North-American rail

The spot and contract savings from domestic intermodal eroded in the second quarter compared with a year ago, while the fate of the third quarter depends largely on whether volume in Southern California keeps up to support peak season surcharges.

While the intermodal piece of the Union Pacific-Norfolk Southern deal could face some obstacles, UP CEO Jim Vena and his team have shown a willingness to try new approaches in growing their intermodal franchise, writes Ted Prince.

Union Pacific said the acquisition of its smaller rival would improve service by reducing interchanges while taking market share from Canada’s Class I railroads and the truckload market.

Any tie-up between the two railroads would be classified as a “major transaction” under US Surface Transportation Board regulations and subject to a rigorous review that could take two to three years.

Canada’s port stakeholders are hopeful the new prime minister and world-renowned economist will fast-track major projects and modernize labor negotiations.

But other Class I railroads will likely be vocal in their opposition to any deal and look to rally support from shippers to block the move, setting the stage for a contentious regulatory battle.

The agreement clears the way for BNSF to move cargo from Los Angeles, Long Beach and Oakland to Salt Lake City for ocean carriers CMA CGM and Mediterranean Shipping Co.

Some customers and competitors were surprised by the timing of the surcharges, which are typically implemented in August or September, if at all, and only after volume spikes.

The journey time, about two to three days better than typical industry metrics, comes despite congestion in other parts of partner CPKC’s network.

Still, analyst Larry Gross suspects that the early strength seen in the first half of the year is substantially composed of volume that has been “borrowed” from a peak season that will be “late and tepid” as a result.

The routing impasse between the railroads threatens supply chain disruptions for ocean carrier CMA CGM, which has cargo booked on the service that is due to begin later this week.

Loup Logistics provides direct access to nearly 80,000 rail-owned containers across North America, significantly expanding UP’s transloading options.

New bottlenecks in Louisiana and Mississippi are now affecting freight flows between Mexico and the Southeast US.

The railroad said the disruptions were the result of the switchover to a new operating system in early May, with the technology integration intended to unify old KCS systems into the CP network.

UP’s new protection program for high-value freight comes amid heightened concerns over cargo theft in the US and will cost users $100 per container.

The railroad said the higher fees, which are temporary, are meant to keep terminals fluid amid the higher volume of imports expected to land in the US over the coming weeks.

Hauling containers between Mexico and the US comes with additional regulations and potential disruptions that could make the 95% on-time performance promise more challenging for Hunt’s new cross-border service.

To achieve the promised 95% on-time performance, J.B. Hunt will require a strong collaboration with BNSF Railway and Grupo México Transportes to navigate challenges in cross-border rail.

Union Pacific Railroad struggled during the pandemic with wheeled facilities where containers are pre-mounted onto chassis before a driver arrives, but in 2021 and 2022 there were periods with no chassis to be found.

The railroad says it acted fast to resolve issues at its Dallas-area terminal and denies there have been any significant problems in Calgary and the Toronto area.

Intermodal providers might see a small bullwhip effect, in which international volume declines in May and June but rebounds in July and August as shipments delayed due to now-paused tariffs on Chinese goods begin arriving in Southern California.

The US’ second-largest intermodal carrier has not yet felt the effects of US tariffs on China but notes the delay in impact between the ports and the rails could take a few weeks.

As port volumes plunge along the West Coast, the downstream effects will likely be felt in the coming months, with softening demand to move freight into middle America on trucks and trains.

Relative stability may indicate that during the coming trade war, transloading could fare better than inland point intermodal, writes Larry Gross.

Rapidly growing occurrences of cargo theft in the US have compelled two early-stage technology companies to use data around truckload movements to assist law enforcement.

Insufficient volumes, including on the lane between the Port of Virginia and Memphis, have forced the railroad to reallocate resources to areas where it believes container business will grow in the future.

Cargo theft in trucking and on the rails has been a problem for years, but it’s getting harder to combat as criminals become more sophisticated in their tactics.

Inclement weather, the lingering effects of labor disruptions and a January surge in imports contributed to the fifth consecutive month of excessive rail dwells at Canada’s largest port.

Damage from last fall’s Hurricane Helene continues to affect CSX’s operations in the Southeast, while the fast-tracking of construction work at Baltimore’s Howard Street Tunnel provides another challenge.

The expedited service will require terminals within the Northwest Seaport Alliance to load rail-bound trains within 48 hours of vessel arrival, significantly faster than the average dwell times of eight to 15 days experienced last year during a surge in container volumes.

The initiative, called RailGreen, will allow intermodal customers to purchase verified carbon certificates reflecting their use of lower-emission freight options.

The deal comes as the world’s largest container shipping company looks to establish a bigger foothold in surface transportation.

The port authority on Wednesday completed an expansion of Inland Port Greer ahead of the opening of the near-dock Navy Base Intermodal Facility (NBIF) at the Port of Charleston later this year.

Despite the month-over-month downturn, Los Angeles-Long Beach volumes were higher than a year ago as Southern California’s freight boom did not begin until the second quarter of last year.

Executives from CSX and Norfolk Southern say that while the market is no longer as strongly pro-shipper as it was a year ago, conditions have yet to shift in favor of rail carriers.

Reshuffling port calls because of a potential Trump administration fee on Chinese-built and -operated ships would place additional strain on the US intermodal supply chain, railroad executives say.

Kate Farmer told TPM25 that people would be “shocked” at how much money the oft-targeted railroad spends on combating the increasingly sophisticated methods of cargo theft.

The Barstow International Gateway (BIG) could cut transit times on international intermodal business and increase the resiliency of Southern California ports during freight surges, BNSF CEO Kate Farmer said.

Tariff concerns and fears of labor unrest helped grow volumes at key ports along the West Coast last month, with the gains coming at the expense of the Northeast and mid-Atlantic.

The latest Journal of Commerce Intermodal Service Scorecard shows how the performance of North American Class I railroads suffered due to congestion caused by high cargo volumes in Southern California and severe weather in the Southeast.