Burlington Northern and Santa Fe Railway Co. and Hub Group Inc. are ready to embark on a domestic container asset management plan intended to bridge the longstanding gap between carriers that own or lease intermodal equipment and marketing companies that use those assets.
The BNSF-Hub Group effort calls for the marketing company to manage and control 2,000 domestic containers that the railroad owns.For decades, the gap between the interests of the asset-owning railroads and the intermodal marketing companies (IMCs) that manage shipments but don't put down cash for trailers and containers has spawned debate and friction.
The program is believed to be the first of its type in an industry where almost none of the marketing companies owns a large equipment fleet. Several marketing companies have acquired their own equipment or agreed to manage boxes owned by others.
The vast majority of marketing companies' freight, however, is moved in equipment that is owned or leased by a railroad. More than 90 percent of freight moved by marketing companies on BNSF travels in equipment that is owned by leased by BNSF or another railroad.
''We are doing what we do best, which is manage the equipment,'' said Tom Hardin, Hub Group's president.
He noted that BNSF has been outspoken in saying that IMC business handled on the railroad does not produce the same return on investment for the carrier as movement of freight for companies that own their own assets.
''We have been talking to the industry over time about the need to improve utilization of rail-controlled (intermodal) equipment,'' said Ed Zajac, assistant vice president of intermodal marketing for the railroad.
''The Hub Group came to us with suggestions of how to do a program. They have the incentive to move the equipment faster to increase utilization, increase revenue and improve service to customers.''
The program also could be a vehicle for IMCs to regain markets that have been lost to trucking companies that own their own assets, according to Mr. Hardin.
Although BNSF's business volume with IMCs grew last year, the railroad's shipment volumes handled for truckload motor carriers increased at a faster rate, exceeding 20 percent.
Mr. Hardin said the new effort also could be an opportunity to recapture business that has been lost due to rail service problems.
The first of the domestic containers covered by the program will come under Hub's control on May 1. All 2,000 units are expected to be in service by Oct. 1.
Roughly 10 percent of BNSF's domestic container fleet is being dedicated to the Hub Group program.
All of the containers in the program are 48 feet long and 102 inches wide.
The BNSF-Hub Group agreement has sparked some discussion of similar arrangements with other marketing companies, according to Mr. Zajac.
Mr. Hardin said that having the entire 2,000 units available in October would enable Hub to have a better fleet available in the fall, a traditional period of intermodal equipment shortages.
The containers controlled by Hub Group must be kept on a network of 52 BNSF intermodal facilities. In addition to BNSF's own lines, that network also includes major cities served by Conrail Inc. and key markets in the Southeast, such as Atlanta and Charlotte, N.C.