CSX and BNSF launch national intermodal partnership

Late last week, two Class I railroad carriers—Jacksonville, Fla.-based CSX and Fort Worth, Texas-based BNSF announced they are teaming up on various intermodal service offerings focused on coast-to-coast movements.

The new service offerings include:

• the introduction of new, coast-to-coast, direct domestic intermodal services between Southern California and Charlotte, North Carolina and Jacksonville, Florida;
• a new service to be launched between Phoenix, Arizona, and Atlanta, Georgia, focusing on over-the-road (OTR) freight conversion to rail through a seamless product between the two railroads (with two new 10,000-foot sidings between Phoenix and Flagstaff being used to enable more efficient meet/pass operations on the route connecting to BNSF’s Southern Transcon); and
• the introduction of new direct international intermodal services between the Port of New York and New Jersey, and Norfolk, Virginia, and Kansas City

CSX and BNSF officials said that these new intermodal services will provide immediate value for customers in various ways, including increasing flexibility and optionality, while delivering integrated service for freight moving across the U.S. The companies added that additional details about these new services will be announced going forward.

“This collaboration between BNSF and CSX demonstrates the power of partnership, delivering greater flexibility, efficiency and value for our customers,” said BNSF Group Vice President of Consumer Products Jon Gabriel in a statement. “We are looking forward to these offerings providing immediate, streamlined service to the supply chain across key markets nationwide.”

And Drew Johnson, Vice President, Intermodal Sales and Marketing at CSX, said in the same statement that through this new connectivity, CSX and BNSF are connecting Western and Eastern U.S. markets, creating faster, more reliable service.

“Together, we’re opening access to key markets and strengthening options for our mutual customers,” he said.

BNSF President and CEO Katie Farmer wrote in a LinkedIn post that through these new services BNSF and CSX will both be able to connect western and eastern U.S. markets more efficiently than ever before.

“By introducing direct routes from Southern California to Charlotte, North Carolina and Jacksonville, Florida, and from Phoenix to Atlanta, we're about to achieve a new level of seamless integration in the intermodal supply chain,” wrote Farmer. “BNSF's commitment to providing customer-focused solutions drives every decision we make. This new partnership offers our customers increased flexibility and optionality, ensuring their shipments move smoothly across the country and opening doors to key markets. You can rely on us to continue to push the boundaries of what's possible in safe, reliable, efficient freight transport. We look forward to taking this journey with CSX.”

Larry Gross, President of Gross Transportation Consulting in Durango, CO, an independent consulting practice specializing in freight transportation matters, told LM that in looking at this announcement, it is important to note that only around 14% of intermodal activity interchanges between railroads, not including the “rubber tire” [trucking] transfer in Chicago, as per data from the Association of American Railroads (AAR) data.

“Let’s say freight is delivered by the BNSF, it is then driven across town and gets back on an Eastern railroad and moves beyond,” he said. “There is quite a bit of that. But basically, what the railroad is doing there is kind of offloading the complexity of the system onto the user and the city of Chicago—letting Chicago be the sorting hub for intermodal, instead of doing it steel wheel [via rail]. Which they only want to do when there are large, concentrated volumes. The problem with the rubber tire is it has significant costs associated with two lifts, plus across town, and the chassis and everything else you know. I would say that it is a burden on intermodal; you can make up for it if it is a very long-haul move, but it sort of knocks you out of a lot of the shorter-haul markets. I am very much in favor of seeing these railroads work closely together to try to get that 14% figure up.

“The trucks have a national network, and intermodal has regional single-line networks,” he added. “A merger is one way to deal with it. I would say it's a high-cost way to deal with it, and a risky way to deal with it, from a regulatory and service and a lot of different aspects. And to the extent that it's theoretically going to grow the business. I think the only place where potentially a merger will actually grow volume is intermodal, potentially. This theory that somehow, it's going to reverse decades of carload losses is just a fantasy.”

This news comes at a time amid speculation that CSX and BNSF would enter into a merger agreement, following the recent Union Pacific-Norfolk Southern merger, which was announced in late July but not yet a done deal. Over the weekend, though, a CNBC report stated that Warren Buffet, Chair of Berkshire Hathaway, BNSF’s owner, said that Berkshire told CSX it does not plan to merge with CSX. The report added that an August 3 meeting between Buffet, Greg Abel, Berkshire Hathaway Chairman and CEO, and CSX Joe Hinrichs, “discussed cooperation to make freight rail more efficient.”