Posts Tagged ‘CSX intermodal operations’

Class 1 Execs Tout Intermodal Growth

September 10, 2020

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.

CSX Closes Pittsburgh Intermodal Terminal

May 6, 2020

Less than three years after it opened, CSX has closed an intermodal terminal in Pittsburgh.

The terminal, which cost $60 million and was located in a former Pittsburgh & Lake Erie yard in McKees Rocks, was part of the National Gateway Initiative that a previous management of CSX launched in 2008.

The Pittsburgh terminal, which opened in September 2017, was the last component of the National Gateway to be completed.

The $850 million public-private project also included construction of an intermodal terminal at North Baltimore, Ohio.

At the time that these terminals were built, CSX was using a hub and spoke strategy to build intermodal traffic.

That strategy was dropped several months after the late E. Hunter Harrison became CEO of CSX in March 2017. Instead CSX began favoring intermodal service lanes with the highest volume and profit.

An analysis published on the website of Trains magazine suggested that the 70-acre Pittsburgh intermodal facility was doomed by the decision of CSX to end steel wheel transfer in Chicago of intermodal containers and trailers received from western railroads.

Instead those containers and trailers are moved across Chicago by highway.

Trains quoted intermodal consultant Larry Gross as saying this effectively made traffic coming into Pittsburgh from the West a 460-mile haul for CSX, which the carrier might not have seen as being profitable enough.

Gross noted Pittsburgh is a relatively short haul for CSX intermodal traffic and that worked against it.

He also said the CSX network was not well suited for diverting north-south highway traffic through Pittsburgh onto rails.

CSX has leased the site of the Pittsburgh intermodal terminal to Shell Oil Company, which will use it as a storage-in-transit facility for a new petrochemicals complex it is building 30 miles northwest of Pittsburgh in Potter Township that will produce 1.6 million tons of polyethylene annually.

However, CSX stands to benefit because the haulage of plastic pellets is more profitable than intermodal traffic.

CSX said it can handle intermodal traffic to Pittsburgh through other existing terminals.

CSX CEO Says Better Service Will Bring Traffic Growth

November 15, 2019

CSX CEO James Foote continued his “our future is upbeat” tour this week, telling an investment conference that substantial improvements in service reliability will enable CSX to grow faster than the overall economy over the long term.

James Foote

Speaking to the Stephens Nashville Investment Conference, Foote said internal and independent surveys of CSX shippers have found they view the service provided by the carrier as having been much improved over the past two years.

“What they’re getting in terms of service quality today is off the charts,” he said.

Foote acknowledged CSX has lost business in previous years to trucks because of unreliable or inconsistent service.

But now Foote projects that CSX should see above average growth in volume and revenue.

In response to an audience question he said that CSX would see gains that exceed the nation’s gross domestic product, a measurement of economic growth.

“Long term, yes, absolutely I think so,” Foote said.

He said shipping merchandise freight by rail is less expensive than shipping by truck.

Since 2011 the U.S. GDP has been 37 percent while CSX’s traffic volume has been flat.

Between 2011 and 2018, CSX’s merchandise volume grew buy 1.7 percent, coal traffic declined 42 percent, and intermodal business rose 26 percent.

The latter is a particularly ripe area for growth, Foote said.

With CSX intermodal shipments meeting their trip plans 98 percent to 99 percent of the time, the carrier believes that 10 million highway shipments annually could be diverted to its intermodal network.

Last year CSX hauled 2.9 million containers and trailers.

Intermodal trip compliance plans are measured from terminal cutoff to terminal availability.

If CSX is to see growth in its merchandise network it will need to get trip compliance for merchandise shipping into the 90 percent range in order to compete with trucks.

Foote said CSX is getting close to that but still have a long way to go to reach it.

“We will get that business when our service levels get reliable enough,” Foote said.

Another factor is that the economy will need to improve, particularly the industrial economy.

The latter has been hindered by, among other things, global trade wars.

Foote acknowledged that intermodal traffic normally surges late in the year but that has not been the case this year.

He attributed that to changing shipping patterns. “We’re in the peak season and there’s not a peak,” he said.

CSX Executive Says Overhaul of Intermodal is Complete

September 20, 2019

A CSX executive said this week the carrier has completed making major changes to its intermodal operations and is now looking for business growth opportunities.

Speaking at the annual Intermodal Expo of the Intermodal Association of North America, Maryclare Kenney, vice president of intermodal and automotive at CSX, said the carrier is now able to provide more reliable service.

“We’re looking to grow,” Kenney said. “We’re open for business and we’re excited by the consistent, reliable service we’re able to bring customers.”

CSX overhauled its intermodal network soon after adopting the precision scheduled railroading operating model.

One major change was to end the hub and spoke business model that involved the Northwest Ohio Intermodal Terminal, which CSX had used as a sorting hub for containers brought in from various points on its system.

Low volume intermodal service lanes were closed, resulting in a 15 percent drop in intermodal volume over the past two years.

Intermodal volume this year at CSX is down 8 percent. Overall North American intermodal volume thus far in 2019 has fallen by 4 percent.

Kenney said that before implementing PSR two years ago CSX had periods of time when it delivered good service but had challenges maintaining consistent, reliable service.

She attributed that in part to a complicated intermodal network.

“We were trying to be all things to all people, serve every lane that somebody wanted us to serve, and we really didn’t think about the volume and density that was required to really make you successful in railroading,” Kenney said.

CSX now emphasizes a high-density point-to-point intermodal network of higher density and more profitable lanes.

Kenney said that combined with the efficiencies of PSR have enabled CSX to improve its service reliability.

In previous years, CSX measured intermodal on-time performance by whether it delivered within four hours of scheduled arrival. The best it achieved under that standard was a 90 percent on-time performance.

Currently, CSX measures on-time performance to the minute based on a trip plans for each container and trailer.

The carrier said that it has achieved 93 percent on-time performance in the third quarter of this year, which it said was a 20-point improvement since the second quarter of last year.

Kenney said that on some days Intermodal trip-plan compliance has been 99 percent.

As for expansion plans, CSX and Canadian National will launch next month a new joint intermodal service connecting Toronto and Montreal with New York, New Jersey, and Philadelphia.

CSX and BNSF have haulage agreements that involve use of the Northwest Ohio terminal in North Baltimore. Containers originate on BNSF in California and are unloaded in North Baltimore.

Tom Williams, BNSF’s group vice president of consumer products, said at the conference that additional origination points are likely to be added.

The North Baltimore terminal is now used to serves local markets.

Kenney declined to comment on whether CSX and Union Pacific are planning to revive some of their discontinued interline services.

There have been trade press reports that intermodal marketing companies had received inquiries from the railroads to determine if there was interest in resuming some of those discontinued services.

Kenney would only say that CSX continues to evaluate its network and that interline services will continue to evolve.

Although international intermodal service from Southeastern ports to inland ports has seen robust growth, Kenney said the overal trend is negative for railroads because intermodal captures far less international volume from East Coast ports than it does from West Coast ports.

Schneider Begins Service to CSX Ramp in Indianapolis

June 27, 2019

Schneider has announced that it is offering intermodal service to Cincinnati, central and southern Indiana, and Louisville, Kentucky, via a CSX ramp in Indianapolis.

In a news release, Schneider said that it will operate eastbound shipments from Indianapolis to North Bergen, New Jersey, and Worcester, Massachusetts, six days a week.

Westbound shipments will operate from North Bergen to Indianapolis.

Schneider said the new service will offer a more cost-competitive transportation option to eastern U.S. markets by offering two- and three-day transit times that are competitive with truckload transit times.

“This is a new option for shippers to reliably move loads at transit times competitive to truckload,” said Jim Filter, senior vice president and general manager of Schneider’s intermodal division in a statement. “We’re also confident this will provide cost-competitive intermodal service to the region, as eastbound freight will not have to be drayed to Chicago.”

Schneider offers intermodal service to more than 40 ramps in North America.

CSX Putting New Intermodal Strategy Into Place

October 20, 2018

Earlier this year, CSX CEO James Foote said the railroad’s intermodal network was a mess and needed to be revamped.

Much of that revamping has involved the announcement of plans to end service in smaller intermodal service lanes in favor of higher-volume point-to-point markets.

But management had been vexed as to what to do with the Northwest Ohio Intermodal Terminal outside of North Baltimore, Ohio.

It opened in June 2011 as part of a hub and spoke strategy to build traffic in the lower-volume service lanes CSX is now abandoning.

The idea behind the hub and spoke concept was that volume could be built in low-volume markets by creating a connecting hub much like the passenger hubs that airlines operate in such cities as Atlanta and Chicago.

The concept is also used for air freight service provided by FedEx and UPS. North Baltimore was the connecting hub.

But once the hub and spoke strategy ended what would CSX do with the new North Baltimore terminal? Initially, the carrier talked about using North Baltimore to do block swapping.

Now, CSX sees the Northwest Ohio terminal as a gateway to Ohio Valley markets.

Rather than pick up containers by rail in such cities as Cleveland, Cincinnati and Columbus, CSX will instead load them aboard trains in North Baltimore after they have been driven there by truck.

CSX and BNSF recently announced a haulage agreement to build dedicated trains that will link North Baltimore and West Coast terminals by running through Chicago.

Also on the docket for North Baltimore is development of a 500-acre logistics park and the launch of service to East Coast ports.

In the recent third quarter earning conference call, CSX executives portrayed their strategy as one of reducing operational complexity while developing a smaller but more profitable intermodal network.

“We still have a long way to go to get that franchise right,” Foote said. “Part of the process is disassembling the old independent structure of the company. Because it’s not an independent company — it’s part and parcel of the railroad.”

By that he meant that previous management sought to provide service to as many terminals as possible and increase the volume of containers handled.

Foote said that resulted in an intermodal network that was inefficient and offered spotty service reliability due to its complex nature.

But perhaps more importantly, it came with high costs and low profit margins.

Overhauling intermodal operations is one of Foote’s areas of expertise, having done it at Canadian National where intermodal went from being CN’s least profitable endeavors to one of average profitability.

He believes the same transformation can be done at CSX, saying that more efficient and reliable service will lead to volume and revenue growth.

Foote said that during the third quarter CSX intermodal traffic was up 3 percent and intermodal revenue rose by 12 percent in comparison with the third quarter of 2017.

The reorganization of CSX’s intermodal strategy that began in fall 2017 has meant that in terms of market coverage, CSX has lost 14 percent of it.

It has dropped or will have dropped by late January 900 intermodal market pairs. It will continue to serve 500 market pairs, meaning it will have given up 44 percent of those pairings.

Most of those discontinued pairings were short-haul traffic and some never generated any traffic volume.

The BNSF haulage agreement is an example of how CSX is using the precision scheduled railroading model to reorganize its intermodal operations.

A key principle of the model is to minimize the number of times that a freight car is handled between origin and destination.

Foote said even after CSX abandoned the hub and spoke concept, it still found itself shuffling containers between trains twice or three times between origin and destination.

CSX officials said the railroad lost 7 percent of its intermodal volume when it ended the hub-and-spoke operation and it expects to lose another 7 percent by ending some of its low-volume markets.

The objective of the new intermodal model is to make up those losses through focus on potentially higher volume markets.

CSX to End Intermodal Drop Service in 300 Markets

October 9, 2018

CSX plans to eliminate in January intermodal drop service between 300 intermodal origin-destination pairs, including some in Cleveland, Columbus and Cincinnati.

Intermodal traffic originating or terminating in those cities will instead arrive and depart by highway and be placed on trains at the Northwest Ohio Intermodal Terminal in North Baltimore, Ohio.

At the same time, CSX plans to introduce new services in seven domestic markets as it continues its ongoing efforts to focus its intermodal network on higher-density and more profitable routes.

Earlier CSX announced new interline services with BNSF and Union Pacific.

CSX officials have said the changes are expected to build more point-to-point service linking high-volume terminals in a bid to reduce operational complexity and bolster profitability.

“The January service changes are part of the overall CSX network strategy to improve service consistency and prepare the network for sustainable growth now and in the future,” said Maryclare Kenney, vice president of intermodal and automotive, in an advisory to shippers.

She said the changes will alleviate congestion in Chicago and improve the reliability of intermodal service.

In some instances, CSX is recommending that shippers route containers to a nearby terminal.

Starting Jan. 2, CSX will end service to 231 domestic service lanes while suggesting that at least 60 of those lanes could involve shifting service to another terminal.

Many of the domestic service lanes that are being ended are interline services with Union Pacific and the railroads’ joint UMAX container pool. Others are shorter-haul routes.

Also on Jan. 2, CSX plans to end service in 65 international service lanes with recommendations to use alternate nearby terminals in more than two dozen of the affected routes.

Once the changes are implemented, CSX will offer intermodal service in 297 domestic service lanes and 202 international service lanes.

CSX-BNSF to Launch Ohio-LA Container Service

October 5, 2018

CSX and BNSF said this week they will begin a container service between Los Angeles and Ohio that will use the Northwest Ohio Intermodal Terminal in North Baltimore.

The service will begin on Oct. 29 and originate trains five days a week in each direction.

On BNSF, the containers will move via the Southern Transcon route west of Chicago.

“Customers who take advantage of this new service can reach key markets within the fast-growing Ohio Valley region,” said BNSF Group Vice President Consumer Products Tom Williams in a statement. “Our new Ohio intermodal service will create an efficient, direct service from the West Coast.”

CSX said it will work with NorthPoint Development to construct a 500-acre logistics park adjacent to North Baltimore facility and is expanding eastern access to the facility through new service to and from the Port of New York and New Jersey.

This will involve international traffic that will be trucked from North Baltimore to destinations in southern Michigan, western Ohio, and Indiana.

The logistics park will include traditional warehousing and distribution capabilities, as well as services such as a container yard and equipment storage, export container stuffing, and transload and break-bulk resources, all within a heavy-haul local corridor.

The North Baltimore facility was opened in June 2011. At the time, CSX operated it on a hub and spoke model in which containers from various locations throughout the CSX network were routed there to be interchanged.

The hub and spoke approach was intended to help build traffic density in low-density intermodal markets.

That model was dropped last year when CSX ended the hub and spoke intermodal operating model. At the time, CSX officials said sorting containers in North Baltimore added transit time to traffic that is price- and service-sensitive.

Instead, CSX said it would focus on point-to-point intermodal service in high-volume markets.

The BNSF-CSX agreement means that containers will no longer be trucked across Chicago but instead will move through the city by rail.

Intermodal analyst Larry Gross told Trains magazine that BNSF is trading the cost of trucking containers in Chicago for extended drayage from North Baltimore to destinations that include Detroit, Cleveland, Columbus, Cincinnati and Louisville.

Gross said there is not much drayage capacity at present in North Baltimore, which means the new service is likely initially to appeal to national trucking companies such as J.B. Hunt and Schneider National, which have their own drivers.

“It’s not like drayage capacity will magically appear,” Gross said, but added that he expects local drayage capacity to develop as intermodal volume increases in North Baltimore.

The logistics park CSX plans to develop in North Baltimore will offer opportunities for backhaul moves of agricultural products to Asia.

The park will be similar to logistics parks that BNSF has near its intermodal facilities in Joliet, Illinois; Oklahoma City; Kansas City; and Alliance, Texas.

In the short term, CSX said the number of trains serving the North Baltimore facility won’t change, but is expected to grow over time.

The service that starts on Oct. 29 will use existing intermodal trains that BNSF and CSX interchange in Chicago.

CSX Revamping Intermodal Service

August 16, 2018

The plans of CSX to revamp its intermodal business will focus on more profitable longer-haul service linking major markets.

Trains magazine reported on Wednesday that CSX has notified its customers that numerous changes are being made to traffic that is interchanged with BNSF as well as the pending end of 75 low-volume service lanes.

A similar change in interline service with Union Pacific had been announced about a week ago.

CSX said that the changes are designed to reduce transit time through Chicago.

The new operating plan will funnel interchange traffic coming through Chicago to five eastern destinations including Chambersburg, Pennsylvania; North Kearny, New Jersey; the Northwest Ohio Intermodal Terminal in North Baltimore, Ohio; Springfield, Massachusetts; and Syracuse, New York.

Intermodal traffic will be sent to those terminals by truck from markets now served by rail. For example, traffic going to and from Cincinnati, Cleveland, Columbus and Detroit will travel by highway to and from North Baltimore.

Baltimore will be served via Chambersburg; Philadelphia via North Kearny; Worcester, Massachusetts, via Springfield; and Buffalo, New York via Syracuse.
CSX said the changes will cut travel time, including by as much as a day between West Coast terminals and New England.

The changes will occur in mid-September with UP interchange and in mid to late September for BNSF interchange.

BNSF and CSX also will shift interchange traffic bound for the Southeast from Chicago to Memphis. This includes traffic headed for Atlanta, Florida, and Charlotte, North Carolina.

“We have been working closely with our interline partners, Union Pacific and BNSF, to streamline interchanges, especially for traffic routed through Chicago and the Southeast,” CSX Chief Marketing Officer Mark Wallace wrote in a letter to intermodal customers. “These changes, to take effect prior to peak season, will enable us to execute our service plan with greater reliability and speed during this important shipping period.”

Union Pacific had told its shippers in early August of the plans of CSX to end steel-wheel Chicago interchange between a number of UP origins and CSX destinations as well as to shift interchange away from Chicago and New Orleans in favor of Memphis.

Most of the 197 UMAX service lanes being discontinued are low volume, including 67 that have not had any container movements in the past 12 months. Other lanes being dropped averaged just one container per week.

“Maintaining these status-quo service offerings would be detrimental to the majority of our customers and the East-West transcontinental network, particularly during fall peak,” Wallace said in his letter tocustomers.

CSX contends that most of the UMAX volume in cancelled steel-wheel interchange lanes can continue via crosstown trucks linking UP and CSX terminals.

However, Trains quoted an intermodal analyst as saying that might not happen because drayage capacity is tight in Chicago and it will increase the cost of the move. The analyst said drayage by highway will increase the travel time.

Movements from the West Coast to the Ohio Valley are likely to stay on the road once they are unloaded in Chicago.

In some instances, the traffic might be diverted to Norfolk Southern in Chicago. Of the UMAX lanes being dropped, 49 could potentially shift to NS.

CSX CEO James Foote had indicated during an earnings call conversation last month that the carrier was studying revamping its intermodal network. He said at the time that during his days at Canadian National that that carrier had undertaken a similar intermodal restructuring.

During his comments last month Foote said CSX would seek to become more efficient.

In his letter to shippers, Wallace said CSX will not be making any other changes to its intermodal network until the peak season is over.

The intermodal restructuring will not result in any closing of terminals.

CSX Still Reworking Intermodal Strategy

July 19, 2018

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.”