Posts Tagged ‘railroad intermodal traffic’

NS Outlines Steps it’s Taken to Untangle Intermodal Congestion

August 9, 2021

In response to a request by federal regulators, Norfolk Southern has outlined steps it has taken to alleviate congestion in its intermodal terminals.

NS contended that the congestion is due to factors beyond its control, an assertion made by other Class 1 railroads in their responses to the U.S. Surface Transportation Board.

NS said it has taken steps to limit the flow of containers, particularly to terminals in Chicago, where bottlenecks have occurred due to a high volume of containers coming in and shippers and receivers being slow to pick up containers unloaded from inbound trains.

In a letter signed by CEO James Squares, NS said it is metering the flow of traffic at origin terminals to keep inland terminal volume “consistent with the ability of the drayage and warehouse communities to pull them from those terminals, and increased the flow of inbound containers as outgate capacity has improved.”

The most congested NS terminals have been Chicago Landers; Austell, Georgia; and Columbus, Ohio.

At Landers, NS increased stacked container capacity by 60 percent and lift capacity by 40 percent.

Squires said NS has worked with BNSF and Union Pacific to create steel-wheel interchanges in Chicago in order to reduce the demand for crosstown rubber-tire moves of containers from one railroad terminal to another.

TTX Sees Intermodal Volume Growth Continuing

February 26, 2021

Railcar pooling company TTX expects intermodal volume this year to continue its growth trend.

Speaking during a webcast sponsored by the Intermodal Association of North America, TTX analysts said intermodal growth will be driven by low retail inventories and continued consumer demand for goods rather than services due to the pandemic.

Another factor, the TTX analysts said is the inability of trucking companies to find enough drivers to meet transportation demand.

The TTX panelists projected that international intermodal volume will grow by 7.3 percent while domestic traffic will post gains of 4.7 percent.

Intermodal volume in 2020 was story of sharp contrasts with traffic plunging early in the year as the COVID-19 pandemic took hold before bouncing back in the fall.

Among the assumptions that TTX is making for its 2021 projections are that government pandemic assistance will continue and that the economy will continue to recover from its pandemic-induced doldrums.

It also assumes that growth will continue in parcel shipments due to strong e-commerce which got a boost during the pandemic when retailers were forced to reduce operations and/or many customers became unwilling to shop in person.

John Woodcock, director of market development at TTX, said 2021 will not follow the traditional intermodal pattern of peaking between August and November. Instead, he said intermodal will see a more drawn out peak.

Another change this year will be shifting of more international business from West Coast ports to ports in the East and along the Gulf Coast.

J.B. Hunt Expects Intermodal Traffic to Grow

January 21, 2021

A cut of JB Hunt containers bring up the rear of NS train 27R in North East, Pennsylvania.

A trucking company that makes extensive use of intermodal transportation believe is optimistic that intermodal volume will grow faster than truck transportation.

Officials at J.B. Hunt Transport Services acknowledged this week that capacity constraints in Southern California are hindering intermodal traffic.

But in the long term Hunt expects its intermodal volume to grow to 10 million loads annually, up from about 2 million currently.

Hunt has a fleet of 98,700 domestic intermodal containers with orders pending for 6,000 new boxes to be delivered this year.

During a quarterly earnings call Hunt said its intermodal volume in the fourth quarter grew by 1 percent with much of it coming from traffic originating on BNSF.

However, fourth quarter volume in the East was flat. Norfolk Southern is Hunt’s largest intermodal partner in that region.

Congestion at western terminals in the fourth quarter kept Hunt from growing intermodal volume further.

That congestion was triggered by a sharp increase in imports and labor issues.

Congestion Prompts NS to Limit Inbound Intermodal Loads at Some Terminals

December 18, 2020

Norfolk Southern is limiting inbound loads at some of its busiest intermodal terminals due to congestion.

The affected terminals include loads moving between Chicago 63rd Street and Pittsburgh; and Toledo and Buffalo, New York.

In a service advisory NS said the Chicago 63rd Intermodal facility would remain open during the ingate closures and it urged customers to remove equipment from the facility in order to increase parking capacity.

The move came as NS and other Class 1 railroads have experienced sharply increased intermodal volumes in recent months.

NS has seen its overall intermodal traffic rise by 4.2 percent in the fourth quarter to date.

BNSF has also announced limits on inbound loads at some of its terminals.

Intermodal Growth Seen Continuing into 2021

December 13, 2020

A railroad industry consulting firm has predicted that intermodal traffic will continue growing in 2021 but carload traffic will continue to struggle to recover from the COVID-19 pandemic.

FRT Transportation Intelligence predicted that intermodal traffic will increase by 5.4 percent in 2021 with most of that growth attributed to retailers restocking their inventories due to consumer demand.

Domestic container volume will rise by 6.2 percent while trailer volume is expected to hold steady.

The latter has been in decline in recent years but has received a boost in recent weeks by tight capacity in the trucking industry and a shortage of truck drivers.

FRT projects international intermodal volume to increase by 5.4 percent in 2021.

Todd Tranausky, vice president of rail and intermodal at FTR, said last week that those who still have jobs have shifted their discretionary spending from services to consumer goods as a result of pandemic-related factors such as social distancing.

Intermodal volume in past years has declined after its fall peak, but that had not been the case this year, Tranausky said.

Tranausky said a variable that could affect intermodal volume is the distribution of COVID-19 vaccines.

If vaccines help led to a diminishing of the pandemic in the second half of next year that could prompt consumers to begin spending again on such services as restaurants, theaters and cultural events.

In the meantime, FTR expects intermodal volume for 2020 to be 2.5 percent below 2019 levels despite increases in recent months in intermodal traffic.

As for carload traffic, it is tied to industrial production, which has lagged during the pandemic as it struggles to reach pre-pandemic levels.

Except for coal, agriculture and anything tied to crude oil, FRT expects carload traffic in 2021 to be flat.

The consulting firm sees some recovery in the first quarter and that second quarter year-over-year numbers will show large gains due to being compared to the pandemic-related traffic levels of 2020. 

Tranausky said carload volumes in the third and fourth quarters of 2021 will hinge on how the pandemic and consumer spending unfold, as well as whether there’s a federal stimulus and what shape it takes.

Railroads Setting Intermodal Records

December 10, 2020

November was a recording setting month for intermodal traffic at three Class 1 railroads, including CSX.

Industry analysts said that was due to high levels of consumer spending, a strong e-commerce market and retailers restocking depleted inventories.

CSX handled more than 60,000 containers and trailers in the past three weeks, which topped the 59,701 it handled during the same period of 2019.

 “When we look back, we did all the right things before in really optimizing the intermodal network . . . It’s paying huge dividends right now,” CSX Chief Financial Officer Kevin Boone said during a recent investor‘s conference.

Intermodal analysis Larry Gross said CSX appears to have gained some of that volume at the expensive of its chief competitor, Norfolk Southern.

However, NS is still the intermodal king of the East, carrying 47 percent more volume thus far this year than did CSX.

For the first four weeks of November 2020, intermodal traffic was up 18 percent at CSX and up 8.3 percent at NS.

Intermodal traffic rose 18 percent at BNSF, 21.2 percent at Canadian National, 10.3 percent at Canadian Pacific and 18.9 percent at Union Pacific during the same period.

Despite the rising volumes some factors are limiting the growth of intermodal traffic, including a lack of drayage capacity, slowdowns in warehouse productivity due to pandemic safety protocols and high demand, and congestion at West Coast ports.

In recent investor conference presentations, railroad executives have said they expect intermodal traffic to remain high through February.

Rail Executives See Intermodal Boom Lasting Into Next Spring

November 13, 2020

Executives of CSX and Canadian National told a conference this week they are optimistic that the robust intermodal volumes that railroads have seen in recent weeks will continue through early next spring.

Speaking to the Baird Industrials Conference, the executives said this was due to North American retailers continuing to rebuild inventories depleted during the COVID-19 pandemic-induced economic slowdown.

For the past few months intermodal growth has outpaced that of other rail freight commodities, which have continued to lag behind 2019 levels although intermodal traffic fell sharply in the early months of the pandemic.

Mark Wallace, the CSX executive vice president of sales and marketing, told conference attendees that intermodal growth is expected to continue deep into the first quarter of 2021.

“This e-commerce phenomenon is continuing, and we’re seeing some great volumes in this replenishment of inventories, and restocking is going extremely well,” he said.

CSX’s intermodal volumes has been up 10 percent since Oct. 1, with trailer volume increased by 26 percent compared with a year ago.

The growth in trailers is significant because those often carry parcels and less than truckload shipments related to e-commerce.

Keith Reardon, CN’s senior vice president of consumer product supply chain, said his company’s sales personnel based in Asia are predicting international trade coming from that continent will continuing deep into February and maybe into March as North American inventories are rebuilt.

Although CN-served ports in Western Canada will be a primary beneficiary of this trade, the Danish shipping line Maersk recently made its first call at the CN-served Port of Mobile, Alabama, with Asian cargo routed through the Panama Canal.

In a related matter, CN Chief Financial Officer Ghislain Houle told the same conference that if trucks evolve to become autonomous, that could hurt railroad intermodal business that travels in the 500- 700-mile radius.

However, he said autonomous trucks would pose less of a threat to long-haul intermodal volume, at least in the short term.

Although autonomous trucks are still in the testing stage, Houle expects them to become reality eventually.

When that happens, railroads will need to respond by shifting to one-person locomotive crews and eventually autonomous operation in which there is no one in the locomotive cab.

“Now obviously the driverless truck will get there,” Houle said. “And obviously that may represent a threat to railroads.”

Positive train control will enable railroads to respond by operating one-person crews and, within a couple of years, driverless trains.

“If you believe that a truck can be driverless on publicly-funded roads, you will believe that at one point trains could be driverless on a privately-funded network,” Houle said. “So the technology will advance on trains as well.”

Driverless trains are already operating on the Rio Tinto railroad in Australia.

Houle acknowledged that it will take more than technological advances to make driverless trains a reality.

Government regulators in the United States and Canada will need to be persuaded to allow them and the arguments in favor of autonomous trains will need to be rooted in safety and not economics.

“You will make the case that having a driverless truck or you will make the case that having a driverless train is safer than having people in the cab,” Houle said.

Intermodal Traffic Set Record in October

November 5, 2020

U.S. rail intermodal traffic set a record in October while carload traffic in half of the categories tracked by the American Association of Railroads increased.

AAR reported this week that overall traffic volume increased 2 percent during the month with railroads handling 2,082,646 carloads and intermodal units.

Railroads handled 1,169,874 containers and trailers, up 10 percent, and 912,772 carloads, down 6.6 percent. The comparisons are with October 2019.

AAR Senior Vice President John T. Gray said the intermodal volume for October 2020 set a monthly record.

Gray noted that rail intermodal volume has risen by a third since April and the increase in carload traffic was the best it’s been since the pandemic began,

Grain was the highest it has been in 13 years, while motor vehicles and parts were close to 90 percent of their levels of earlier this year.

“Changes in energy markets continue to pressure carloads of coal, petroleum products, and frac sand and holding back total carloads,” Gray said in a statement. “Excluding those three categories, carloads in October were a few percentage points higher than last year.”

The 10 carload commodity categories that saw carload gains compared with October 2019 were: Grain, up 21,557 carloads or 25.5 percent; iron and steel scrap, up 3,579 carloads or 29.1 percent; and waste and nonferrous scrap, up 1,527 carloads or 11.2 percent.

Posting declines were coal, down 56,343 carloads or 19.1 percent; crushed stone, sand and gravel, down 14,275 carloads or 16.0 percent; and petroleum and petroleum products, down 10,199 carloads or 20.0 percent.

Gray attributed the increase in intermodal traffic to an increase in imports and retailers stocking up for the holiday shopping season.

Total U.S. carload traffic for the first 10 months of 2020 was 9,480,575 carloads, down 14.5 percent, or 1,608,065 carloads compared with the same period in 2019.

Intermodal units were 11,204,234, down 4.4 percent, or 517,668 containers and trailers, from last year.

Combined freight traffic for the first 44 weeks of 2020 was 20,684,809 carloads and intermodal units, a fall of 9.3 percent compared with last year.

Conference Speakers Optimistic That Intermodal Traffic Growth Will Continue

October 2, 2020

Colorful containers on a late day eastbound intermodal train on  CSX in Clinton, Ohio.

Speakers at the recently concluded North East Association of Rail Shippers virtual fall conference expressed cautious optimism that recent growth in intermodal volume can help railroads recover from traffic losses prompted by the COVID-19 pandemic.

Jason Seidl, managing director of Cowan and Company said the consensus among railroad executives who spoke during the conference is that current trends could continue for the remainder of 2020 and into next year.

Railroads are bullish on intermodal for the time being due to continued tightness in the trucking industry that has sent some shipment onto the rails.

Kansas City Southern CEO Pat Ottensmeyer said the USMCA treaty, which replaced NAFTA,  “allows North America to emerge as an even more powerful force in global manufacturing and trade.”

However, Ottensmeyer said the United States “must do a better job” coordinating policy with Mexico and Canada in order to maximize the benefits of the treaty.

Tom Tisa, who heads business development for CSX, noted that railroads posted intermodal traffic records in August because retailers were restocking depleted inventories and preparing for the holiday sales season.

However, Tisa expressed some uncertainty that the intermodal surge is sustainable although he is optimistic that it will continue.

Speakers at the conferences noted a contrast between how Canadian Class 1 railroads are managing their precision scheduled railroading operating model with how it is being done by U.S.-based carriers.

Analysts said this probably is because Canadian National and Canadian Pacific have been using PSR for a longer period of time whereas the U.S. carriers are still in early stages of

PSR, particularly those focused on chopping costs and paring assets.

Whereas U.S. railroads are still looking to sell low-density lines, Canadian carriers are seeking to add routes, including some lines they once spun off.

Panelists Upbeat About Class 1 Rail Traffic

September 12, 2020

Participants in an investor’s conference saw sunshine this week when discussing the state of  North American Class 1 railroads.

Speaking at the Cowen and Company Global Transportation & Sustainable Mobility Conference, analyst Jason Seidl said the railroads “are focused on adding back traffic at high incremental margins, though rail network congestion persists.”

Seidl, who is managing director at Cowen, along with fellow analysts Matt Elkott and Adam Kramer wrote in Railway Age that freight fundamentals across all modes are strong, with retail and consumer packaged goods restocking of inventories a major driver of the current spike in demand for intermodal business.

“Many customers are choosing to renegotiate TL (truckload) contracts early as spot rates just eclipsed 2018 peak levels and are likely headed higher,” they said.

Executives from Canadian National said traffic is moving back toward normal levels, driven by strong growth in intermodal, grain, lumber, and frac sand volume.

“We are clearly seeing a recovery happening,” Chief Financial Officer Ghislain Houle said.

CN’s domestic intermodal volume is up 30 percent while international intermodal gained 19 percent.

“Frankly, at this point we have good demand. I would say that we’re essentially not even moving everything that we could move,” Houle said. “We are calling back people. But this is a good story. This is a good problem to have.”

The Cowen analysts said CSX has benefited from a strong intermodal recovery in domestic and international intermodal volumes alike

Domestic intermodal traffic began rising at the end of the second quarter as the economy started to recover and employees returned to work.

That led to a need by retailers to replenish their inventories.

The Cowen analysts wrote that intermodal is currently in excess of 15 percent cheaper than trucking, which gives CSX an opportunity to increase pricing when renegotiating contracts in the coming months and next year.

At Norfolk Southern, traffic volumes are are close to pre-COVID-19 levels in merchandise while iIntermodal and total volumes are now above.

However, coal traffic remains well below pre-pandemic levels.

NS officials have reported seeing a shift in intermodal traffic from the West Coast to the East Coast, but is not giving up on West Coast traffic.

Capital spending for NS next year is expected to increase only modestly as the carrier tries to minimize the magnitude of the increase.

The Cowen analysts said NS is looking at reducing its workforce in the third quarter compared with the second quarter and a year over year improvement in the third quarter operating ratio.