John D. Boyd | Apr 21, 2010 5:34PM EDT
Intermodal shipment consolidator Hub Group will buy a total of 2,500 new domestic, jumbo-sized containers this year, amid a demand surge that has it near full capacity. That is up from 2,000 the company earlier identified.
“We’re seeing very tight capacity,” said Chairman and CEO David Yeager, coming from a broad range of customers.
Hub last week said in a regulatory filing it was buying 2,000 new 53-foot containers. Yeager now says it is also buying 500 more in another configuration that allows a bit more room for shippers of food and lightweight palletized cargoes.
They will be built in China and should all be in Hub’s hands by the end of August, in time for the autumn peak shipping period for domestic intermodal.
Right now Hub’s fleet totals about 15,000 boxes, counting those it owns and those it leases from railroads. The new purchases and other arrangements will take it up to a peak season level of around 18,000 later this year, Yeager said, before it sheds some older units to end the year with about 17,500.
He said Hub saw demand building early in the year but wondered until the mid-February Chinese New Year period if it might be just an inventory correction. But with bid activity continuing strong and Hub’s own customers upbeat, “it looks like its for real,” the CEO said. “The economy is improving; there is no question.”
The strength of the turnaround was somewhat surprising. Yeager said at this time last year, when the recession was bottoming, Hub had 2,500 of its containers parked. Now, they are all in use and it is ordering that many more, bringing its owned fleet to 8,725.
Hub will shift in phases out of 1,400 containers it is still running on BNSF Railway, or about 10 percent of its total boxes. The rest of its western-U.S. traffic is already on Union Pacific, and this fall Hub will have 100 percent on UP.
He also said UP will be providing some equipment to make up for the BNSF boxes, so the new container purchase will be a net addition to the Hub fleet.
Contact John D. Boyd at jboyd@joc.com.
