CSX Transportation has begun requiring truckers to book appointments to return empty boxes or drop off loaded containers, an operational change that hasn’t been burdensome in smaller markets but is a significant issue in Chicago and Memphis, Tennessee.
Beneficial cargo owners (BCOs) in the two large intermodal markets have had to pay storage charges while waiting to get a reservation number, which they say takes days in some cases. Transit times have slowed as boxes idle until a slot opens up. Reservations are not required to pick up a container.
CSX was unavailable for comment, but draymen tell JOC.com the railroad wants to limit the amount of boxes idling in its terminal. Such an explanation would be consistent with precision scheduled railroading (PSR), an operating model installed at the Jacksonville, Florida-based railroad by the late E. Hunter Harrison and James Foote, who succeeded Harrison as CEO after his passing in late 2017. Rather than having truckers show up at random, a reservation system would allow CSX to match the number of containers entering its terminals to the number of slots on an outbound train and available storage space.
It’s the latest in a series of changes to CSX’s intermodal network under PSR, which emphasizes a simpler network, scrapping unnecessary assets, and devoting resources to tight schedules on high-volume routes. Just last month, the railroad eliminated nearly 300 domestic and international origin-and-destination pairs. CSX also made significant changes to its steel-wheel interchange program last September, resulting in extra costs for shippers booking drayage to move containers from Union Pacific Railroad and BNSF Railway, slashed domestic intermodal service, slashed intermodal service in Detroit last year, and eliminated several other domestic lanes in October 2017.
While the appointment system has been disruptive in Chicago and Memphis, BCOs have not reported any issues with international intermodal service in Detroit; Cleveland, Ohio; or Charleston, South Carolina.
“The only thing we’ve seen is occasionally getting a shipper rail billed at 3:30 p.m., and then at 4:15 p.m. when he arrives, his reservation is expired because the cutoff is 4:00 p.m.,” said Aaron Owens, an agent for Whitacre Intermodal. “We have gone weeks in the office without hearing anyone talk about it.”
The South Carolina Ports Authority handles the CSX reservations in Charleston, and a port spokesperson says there have been no delays getting reservations. The same is true for Cleveland, according to a shipper that spoke to JOC.com at the 2019 TPM Conference.
CSX began mandatory reservations in Charleston, Cleveland, Detroit, and Chicago between late January and mid-February, according to a schedule obtained by JOC.com, which also shows rollouts coming to about 20 markets before the end of August. CSX instituted the system in Memphis and Nashville last summer.
Crosstown dray delays
The reason the reservation system rollout has not been as smooth in Chicago is probably the sheer amount of cargo that comes through the largest US intermodal hub on a daily basis.
Frank Klimala, a terminal manager with Horizon Freight System in Joliet, Illinois, told JOC.com it initially took five days to get a reservation number. Wait times are improving, but he said they’re still around three days. This might be because late January was a busy time in the ramp up to Chinese New Year, but volumes have receded considerably since then.
Canadian National Railway also requires appointments, but those are generally available within 24 hours, according to Klimala. “We had one container sitting here for seven days because every morning we would come in and book a reservation, and CSX was always full. Finally, one of our dispatchers woke up after midnight and got a reservation,” he said.
The problem in Chicago is not only returning empty containers, it’s also slowing crosstown drays between western railroads and CSX.
Multiple truckers said shippers receive a daily reservation cap. So if, for example, a shipper has 50 containers in UP’s yard and only 10 slots per day with CSX, it has to spread the crosstown drays out over five days, and that’s assuming slots on the trains themselves don’t run out before a shipper reaches the daily cap.
This brings several cost considerations to the forefront for BCOs. First, does the BCO ask a trucker to pull the container from UP or BNSF and store it for a fee, or leave it and incur rail demurrage?
Art Gneuhs, vice president of Midwest operations for C&K Trucking, said that if a container will only incur one day of demurrage, the shipper is better off paying the railroad. If it will incur several days of demurrage, it’s likely cheaper to let the trucker store the box. Rail demurrage can be $100 to $150 per day versus a dray of $75 and storage around $50 to $75 per day, according to Klimala and Gneuhs.
Second, if it takes four days to get onto a CSX train, does the ocean carrier charge a per diem penalty? Third, if there isn’t a reservation available to return an empty box, will the ocean carrier fine the BCO?
“The larger shippers are aware of what is happening and have the technology to book reservations in an unobtrusive way. But it has certainly caused them some pain and some additional expenses that they are not thrilled with,” Gneuhs said. Smaller shippers probably are not as fortunate.
Missing the boat
Memphis and Nashville are large export markets for commodities such as cotton, with precise schedules for getting a container to a specific train so that it can reach port before the vessel departs. As a result, shippers unable to get a reservation to bring in an export container risk missing their assigned sailing.
Donna Lemm, vice president of IMC Cos., said there have been some inconsistencies in turnaround times on reservation numbers.
“In Nashville, for example, we are experiencing wait times and we have had instances in which our driver has submitted rail billing [and] waited at the gate only to find out that he or she does not have a reservation number for that day,” she said. “We are being asked to return the loaded container to our yard, store it for free, and to request a reservation number for the next day. Meanwhile our shipper misses rail cut off and may miss the intended vessel sailing at port.”
Contact Ari Ashe at email@example.com and follow him on Twitter: @arijashe.