Rail/Intermodal
Several new intermodal services have been announced in the two weeks since Canadian Pacific’s takeover of Kansas City Southern on April 14. CPKC has been busy announcing partnerships for cross-border intermodal movements from Mexico into the U.S. with Schneider and Knight-Swift.
The combined carrier clearly wants to change the historical dynamic of Mexican intermodal traffic being solely an intra-Mexico affair. It is unclear how quickly the additional volumes will come online as some of them based on public statements are destined to Chicago and other northern parts of the combined network where capital investments would be needed to support significant traffic growth.
The new partnerships are gaining attention and response in the industry. Canadian National, Union Pacific, and Grupo Mexico announced their own cross-border service aimed at attracting intermodal and other carload freight moving between Mexico and the rest of North America. The Falcon Premium service aims to provide the best transit times and service between Mexico and the Midwest.
Shippers will get to decide which service actually best fits their needs and delivers the service level that is advertised consistently. Intermodal certainly could use all the additional volume it can get given the latest week saw volumes 28,000 carloads below their five-year average.
Two shippers in Pennsylvania filed a common carrier complaint against Norfolk Southern and Amtrak that the Surface Transportation Board will hear on an expedited basis. The shipper claims that a proposed six-week suspension of rail service by the two railroads to complete a maintenance project on Amtrak’s Keystone Corridor between Harrisburg and Lancaster, Pennsylvania violates the railroads’ obligations to provide freight service to it.
The project would lead to an inability for NS to serve the shippers that primarily move animal feed and other agricultural products for the six-week duration of the project. Amtrak intends to minimize impacts on its passenger operations, which likely leads to the focus on freight operations.
NS has freight rights over the Amtrak line in the area along with an obligation to provide freight service upon reasonable request as part of its common carrier obligation. The board will have comments and replies by mid-May as it seeks to issue a decision quickly before the project begins later this summer.
Intermodal & Carload Volume
Volumes posted their best performance of the year for intermodal in the latest week, but that still kept them nearly 30,000 carloads below their five-year average. Intermodal volumes may have perked up in the latest week, but still have a way to go. Weak imports and truck utilization will maintain downward pressure on intermodal volumes.
Rail carload traffic moved up to within 3,000 carloads of its 2023 high that was reached in week two of the year. The sequential gain from the week prior, however, was largely fueled by a jump in coal volumes. Going forward, it is unlikely that carload volumes will be able to sustain this week’s levels unless non-coal commodities move stronger.
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