Pacer International and CSX Transportation have extended their partnership through a new multiyear agreement, giving the intermodal middleman more opportunity to tap the Eastern shift of cargo from the road to the rails.
The Jacksonville, Fla.-based railroad will remain the primary carrier for more than 18,000 Pacer containers for several years after 2014, which was when the initial contract was set to expire. Pacer expects the agreement to increase its “volumes on CSX, particularly east-to-east shipments.”
The new agreement will likely last three to five years, according to a BB&T Capital Markets research note. The original agreement was struck in 2009, and the newest pact reflects the “strong relationship” Pacer has with CSX.
BB&T analysts said the new rates under the recently announced agreement have been in place for several months, driving “much of the 33 percent growth” Pacer saw in the Eastern market last quarter. The new contract also expands Pacer’s reach to more lanes in the Eastern market, according to BB&T.
“The existing CSX contracts have been primarily trans-continental business, with a much smaller percentage of business coming from the East, as we believe the prior rate structure in the East was not competitive enough to provide [Pacer] with the ability for significant business wins, thereby hindering growth,” according to the BB&T note.