Intermodal: Container moves will multiply if Class Is align their networks with global trade shifts

By Jeff Stagl, Managing Editor

What will railroads accomplish intermodal-wise during the next 50 years? The same thing they’ve achieved in the past half century: immense volume and revenue growth.

“We’ve seen significant growth in intermodal and it likely will escalate,” says Steve Branscum, BNSF Railway Co.’s group vice president-consumer products. “The key drivers are continued growth in the U.S. and world populations, and increase in world trade. The world clearly is a smaller place.”

The Class Is’ biggest challenge during the next few decades will be ensuring they have enough capacity and an optimally configured network to accommodate growing demand, according to Branscum and Norfolk Southern Corp. VP of Automotive and Intermodal Marketing Mike McClellan.

Of mega-importance

For BNSF, that means boosting capacity in many of the 15 key interior “mega-politan” areas defined in a recent Virginia Tech University study. The mega-politan areas — which cover a broad area, such as Detroit/Toledo/Cleveland/Columbus — today account for 65 percent of the nation’s population and will account for 75 percent by 2030.

“These are the areas that define transportation markets and where we need to invest,” says Branscum.

For example, BNSF plans to work with CSX Transportation to access Atlanta, a key mega-politan area and intermodal region BNSF currently can’t tap into.

NS also plans to expand — and already is expanding — its intermodal network, both in the number of nodes and number of links between those nodes, says McClellan.

For example, along NS’ proposed 1,400-mile Crescent Corridor between New Jersey/Northeast markets, Memphis, Tenn., and New Orleans — which the Class I hopes to have in place by 2013 — intermodal facilities would be built in central Maryland, central Virginia, eastern Tennessee and central Alabama. In addition, the railroad plans to develop intermodal services to add links between those locations.

“Look at Norfolk to Charlotte. We need a link between those cities, but we don’t have that link today,” says McClellan.

In for the short haul

Adding nodes and links will address one of several emerging intermodal trends: growing demand for high-quality, truck-like services in medium- to short-haul markets, says McClellan. The services would match trucks’ consistency levels (but not necessarily their speed), and cover 450 to 1,250 miles for domestic intermodal customers and 200 to 1,000 miles for international customers.

Other emerging trends over the next half century will be an increasing percentage of Asian imports going to the New York/New Jersey port, primarily because of the Panama Canal expansion; a continually rising cost structure for truckers that could drive more freight to intermodal; the regionalization of freight as more imports arrive at the East Coast and lengths of haul get shorter; and containerization at some point coming “full circle” as trailers are phased out, says McClellan.

“Not because railroads can’t handle trailers, but more because of the economic factors that support double stack vs. TOFC,” he says.

BNSF’s Branscum also believes trailers will be eliminated.

“We never said that before, but we’re talking 50 years and that day will come,” he says. “There are small trucking companies that aren’t sophisticated enough to do containers and trailers.”

But Branscum is skeptical that railroads will increase their share of short-haul intermodal moves unless the federal government finds ways to incent or subsidize the traffic.

“We need to have volume. Between Dallas and Houston, trucks can make it in four to six hours, but we need 130 trucks’ worth for one intermodal train, and it takes 24 hours to wait for loads overnight, load the train and go,” he says. “Perhaps the feds can limit truck hours, such as no trucking at nighttime hours.”

Ultimately, railroads will grow intermodal volume and revenue if every link in the transportation supply chain boosts productivity, such as by transitioning to 24/7 operations, says Branscum.

“We need better productivity at all ports,” he says.