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By Jeff Stagl, Managing Editor

Intermodal business continues to boom for Norfolk Southern Railway in 2012 after a couple of stellar years. In 2011, intermodal business generated 21 percent of total railway operating revenue and 45 percent of all shipments. And over the past two years, domestic intermodal volume shot up 42 percent.

By the time 2012 draws to a close, NS will have moved more than 3 million containers and trailers across its 22-state network. Yet, not all of the movements completed early in the year were as efficient — traffic- and cost-wise — as those performed toward year’s end.

In January, NS began to roll out an R³ initiative to optimize the movements of trailers, and international and domestic containers. Meaning the right lane, right car and right unit, R³ aims to ensure that trains departing an intermodal terminal are headed to the correct destinations, moving freight loaded on the most optimal rail cars and transporting the proper containers or trailers to enhance capacity and increase asset utilization.

The initiative establishes a standard process — tailored to a terminal’s size and layout — for loading and building outbound intermodal trains. For example, terminal workers must try to load all 40-foot international containers on 40-foot stack cars. Previously, the 40-foot units sometimes were loaded onto other cars, such as 53-foot stack cars designed for domestic containers or conventional flat cars that can’t accommodate double-stack loads.

NS previously addressed a stack-car shortage that was caused by growing volumes of 53-foot containers by acquiring several thousands of new platforms. But the usage of 53-foot cars to move units of other lengths has hampered asset utilization even though the fleet was right-sized, says NS Vice President of Intermodal Operations Bob Huffman. In addition, a less-than-optimal usage of cars added train length and weight, he says.

As of late November, R³ had been fully implemented at more than 50 NS terminals, where the right cars now are being matched with the right intermodal units more than 90 percent of the time. Before the initiative was launched, the right matches were being made less than 80 percent of the time. In addition, many 40-foot stack cars have been freed up for more extensive use in the international fleet.

“The problem is we have a complex network of international and domestic terminals. It’s a terminal-intensive network,” says Huffman. “Each terminal was its own little operation and was efficient, but we weren’t getting the overall right result. This is a train-by-train approach, and an in-depth look at operations from a 24- to 48-hour view.”

R³ calls for a higher level of cooperation among the intermodal, transportation, mechanical, industrial engineering, and network and service management departments to better coordinate car switching activities and the timing of car inspections and repairs, and empty car movements at terminals. Department workers also jointly strive to ensure the right cars are in the right block and on the right spot on a track.

“It’s a different way of managing and communicating,” says Huffman.

NS hired business consulting firm The Highland Group to help conduct an initial assessment of terminal operations and work with terminal managers to implement R³.

Each terminal now issues daily bulletins that inform employees how they are faring with matching cars and intermodal units on each train. Huffman receives the daily reports to monitor the performance of every train at every terminal, he says.

So far, performance has been very good: Intermodal trains generally are shorter than in the past, which has increased capacity at terminal loading tracks, improved asset utilization and reduced operating costs, Huffman says.

“It was very evident that we couldn’t continue operating as we were and handle increasing intermodal traffic efficiently and cost effectively,” he says. “We had to get this figured out.”