Posts Tagged ‘intermodal business’

NS Temporarily Suspends Accepting Some Intermodal Shipments

February 19, 2021

Norfolk Southern stopped accepting inbound international intermodal shipments on Thursday at its Landers intermodal terminal in Chicago.

Inbound loads were also temporarily no longer being accepted in Detroit and six East Coast terminals.

The railroad cited the effect of severe winter weather in the Midwest.

It was the second time this week that inbound loads at NS were temporarily suspended.

On Wednesday NS stopped accepting domestic shipments to Chicago-area terminals from several locations.

NS Chief Marketing Officer Alan Shaw said the affected terminals continue to operate but street operations had halted due to buildups of snow and ice.

NS also stopped accepting intermodal shipments interchanging to Kansas City Southern through Meridian, Mississippi, and to Union Pacific at Memphis.

CSX indicated that its Chicago intermodal terminals were struggling with the effects of winter weather but remained open.

In the meantime, Union Pacific said it will reopen all intermodal terminals by Friday after closing them earlier this week.

Loosening Truck Market Bad News for Intermodal

May 14, 2020

Like railroads, trucking companies have felt the sting of lost traffic volume during the COVID-19 pandemic.

In March there was a spike of trucking activity as retailers rushed to stock their shelves amid increased consumer demand that led to the hoarding of some products.

That was followed by an April lull when trucking business fell. That in turn has been followed by a slight uptick this month as some businesses have reopened after more than a month of social distancing restrictions.

Yet intermodal shipping has yet to benefit from those developments and the e-newsletter FreightWaves said that during the March surge intermodal didn’t gain any additional business as truckers did.

A continuing loose truck market in which there is surplus capacity chasing after the less available business does not bode well for intermodal volume growth.

In various conference calls to announce quarterly financial results, Class 1 railroad executives have been pointing to the loose trucking market as a key reason why there has not been intermodal volume growth.

FreightWaves reported that during March the demand for truck transportation rose 30 percent over what it was in March 2019.

Much of that demand was driven by grocery companies, big box retail stores and consumer products companies seeking to replenish stocks depleted by binge buying.

In April, shippers requested trucks to ship goods with 10 percent less frequency than they did in April 2019.

Demand for truck services has been rising modestly since businesses have begun reopening.

However, the FreightWaves analysis noted that many of the businesses that have been reopening are service-based and move little freight.

Shippers continue to request 6 percent fewer truckloads than they did a year ago.

FreightWaves said the current situation in the trucking industry is that in many cases spots rates are well below contract rates.

That’s important because in more prosperous times spot rates that are above contract rate will lead truckers to decline to move a particular good at a contract rate because they can earn more moving another good at a higher spot rate.

When truckers reject moving a load at a contract rate this is known as tender rejection.

FreightWaves said the tender rejection rate of late has been 2.85 percent, which indicates that moving freight at contract rates may be the best business that many truckers can find.

Although this might be as bad as it gets and business is poised to rise with more commerce arising from the end of COVID-19 shutdowns, that rebound may not be as robust as some want to believe.

The FreightWaves analysis concluded that the rejection rate this spring has been of historic proportions and there is little evidence at the moment pointing toward a substantial rebound.

That is particularly bad news for intermodal shipping because it remains to be seen if intermodal is still a growth area within the transportation field.

“ . . . it appears that the March surge in transportation demand was for freight that was too service-sensitive, for freight that too often needed to be refrigerated, in lanes that too often were not truck-compatible and in a market with truck capacity that was too loose to make much of a dent in intermodal volume,” the FreightWaves analysis said.

The analysis said the market has shown a willingness by some truckers to accept loads in lanes that would typically be best suited for intermodal with truckload rates falling below intermodal rates.

Truck Executives Calls for Railroads to Change Price Philosophies if They Want to Grow Intermodal Traffic

December 4, 2019

A trucking company executive told an investment conference this week that railroads need to change their prices if they hope to win more of if its business.

Speaking to the Stephens Nashville Investment Conference, the executive vice president of intermodal operations for J.B.Hunt Transport Services, Darren Field, said his company faces conflicts in selling transportation services.

Field said that J.B. Hunt has increasing moved away from being a trucking company to being a third-party logistics company.

“If we’re working with a customer, and intermodal is a good solution for the route or the origin-destination that the customer is asking about, but our truckload brokerage model says that that’s the best economic value for that customer, then we’re going to leave with that [truckload] service first and maybe intermodal is a secondary option to that customer,” Field said.

He said that if railroads want to see growth in their intermodal traffic they need to change their philosophy toward pricing.

“We’ve never held back in terms of communicating with the railroads that their underlying costs certainly influence our ability to help grow volumes on the railroad,” Field said.

Field said competition from trucks will continue to pressure the ability of railroads to raise their prices, particularly in the East.

“And we understand that we’ve got to work together to drive out costs so that we can both be more competitive against the truck,” he said.

Industry Insiders Sees Continued Role for TOFC Traffic

September 21, 2019

It might seem to a trackside observer that trailers are vanishing from intermodal trains in favor of containers, but industry executives said this week that trailers will continue to be used for intermodal shipments, albeit at reduced levels than in the past.

Pat Casey, vice president of fleet management at TTX Company, said trailers have become more of a niche market.

Railroads like containers because they can be stacked which means a container train carries double the volume of a trailer on flat car train of the same length.

Thus far this year the volume of trailers riding the rails has fallen 15 percent, which Casey told an intermodal conference means that trailer traffic is back to what it normally is.

Last year the volume of trailer on flatcars business sharply rose due to a shortage of over-the-road truck drivers to handle skyrocketing business.

As recently as 1988 trailers accounted for 60 percent of intermodal loads but that has fallen to 7 percent.

Flat cars that can haul trailers are just 11 percent of the TTX fleet.

Officials from UPS, Marten Transport, BNSF, and Norfolk Southern who spoke at the conference, sponsored by the Intermodal Association of North America, said trailers are expected to remain a vital part of their intermodal operations for the foreseeable future.

“It’s the spine of our domestic transcontinental business. It’s very critical for us,”said Ken Buenker, UPS vice president of corporate transportation.

He said in many cases a 53-foot container doesn’t meet the needs of UPS. The delivery company has a fleet of 28-, 45-, and 53-foot trailers.

Likewise, Chad Thompson, vice president of intermodal operations at Marten, said trailers are the foundation of his company’s refrigerated business.

He said some containers work fine but trailers offer the most flexibility because they can be used equally well on road or in intermodal service as business conditions require.

Ingrid Crafford, director of operations systems for NS, said TOFC accounts for just over 8 percent of its intermodal volume.

“We’re focused on maintaining a flexible trailer network. It’s one of our strengths,” Crafford said.  “We want to continue to support the business. Trailers are an important part of our growth strategy.”