CSX Bets on Ohio Hub to Gain Intermodal Business

CSX Bets on Ohio Hub to Gain Intermodal Business

CSX intermodal hub in North Baltimore, Ohio.

NORTH BALTIMORE, Ohio — CSX Transportation’s headquarters are in sunny Jacksonville, Fla., but the beating heart of its intermodal network is here under overcast skies in northwestern Ohio.

CSX is betting the $175 million state-of-the art terminal, the hub to its corridors, or spokes, is the best way to spur shippers to shift more truckloads to the rail. If CSX’s wager pays off, the eastern railroad could grab some 9 million truck loads that are hauled more than 550 miles annually across its network.

The hundreds of millions of dollars the railroad has invested in its intermodal networks appear to be paying off. CSX expects domestic intermodal traffic to rise 5 to 6 percent this year, and international volume to expand 3 to 4 percent, after total intermodal volume rose 7 percent year-over-year in 2012.

That freight growth comes as the hub delivers for container lines, including Maersk Line and Hyundai Merchant Marine. The latter cited the facility as a reason for switching its business in 2010 from Norfolk Southern Railway to CSX. But the other major eastern railroad isn’t CSX’s only competition. “We view the trucking industry as competition,” said Whilby Whitt, president of CSX Intermodal Terminals. The North Baltimore, Ohio, facility “is allowing us to assemble density so we can generate more origins and destinations for customers, so we can be more truck-like.”  

The terminal’s five hulking grey wide-span cranes have been lifting containers since the facility opened in  February 2011. But it’s only been in the last six months that CSX has ramped up its operations at the facility and shifted even more cargo through the hub.

The terminal, south of Toledo, handled roughly 540,000 container lifts in 2012, and CSX expects about 60,000 more lifts this year. The terminal will have fewer lifts as it becomes more efficient, so the lift forecast only gives a glimpse of how much more freight CSX plans to funnel through the hub.

The terminal, situated between Buffalo, N.Y., and Chicago, cuts 24 to 48 hours off of transcontinental transit times for trains that don’t need to stop in Chicago. CSX originally considered adding more capacity in Chicago, the nation’s top freight gateway and most congested inland port, “but then realized there was a lot of traffic in Chicago that didn’t need to be in Chicago,” Whitt said.

The hub in northwest Ohio not only connects north-south and east-west routes but also frees up capacity in Chicago. CSX unsuccessfully tried to create “virtual hubs” at terminals but ultimately went big and invested in the Ohio hub to be able to build density without sacrificing speed and reliability.

“I think there is a perception from some customers that, ‘Now, you’re taking it some place and handling it, and that seems like you are adding time,’” said Ryan Houfek, assistant vice president of intermodal marketing. “In fact, we are handling (freight) less in the past and the reliability has improved. We hear customers talk about speed, but they respond and act on reliability.”

Containers at the hub, which handles 32 to 36 trains daily, stay on site for on average of 12 hours, but CSX says it advances many containers in the first six or eight hours. The central location cuts down on the number of crews needed.

Although Best Buy and Lowe’s use the hub, the majority of freight isn’t bound for the northwest Ohio area, Whitt said. The terminal did spur Campbell Soup Co., which has distribution space nearby, to begin using intermodal transport. The limited freight going to the region allows CSX to operate a more grounded operation, reducing the cost of chassis. Add in automated truck gates, electronic container tracking, sophisticated terminal design and skilled crane operators and you have a cutting-edge facility akin to state-of-the art European seaports.

“Quite frankly with the systems and the technology, we reach a much higher degree of execution than has ever been obtained in any intermodal terminal in the world,” Whitt said.

The hub’s importance to the CSX network will become even greater as the railroad wraps up an $850 million public-private partnership to provide double-stack clearance from mid-Atlantic ports into the Midwest. Double-stack clearance between Greenwich, Ohio, and Chambersburg, Pa., will be gained by the second half of the year. The second phase of the clearance initiative, namely the roughly $160 million rebuilding of the Virginia Avenue tunnel in Washington, D.C., will be completed in two to three years.

On the terminal front, CSX began construction this month on an intermodal facility in Quebec, and that terminal could open as soon as late 2014. The railroad also plans to open an intermodal terminal in Pittsburgh within the next three years and have a new Baltimore terminal running by 2015. CSX will also open an intermodal terminal in Winter Haven, Fla., in spring 2014. The company also is adding 130,000 units of annual capacity to its Atlanta facility and will expand its Detroit terminal.

As part of the National Gateway initiative, the railroad already has doubled capacity at its terminal in Charlotte; completed a terminal in Worcester, Mass.; and doubled its capacity in Columbus, Ohio, by transforming a legacy operation to one with rail-mounted wide-span gantry cranes.

Surging business at the new Louisville, Ky., terminal is one of the strongest testaments to the success and potential of CSX’s hub-and-spoke model. The $15 million terminal opened last year, and CSX already is working to expand the 34-acre facility because of increased highway conversions.

“We just gained a huge one to Baltimore that we would never been possible without the hub,” Houfek said. “If a customer wanted to go from Louisville to Buffalo, for example, the response in the past was, ‘You need to call a trucker.’ Now, we can say, ‘yes.’”

Contact Mark Szakonyi at mszakonyi@joc.com and follow him at twitter.com/szakonyi_joc.