DC Velocity - February 2013

modal executives recognize the potential in expanding into other commodity groups, most are too busy trying to convert dry stuff from truck to rail to take the plunge into an unproven business with higher costs and stricter service requirements.

“You have to make a full commitment,” said Brian
Bowers, senior vice president of intermodal and automotive
for Kansas City Southern Inc. (KCS), the Kansas City-based
railroad whose intermodal business is 100 percent dry van.
“You don’t just dip your toe into the refrigerated pool if you
want to keep your toes.”
Bowers said KCS, whose strength is its trans-border net-
work linking the United States and Mexico, plans this year
to assess the feasibility of intermodal service supporting
produce traffic out of Mexico. For now, however, KCS is too
focused on building its relatively small but fast-growing
intermodal business for trans-border dry goods to concen-
trate on a totally new intermodal service, Bowers said.

The executive also expressed doubt as to whether produce shipments could generate enough density to justify the extensive capital and operating investments, especially in Mexico with its less-than-mature intermodal infrastructure.

Drew Glassman, assistant vice president for intermodal at Eastern rail CSX Corp., agreed that the conceptual promise clashes with today’s reality, namely the high equipment costs, the added weight and lost cube from equipping a container with a refrigeration unit, and the concerns about

2010. During that time, it moved 750 intermodal loads without incident, according to Gregg Zody, BNSF’s director of sales for consumer products.

In the fall, BNSF rolled out a product called “Flatracks” to serve flatbed truckers and industrial shippers. Zody said the conversion opportunity to rail from road is significant. “We’ve identified 1 million [flatbed] loads that can be converted to intermodal,” Zody said. He added that the service is competitive on transit times with single-driver service.

The equipment allows each car to hold 90,000 pounds of freight, or 45,000 pounds per load. The placement in the wellcar steadies the containers and prevents the in-transit jarring that could lead to cargo damage. The decks can also be collapsed so four decks can fit in one car for return to the shipper.

NOT FOR THE FAINT OF HEART The early adopters see intermodal opening up new markets and geographies for flatbed the same way it did for dry van. Pacer International, a Dublin, Ohio-based provider whose equipment accounts for about

demand and density.

CSX, whose intermodal business is predominantly dry van, incorporates non-dry-goods traffic into its regular intermodal network, according to Glassman. That structure is likely to remain for quite some time, he said.

“It’s not a big enough market to justify its own sched-
ules,” Glassman said. “It would take a long time, and a lot of
density, to justify that.”
Judging by data from the trade group Intermodal
Association of North America (IANA), there’s no mad rush
to add non-dry van containers. Of the nearly 247,000 con-
tainers projected to be in service in North America in 2013,
all except 2,322 will be dry vans, IANA said. In 2012, all but
1,672 of the 235,000 containers in circulation were dry
vans, according to IANA data.

Despite the obstacles, Finkbiner, who is principal of a consultancy called Surface Intermodal Solutions LLC and until recently was a top sales and marketing executive at Railex LLC, a coast-to-coast refrigerated service operated in conjunction with CSX and the Union Pacific Railroad, remains optimistic. As he sees it, the rails will look for new revenue sources to offset a pronounced decline in their bread-and-butter coal traffic. Fresh fruits and veggies, he said, could be the ticket.

“Once a generation, the coal business bellies up,” he said. “This is a chance for railroads to see what else is out there.” ;

10 percent of all domestic intermodal container moves, began using intermodal about a year ago to compete with flatbed carriers on hauls of steel, aluminum, plastic, and pure resin from the Upper Midwest and Great Lakes regions to Mexico.

By leveraging intermodal, industrial producers that traditionally used trucks will have access to less-expen-sive rail service to connect far-flung supply and production points, according to Jim Commiskey, Pacer’s vice president - automotive and Mexico.

Still, flatbed intermodal is not for the faint of heart, Commiskey said. “There is a lot of learning in the process, especially in how you handle the metal, and how you keep it clean and damage-free,” he said.

Then there’s the challenge of competing against a known quantity. Flatbed trucks remain the familiar mode of transportation for many industrial producers. For that reason alone, trucks are likely to continue to be the preferred way to ship, according to Commiskey.