Class 1 Execs Tout Intermodal Growth

Class 1 railroad executives speaking this week during an investor’s conference played up the recent growth in intermodal traffic, with one executive comparing it to near-peak season levels.

CSX Executive Vice President of Sales and Marketing Mark Wallace said intermodal volume is up 6 percent in the third quarter to date with domestic intermodal volume having risen since late June.

“And that has carried on,” he said. “The volumes have been very, very strong — much to our delight.”

Wallace attributed the rise in intermodal volume to consumer spending, saying e-commerce traffic has been particularly strong.

He and NS Chief Marketing Officer Alan Shaw spoke at the Cowen 2020 Global Transportation & Sustainable Mobility Conference where executives said intermodal traffic generally is now above pre-COVID-19 pandemic levels.

Shaw said NS has also benefited from strong consumer spending, but also from a partnership it has launched with BNSF and Union Pacific for traffic moving between the Southwest and the Southeast.

Another factor favoring intermodal has been a tightening of truck capacity.

The railroad executives also cited good rail service helping to spur intermodal volume growth.

The pandemic has accelerated growth in e-commerce. Shaw said retailers will begin keeping inventory closer to consumers, which presents NS with a “huge opportunity” because it operates the largest intermodal network in the East.

Wallace said his railroad’s intermodal on-time performance, measured by trip plan compliance, was in the low 90 percent range in the third quarter to date.

However, it had been in at 95 percent before the pandemic. One reason for the difference, Wallace said, is that CSX is challenged in getting furloughed train crews back to work in an expeditious manner.

The executives noted that imports to East Coast ports have been growing because retailers are looking to get goods inland as quickly as possible.

They expect East Coast ports to gain traffic because of a rise of manufacturing in Southeast Asia, which favors an all-water route to the East Coast via the Suez Canal.

The increase in intermodal volume, though, will not necessarily result in additional trains being operated.

Instead, the executive said the added traffic will be placed on existing trains.

“We’re leveraging the capacity dividend we created,” NS Chief Financial Officer Mark George said.

He was referring to how as part of the railroad’s use of the precision scheduled railroading operating model it is running fewer but longer trains.

The average train weight at NS is up 11 percent since the beginning of 2019 despite coal traffic being down by a third compared to a year ago, George said.

Wallace said CSX has 30 percent additional capacity on its existing train starts and ample road capacity for longer trains.

Wallace said CSX does not anticipate making any further changes in its intermodal network and it doesn’t expect to close any of its eight existing humps operating at classification yards.

“If we see a high-return project where we think we could have — we could spend some capital and get a very, very high return on that project, then we’re looking to do that, we would do that,” he said.

However, Wallace said CSX has nothing on the horizon as far as major capital expenditures beyond what is planned now.

Tags: , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: