; In early November, trucking giant J.B. Hunt Transport
Services and Norfolk Southern dramatically expanded their
10-year intermodal relationship in a deal that will cover a
swath of the East Coast equivalent to roughly one-third the
area of the United States.
; Con-way Truckload, Con-way’s truckload division, will
begin intermodal service this year in an agreement involving
a major shipper and Eastern railroad on a
lane along the Eastern Seaboard. Con-way Truckload would not provide
specifics at this writing.
; Less-than-truckload (LTL) carrier
Averitt Express continues to be actively
courted by as many as four railroads eager
for Averitt’s over-the-road freight that could be
converted to intermodal service. Averitt spokesman Brad
Brown would say only the company is “working to establish
strategic relationships with the railroads to deliver world-
class intermodal options for our customers.”
At the same time, the railroads are expanding their
domestic intermodal networks in a bid to attract more
trucking business. Norfolk Southern has launched a
“Crescent Corridor” intermodal initiative with service
stretching from New England, northern New Jersey, and
Pennsylvania southward to Memphis, Tenn., and New
Orleans. As part of the project, the railroad will build new
intermodal terminals in Birmingham, Ala.; Memphis; and
Greencastle, Pa. The three terminals are set to open in early
2012. Norfolk Southern is also developing the “Patriot
Corridor” project with Pan American Railways, which will
link Boston and Albany, N. Y., with intermodal service.
In the Midwest, the state of Kansas applied in September for
$50 million in federal stimulus funds to build a Burlington
Northern Santa Fe Railway intermodal facility in Edgerton,
near Kansas City. If the state’s application is approved, work
could begin this year, BNSF said in a statement.
The rails are moving ahead with these initiatives because
they understand domestic intermodal is where their future
bread is likely to be buttered. In 2009, domestic services
accounted for 48 percent of total intermodal volumes, with
international accounting for the balance, according to the
Intermodal Association of North America (IANA). In 2006,
domestic service accounted for only 41 percent of all intermodal traffic, IANA said.
From September to October 2009, domestic container
intermodal traffic grew 9 percent, the strongest sequential
growth of the year, IANA said. The domestic container segment was the one bright spot in an otherwise dismal 2009
for intermodal and rail traffic.
Going short
As railroads focus more attention on domestic intermodal,
they will likely be asked to perform over shorter lengths of
haul than they are accustomed to handling. That could put
railroads in direct competition with truckers on regional
services that have not only been the trucks’ traditional
realm but which have been the fastest-growing category of
U.S. transportation.
The rails are not there yet. According to FTR data, the
average length of haul of a domestic intermodal movement
in the third quarter was 1,507 miles, hardly a short stage
length.
In the past, rail executives have said they couldn’t provide a
profitable and cost-effective intermodal service at hauling
lengths of less than 900 miles. But thanks to improved service
levels and better traffic density that cuts the time a train needs
to be held for full loading, rail executives say they can today
offer competitive intermodal service between 750 and 1,000
miles, and even as short as 500 to 600 miles.
“Today, 500 to 600 miles is right around the break-even
point,” says Finkbiner of Railex.
If railroads can prove their operational mettle on shorter
intermodal hauls, they stand a great chance of capturing
freight moving in the 600- to 800-mile range, according to
David L. Howland, vice president, rail, for trucking and
logistics giant Schneider National Inc. Howland explains
that current federal rules governing a driver’s daily schedule
make it virtually impossible to deliver a load beyond 500 to
600 miles in one workday. This results in a second-day service for the customer, and because the driver is tied up for an
extra day, leads to poor rig and driver utilization as well as
a higher cost per mile to the customer, he says.
If railroads can leverage their intermodal networks to
beat or equal the truckers’ costs on a second-day delivery,
they can “provide the customer with more capacity and
potentially a lower cost” while matching the trucker on
delivery time and reliability, according to Howland.
Jim Bolander, Norfolk Southern’s assistant vice president
of intermodal pricing and development, says the railroad’s
short-haul freight—known within the company as “low
cal” freight—posted double-digit annual gains from 2003
through 2008 and even showed modest growth during a
difficult 2009. The average length of haul is 500 to 700 miles
between intermodal ramps, and 600 to 1,000 miles door to
door, according to Bolander.
“This has been our domestic growth story,” he says.
Bolander says the railroad is simply going with the customer flow, which today often means regionally based shipping and distribution. “We are not looking to shrink our
