-road rail conversions, growing demand from e-commerce and a previously announced new international intermodal contract are all contributing to Union Pacific’s increased intermodal volume. To handle this demand, we continue to invest in our intermodal franchise, including facility expansions, more domestic containers and technology.
We continuously look for ways to create innovative products for our customers. For example, in October, Union Pacific will launch Dallas to Dock service, providing Gulf Coast plastics shippers with one-stop plastics loading, drayage and transportation to global destinations through West Coast ports. Customer benefits include reduced costs, increased capacity and faster transit times meeting the growing overseas market needs.
Union Pacific’s intermodal franchise is well-positioned to help customers adapt as intermodal markets evolve.