Railroads Expand Service Into Non-Traditional Markets

Railroads are expanding their share of the North American freight market in non-traditional areas, with Canadian railroads becoming increasingly competitive in the U.S., eastern railroads returning to their roots on the East Coast and western railroads building inland logistics hubs and going after export cargoes.

In the East, CSX and Norfolk Southern traditionally defined intermodal traffic as being containers from Asia that moved through West Coast ports and were handed off to them by the western railroads.

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“We used to be a West Coast-centric railroad,” said Drew Glassman, assistant vice president of marketing at CSX Transportation. CSX today anticipates strong growth in the Ohio Valley to Chicago corridor with the opening of its Northwest Ohio Intermodal Terminal in North Baltimore, Ohio.

Similarly, Norfolk Southern Railway generates 60 percent of its intermodal volume from the East Coast, compared to only 40 percent 10 years ago, said Jeff Heller, assistant vice president of marketing and sales. Norfolk Southern has become especially competitive on short-distance routes from East Coast ports to Atlanta, Charlotte and Front Royal, Va., Heller said.

Inland ports such as Chicago, Kansas City and Dallas generate empty containers that are coveted by exporters, especially agricultural shippers, and BNSF is pairing the two moves. “Match-backs – that’s where we see growth,” said Patrick Kinne, general director of international marketing.

The Canadian Pacific and Canadian National railroads are expanding their share of U.S.-bound freight through Chicago. U.S. interests have accused the Canadians of “poaching” cross-border cargo by offering lower intermodal rates.

“It makes it sound illegal to provide a rail service,” said Mark Lerner, assistant vice president of intermodal sales at Canadian National Railway. “CN services are priced competitively,” he said, adding that vessel routing from Asia through Prince Rupert is at least two days shorter than through the U.S. gateways.

Canadian Pacific, which moves Asian imports from Vancouver, B.C, to Chicago and beyond, has increased its efficiency by forming partnerships with marine terminal operators and ocean carriers to identify bottlenecks and capture “glowing boxes” with dwell times in excess of 72 hours.