CSX Still Reworking Intermodal Strategy

Containers on a CSX westbound stack train cross the Grand River in Painesville on a winter day.

CSX continues to tinker with its intermodal strategy, which CEO James Foote said needs a lot of work.

Speaking during the second quarter earnings call this week, Foote said intermodal operations needs to become more efficient.

Foote also used the word “dysfunctional” to describe intermodal operations at the railroad.

“We’re just really beginning to get in there and start to figure out how to rationalize that big part of our business,” Foote said.

He hinted that CSX will make changes to train design and terminal operations that might result in consolidation of some terminals.

However, Foote expects management to take its time in redesigning the intermodal strategy.

“We’re not going to do anything that’s going to screw up the railroad,” he said. “So if it takes a little longer than a quarter or two, I’m fine with that.”

CSX overhauled its intermodal strategy last fall by dumping 7 percent of its intermodal volume, most of which was service between low-volume intermodal terminals.

Some intermodal traffic was added into the merchandise network.

A hub-and-spoke strategy implemented during the administration of CEO Michael Ward also was ditched.

The focal point of the hub-and-spoke operations was the Northwest Ohio Intermodal Terminal in North Baltimore, Ohio, which handled more than a quarter of all CSX intermodal shipments.

“At that point in time, it was my belief that a large part of that rationalization of intermodal had been accomplished,” Foote says. “Well, that’s not the case.”
Foote noted he has overseen a revamping of intermodal strategy during his days as chief marketing officer at Canadian National.

“Intermodal at CN was a basket case,” Foote says. “When we were done fixing it over a couple-year period, the average profitability of our intermodal business there was better than the corporate average.”

However, CSX intermodal traffic tends to have shorter hauls than those of CN.

Foote noted that now is a good time for railroads to seek new intermodal business due to truck capacity being tight and truck rates reaching record levels.

“People are looking for capacity,” Foote says. “We want to be able to provide that service and capacity to our customers.”

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