Posts Tagged ‘intermodal traffic’

INRD Begins Intermodal Terminal Expansion

September 21, 2021

The Indiana Rail Road said it has started the first phase of a project to expand its intermodal services.

The short line railroad based in Indianapolis recently acquired 12 acres of land to expand its intermodal yard in Indianapolis.

This will allow for additional container parking capacity and flexibility and include an onsite chassis depot.

In a news release, INRD said the initial phase involves ground preparation, installation of concrete inbound-outbound traffic lanes with an innovative kiosk gate system for expedited handling.

Future work will include high security fencing, the establishment of rear access service roads, installation of low energy consumption lighting, and construction of two new loading pad tracks.

INRD said the intermodal expansion project is expected to be completed in 2023.

The intermodal terminal opened in 2013 and handled 1,450 containers in its first year.

This year, the terminal is projected to move more than 40,000 containers and recently began a new grain export operation with International Feed.

Supply Chain Congestion Seen as Lasting 6 Months

September 17, 2021

Industry observers expect that the tangled global supply chain will take at least six months to untangle, reported Trains magazine this week on  its website.

The magazine quoted intermodal consultant Larry Gross as saying the strain on the intermodal operations is unprecedented, the worst he has seen in his 41 years in the business.

Gross spoke during a panel discussion at the Intermodal Association of North America’s annual Intermodal Expo event.

Analysts say that a flood of imports driven by an explosion in consumer spending has hindered the supply chain between Asian ports, to U.S. ports to railroad networks and their intermodal terminals.

Also driving the congestion has been the fact that retailers are struggling to keep up with consumer demand because their product inventories dipped during the early stages of the COVID-19 pandemic.

A record 59 container ships recently were reported to be anchored off the ports of Los Angeles and Long Beach awaiting berth space.

Lars Jensen of Copenhagen-based Vespucci Maritime told the panel that some of those vessels have been in San Pedro Bay for more than two weeks, delaying the unloading of more than 400,000 twenty-foot equivalent units, or TEUs, the standard measure of international containers.

Much of that cargo will eventually travel to the Midwest and Texas via BNSF or Union Pacific intermodal trains.

Rail intermodal volume has fallen by 10 percent from its May levels and is down 7 percent compared to where it was a year ago at this time.

 “What we really have here is a system starting to bog down from all the operational constraints, congestion, and lower velocity, shortage of equipment, you name it,” Gross said.

He said all links in the supply chain share some of the blame for that congestion.

One panelist, Evan Armstrong of Armstrong & Associates, said railroads are missing an opportunity to pick up business that is instead going to trucking companies.

Yet railroads say shippers have been slow to pick up their containers at intermodal terminals, particularly in Chicago, and that has had a cascading effect.

 Shippers also have been holding containers at their warehouses, which has created a shortage of chassis used to tote containers.

Tim Denoyer, vice president and senior analyst at ACT Research, said the chassis shortage is unlikely to be resolved for another six to 12 months.

Officials at Union Pacific, Norfolk Southern, and Canadian Pacific all said during the panel discussion that intermodal systems were in “disarray” around the globe.

They said their intermodal networks have capacity to handle current volumes, but only if all links in the supply chain are working relatively smoothly.

“Everything depends on speed,” said Leggett Kitchin, NS vice president of domestic intermodal. “At the current speeds, the box supply is probably tight.To the extent that we can speed up, and the street can speed up, then we’ll have capacity to grow into.”

AAR Seeks to Forestall Intermodal Regulation

August 13, 2021

The Association of American Railroads warned federal regulators on Thursday that any attempts they might make to regulate intermodal traffic would have unintended consequences and run afoul of congressional intent to keep the railroad industry deregulated.

The railroad trade group acted after U.S. Surface Transportation Board Chairman Martin J. Oberman expressed concerns about how intermodal traffic has slowed due to terminal congestion.

Containers are stacking up at busy terminals on the West Coast and in Chicago and ships are waiting outside harbors to unload containers coming from overseas.

Oberman also discussed how shippers have had to pay railroads large storage and demurrage fees for containers sitting in intermodal terminals.

The latter has led some shippers to ask the STB to intervene.

In its statement, the AAR said regulation of intermodal traffic would not resolve the current congestion issues.

Individual Class 1 carriers have said in letters to the STB that the issues causing the congestion in the supply chain are not the fault of the railroads

Instead, the railroads have pointed to shippers being slow to pick up containers due to labor shortages at warehouses.

“The global supply chain faces unprecedented challenges in its recovery from the global pandemic, caused by factors beyond the Board’s regulatory regime,” AAR Counsel Timothy Strafford wrote in a letter to Oberman.

Strafford’s letter noted that the former Interstate Commerce Commission and the STB itself have broadly exempted from regulation trailer-on-flatcar/container-on-flatcar services “due to the fiercely competitive nature of intermodal traffic.”

He said railroads lack market domination over intermodal shipments and therefore the STB should refrain from regulating storage charges.

AAR said that if regulators were to limit demurrage fees through regulation, shippers would have no incentive to promptly remove containers from intermodal terminals and that would force railroads to further meter inbound container shipments or halt them altogether until the backlog of stored containers can be cleared out.

In recent weeks some Class 1 carriers have restricted the flow of containers to certain terminals in an effort to reduce the number of containers being stored there while awaiting pickup from shippers.

Strafford said in his letter to Oberman that Class I carriers have been working with shippers to keep intermodal terminals and rail networks fluid.

Intermodal Showing Signs of Slowing

August 11, 2021

U.S. rail traffic for the week ending Aug. 7 up 2.4 percent, but intermodal volume, which had been a bright spot earlier in the year showed signs of slowing.

The Association of American Railroads said railroads handled 509,607 carloads and intermodal units last week.

The percentage increase is comparison to the same week in 2020.

Railroads handled 234,336 carloads, a 6.3 percent increase and 275,271 containers and trailers, a 0.6 percent decrease.

Rail volumes for the week were down 5 percent from the same week in 2019, according to Susquehanna Financial Group Analyst Bascome Majors.

Majors said intermodal last week was up 1 percent from 2019, and the four-week trend for intermodal was up 1 percent vs. 2019.

AAR said six of the 10 carload commodity groups it tracks posted gains compared with the same week in 2020.

They included metallic ores and metals, up 7,424 carloads, to 23,193; coal, up 7,301 carloads, to 66,838; and nonmetallic minerals, up 3,131 carloads, to 33,759.

Losing ground were grain, down 3,730 carloads, to 18,190; motor vehicles and parts, down 2,937 carloads, to 13,230; and petroleum and petroleum products, down 1,106 carloads, to 10,188.

For the first 31 weeks of 2021, U.S. railroads reported cumulative volume of 7,141,531 carloads, a rise of 9 percent compared to the same point in 2020; and 8,673,507 intermodal units, growing 14.6 percent over last year.

Total combined U.S. traffic for the first 31 weeks of 2021 was 15,815,038 carloads and intermodal units, a gain of 12 percent vs. last year.

Intermodal Traffic Up 20.4% in 2nd Quarter

July 31, 2021

The Intermodal Association of North American said this week that during the second quarter of 2021 intermodal volumes rose 20.4 percent year the same period in 2020.

International containers gained 24.8 percent from 2020; domestic shipments,15.7 percent; and trailers,18.5 percent.

“Intermodal volumes have now grown for the fourth consecutive quarter. What is noteworthy is the breadth of the gains,” said IANA President Joni Casey in a statement. “With one or two exceptions, the three market segments showed positive performance in all of IANA’s 10 regions.”

The seven highest-density trade corridors, which collectively handled more than 60 percent of total volume, were all up double digits in the second quarter.

Trans-Canada led with 29.6 percent, followed by the Southeast-Southwest at 28.9 percent and the Midwest-Northwest at 26.6 percent.

The Intra-Southeast likewise posted a 25.9 percent increase; the South Central-Southwest, 24.5 percent; and the Midwest-Southwest, 21.8 percent. The Northeast-Midwest came in at 20.9 percent.

Oberman Continues to Assert Himself

July 26, 2021

Martin Oberman was at it again last week. This time he was prodding Class 1 railroads to provide more information about congestion at intermodal terminals.

The chairman of the U.S. Surface Transportation Board was acting after some railroads embargoed containers in an effort to clear out backlogs in intermodal terminals on the West Coast and in the nation’s heartland.

The temporary embargoes in particular were affecting international shipments. Containers are stacking up faster at terminals than railroads can move them and customers can receive them.

“I am particularly concerned about significant increases in container congestion at key U.S. terminals, and substantial charges being levied by the railroads for container storage at these terminals,” Oberman wrote in letter to the CEOs of North American Class 1 carriers.

Industry observers have said the supply chain congestion has been triggered by strong consumer demand that has led retailers to seek to restock their warehouses and store shelves.

Other factors are labor shortages and COVID 19-related protocols

Shippers have been slow to return containers to intermodal terminals, which resulted in a chassis supply shortage and diminished drayage capacity.

For their part, the Class 1 railroads contend that the intermodal congestion is not their fault because it has been caused by matters that are largely been beyond their control.

Railroads argue they are working with ports, steamship lines, shippers, and drayage companies to ease congestion.

Yet shippers point fingers back at railroads, saying they are charging excessive demurrage fees for containers stuck in intermodal terminals.

Oberman cited the latter charge in his letter to the railroad chiefs.

“The Board has received numerous reports related to the length of time that containers are being held in rail yards, and the sizeable storage fees (“demurrage”) some customers have been required to pay in order to obtain release of containers bearing their shipments,” he wrote. “These reports have come from shippers, both large and small, in addition to third-party logistics providers. I am particularly troubled about reports that Class I railroads are continuing to impose these charges even in circumstances when the receivers, as a practical matter, have no means to facilitate the release of their containers. Under these circumstances, demurrage fails to provide any constructive incentives, and perversely results in massive charges that can exceed the commercial value of the shipment.”

The STB head wants railroads to provide information on their demurrage policies, whether receivers are permitted to use their own chassis to retrieve their boxes, a description of any efforts made to reduce storage charges when the delay is beyond a shipper’s control, and the average daily volume of stored containers.

The STB’s authority over intermodal is limited due to exemptions that prevent regulators from seeking to apply its  demurrage policies and rules would apply to containers and trailers.

Some shippers are pressuring the STB to lift those exemptions, although Oberman underscored in his letter that the STB is not seeking at this time to do that. Nor did Oberman threaten to do that, at least not just yet.

“Because I recognize the significance of any such potential Board action, I am requesting the above information to facilitate careful consideration of this difficult situation and to assist the Board in determining whether any action may be warranted.”

In response the Association of American Railroads issued its own letter warning Oberman and regulators to stay out of the matter.

“​​Railroads are engaging with their customers, supply chain partners, and other stakeholders to do their part to meet demand to support the recovery of the national economy,” AAR attorney Timothy Stafford wrote.

“Particularly at this critical time in the nation’s recovery, regulatory action by the STB that interfered with that effort or that hindered railroads’ ability to serve their customers could be very damaging.”

Earlier this month, Oberman spoke out about what he termed questions about whether railroads are shirking their common carrier obligations under pressure from Wall Street investors seeking higher railroad industry profits and stock prices.

Oberman has also said regulators will take a look at such matters as reciprocal switching, lifting exemptions on the regulation of certain commodities, and ways to more easily settle rate disputes.

None of those probes is likely to please the AAR and its members. Yet an analysis published on the website of Trains magazine last week suggested that the STB interest in taking a more hands-on approach to regulation may be a consequence of what railroads have been doing in the past several years in the wake of their adoption of the precision scheduled railroading operating model.

After switching to PSR, carriers have reduced service, ceased pursuing or carrying certain types of traffic, and emphasized traffic that provides higher profits.

The Trains analysis cited a warning cited in January 2019 by former BNSF Executive Chairman Matt Rose warned that Class I railroads were courting regulatory risk.

“We have this common-carrier obligation to provide freight service to all customers in all markets,” Rose said. “And what we’re doing in PSR is we’re redefining what we’re willing to accept in the freight railroad industry on certain lanes. And I really do believe we’re going to get in a lot of trouble by doing that.”

“When you start redefining markets I think then the federal policymakers will look at this, and quite frankly, they will not be happy with us,” he said.

Oberman has signaled on multiple occasions that he intends to do just that. He recognizes that doing so will invite railroad industry resistance.

“I am frequently reminded by my friends in the railroad industry that we should butt out and the market should regulate rates and service. And I agree. I think the market should regulate rates and service,” Oberman said. “But . . . for that to happen there has to be a market. And so to me, it is far better if we have more competition in the shipping and freight industry so we don’t have to get involved.”

Aside from such issues as reciprocal switching, which allows captive shippers to seek access to another nearby railroad via interchange, the more activist approach espoused by Oberman may affect how regulators view the CSX acquisition of Pan Am Railways and the efforts of Canadian National to acquire Kansas City Southern.

Some of the increased attention being paid to railroad operations can be tied to a change of administrations in Washington, but even before that the STB had begun giving transactions more scrutiny.

An example of that were the conditions regulators imposed on the sale by CSX to CN of the former’s line from Syracuse, New York, to Montreal.

The STB approved the sale, but imposed conditions that both class 1 carriers found unacceptable. The sale has yet to be consummated.

In that case, the STB sought to require short line railroad connections with CN that CSX opposed.

It remains to be seen how far Oberman and his fellow regulators will go with their renewed interest in being more active.

Regulators may approve the CN-KCS merger and the CSX acquisition of Pan Am, but with strings attached that the parties might not like.

Looming in the background is the political balance of power at the federal level. It currently favors a more activist approach to regulation but that could change if control of Congress changes hands in the 2022 elections.

The Trains analysis concluded by saying that Oberman’s comments should serve as a wakeup call that there’s a new sheriff in town.

For now that sheriff is more interested in asking questions and raising concerns about issues that railroads would prefer regulators stay away from. But the carriers ultimately have little choice for now but to endure what Oberman and others are dishing out and work with it.

J.B. Hunt Can’t Meet Customer Demand for Intermodal Service Due to Congestion

July 21, 2021

Intermodal shipper J.B. Hunt said this week that it cannot meet the demand for its service because of reduced velocity in the North American railroad network.

During a quarterly earnings call on Monday, Hunt managers said the demand for its services exceeds its capacity.

Managers said another factor behind that was slow customer turn times.

In recent weeks some Class 1 railroads have begun limiting acceptance of intermodal shipments because of congested terminals.

BNSF, for example, is limiting the flow of international containers from the ports of Los Angeles and Long Beach to its Logistics Park Chicago intermodal terminal for two weeks to work off a backlog of containers in Chicago.

Union Pacific has temporarily suspended inbound moves of international containers from West Coast ports to its Global IV terminal in Chicago.

Chicago is the largest single destination for cargo arriving at the ports of Los Angeles and Long Beach, the two busiest ports in North America.

Los Angeles handled record container volume in June, while Long Beach saw record volumes in May.

CSX has been restricting the flow of containers from the Port of New York and New Jersey to terminals in Chicago, Cleveland and Indianapolis.

In Canada, backlogs have been reported at the Port of Vancouver due to fire-related line closures and operational restrictions affecting Canadian Pacific and Canadian National.

Darren Field, president of Hunt’s intermodal division, said labor shortages at intermodal terminals and at customer warehouses is the major reason behind slow turnaround times for Hunt’s containers.

Hunt has imposed accessorial charges and in some cases is restricting capacity to some customer locations in an effort to encourage shippers to increase their turnaround times.

 “We are working very closely with our rail providers and customers to improve our capacity across the network by focusing on reducing the detention of equipment and helping our rail providers reduce congestion across their terminal infrastructure,” Field said.

J.B. Hunt primarily uses Norfolk Southern also routes some containers via CSX.

Field said he does not expect railroads to melt down despite reduced velocity and capacity limits at some intermodal terminals.

He said at some locations employment levels are 5 percent below where they need to be to handle current volume.

“All of the railroads are very focused on these challenges and they are out addressing them,” Field said.

Some See TOFC Fading Away

July 5, 2021

For decades, trailers on flatcars have been a staple of U.S. freight trains. But over time TOFC has lost ground to doubled-stacker containers in well cars.

now some industry observers believe the endgame for TOFC will soon be at hand.

In an analysis published on the website of Trains magazine, intermodal analyst Larry Gross predicted TOFC will vanish within the next four years.

The long range implication for intermodal service is that railroads will no longer be able to serve as a plan B for shippers when trucking companies encounter driver shortages or when parcel shippers need extra capacity for peak volumes during holiday shipping seasons.

Intermodal traffic will become even more of a niche product for railroads than it already is.

Already, Gross noted, TOFC is gone in Mexico and Canada. In the United States TOFC accounts for just 8.5 percent of intermodal traffic.

As recently as 1988 TOFC was 60 percent of U.S. intermodal traffic.

TOFC has ebbed and flowed over the years and in the first quarter of 2021 TOFC traffic grew 26 percent, driven in part by an increase in parcel traffic triggered by explosive growth of e-commerce.

Gross, though, said traditional TOFC users are expanding their container fleets. For their part, railroads have encouraged the switch to containers by ending TOFC service on specific routes and terminals.

Railroads have also widened the rate differential between trailers and containers in another move to encourage the use of containers over trailers.

Not surprisingly, the move to precision scheduled railroading by most Class 1 railroads also has played a role.

Carriers prefer double-stacked containers because stack trains can carry twice the volume of a TOFC train of the same length.

Paring the number of trains on the road has been a major objective of U.S. railroads that have made the change to PSR.

Other reasons that railroads give for wanting to be rid of TOFC include the facts that trailers take up capacity in terminals, require separate lifting equipment, and must be placed on the few remaining TOFC cars maintained by TTX Corporation.

Yet from a shipper standpoint, containers are not always ideal.

Containers must ride on a chassis and shortages of those is a perennial problem for shippers.

Shippers also say that in some instances a container is not the best tool to move goods.

Gross projects that about half of current rail TOFC traffic will be converted to containers and the rest will move via highway rather than rail.

Shippers most likely to switch to containers are long-haul movers using 53-foot trailers, Gross said.

Business that is likely to be lost to the highway includes that which moves in 28-foot trailers favored by parcel shippers, such as UPS and FedEx, and shippers sending small lots of goods from origin to destination without a sorting move en route.

Gross said a few trailer-oriented services will continue to survive awhile longer, including Norfolk Southern’s Triple Crown RoadRailer service between Detroit and Kansas City.

The RoadRailers are likely to continue operating until the equipment wear out, Gross said.

TOFC has a long history dating to the former Chicago Great Western starting the service by loading trailers on flatcars in 1936.

At various times, railroads have sought to encourage the growth of intermodal business through innovation. RoadRailers are one such example.

There will continue to be intermodal trains and some of those trains will continue to receive expedited handling by dispatchers because shippers are paying extra for premium service.

But those trains will feature solid containers rather than the string of UPS trailers that have come to symbolize a railroad’s hottest trains.

Canadian PSR Success Stories Unlikely to be Replicated by U.S. Class 1 Railroads

June 16, 2021

U.S. railroads that have adopted the precision scheduled railroading operating model like to describe it as a two-step process.

The first step involves ruthless cost cutting as freight schedules and operations are revised to move more freight in fewer and longer trains.

Some shops and yards are closed or reduced in their scope of operation, and layoffs are widespread as the carriers seek to do more with less.

The second chapter is a so-called pivot to growth. Class 1 railroads CEOs like to tell investor conferences that the savings from slimming down and becoming more efficient and reliable operators will enable railroads to chase after volume growth.

But what if the second chapter of the story is actually a myth?

Railroads have an answer for that. They’ll point to the experience of Canadian National and Canadian Pacific, both of which implemented PSR and once it was in place began enjoying double digit traffic growth.

Between 2010 and 2019 Canadian rail traffic rose 47 percent while U.S. rail traffic fell 2 percent.

Yet an analysis published on the website of Trains magazine suggested that what happened in Canada is less likely to occur in the United States.

What drove growth in Canada were factors unique to that country with much of it being driven by international intermodal, petrochemicals and fuel, and agriculture.

Canadian international intermodal traffic grew at the expense of U.S. West Coast ports and a 40 percent rise in containers landing at Canadian ports that were forwarded to the U.S. Midwest.

CN and CP also are hoping that Eastern Canada ports can divert traffic away from U.S. East Coast ports.

The Canadian carriers have other advantages including how farmers in Canada are more dependent on rail than is the case with U.S. farmers.

While Canadian agriculture shipments rose 16 percent over the past decade, U.S. agricultural rail volume fell 22 percent. In the United States, railroads haul less than 50 percent of grain ton-miles.

Coal offers another contrast. Most Canadian coal is metallurgical coal and exports of it to Asia drove a 10 percent increase in coal volume over the past decade.

In the United States, most coal is thermal coal used by power plants, many of which have been shifting to lower cost natural gas. U.S. railroad coal volume in the past decade fell 44 percent.

The Trains analysis noted CN and CP also have some other built-in advantages, including networks that are largely east to west across the country and rely far less than U.S. railroads do on interchange traffic.

The Canadian economy is more reliant on rail transportation because the country has longer distances between urban centers and a highway system that is less developed than that of the U.S. Therefore competition from trucking companies is less intense.

The analysis said CN and CP deserve credit for taking advantage of their opportunities and being creative in generating, for example, traffic to fill containers from U.S. destinations that would otherwise return empty to Asia.

They’ve done this by offering good service and competitive rates to keep this traffic from returning to U.S. ports, the analysis said.

It remains to be seen, the analysis concluded, how successful U.S. carriers will become in growing traffic as they claim to be doing.

But the key point, the analysis said, is that the type of success stories by U.S. Class 1 carriers that CN and CP have enjoyed are not guaranteed because of significant differences in the environments in which the carriers operate.

Intermodal Volume Up 10.5% in 1st Quarter

May 3, 2021

North American intermodal volume rose 10.5 percent year to 4,616,262 units in the first quarter of 201, the Intermodal Association of North America said.

The comparisons in its IANA’s report are to the same period in 2020.

International container volume rose 14.8 percent to 2,362,726 units from 2,057,685 in 2020.

Domestic shipments rose 4.4 percent to 1,944,262 units from 2,862,499; and trailers increased 20 percent to 309,274 units from 257,805.

“Intermodal volumes were up for the third consecutive quarter through Q1. This growth is projected to continue through the remainder of the year,” said IANA President and CEO Joni Casey in a statement.

“Even considering weak comparisons that supported the other segments, domestic intermodal posted solid 4.4 percent gains.”

The seven highest-density trade corridors, which collectively handled more than 60 percent of total volume, were all up in the first quarter.

Trans-Canada was up 26.4 percent; Midwest-Southwest was up 15.7 percent; and the South Central-Southwest was up 15.6 percent.

The Midwest-Northwest was up 8.3 percent; and the Northeast-Midwest rose 5 percent.