Railroads target safety, service improvements to lure shippers in 2024

Source: Supply Chain Dive
Date: 31st January 2024

Boosting network efficiency is a key step in convincing shippers to shift their freight to intermodal, rail executives said.

Getting more freight off highways and onto railcars may be as simple as forming stronger partnerships with the trucking industry and the nation’s short-line rail carriers, railroad executives said during an industry conference in January.

The weak freight market may be a window to win new business especially as trucking companies are seeking low-cost, emissions-reducing options and fighting to retain customers, executives said during the Midwest Association of Rail Shippers Winter Meeting.

Leaders of Union Pacific, Norfolk Southern had optimistic outlooks for intermodal growth in 2024, pointing to efficiency, safety and reliability improvements as critical priorities for their businesses and customers.

Boosting network efficiency is a key step in convincing shippers to shift their freight to intermodal, Union Pacific President acknowledged to conference attendees. The railroad has invested and secured grants to improve its performance.

Trucking is the real competition but railroads have an opportunity “to make the pie bigger for all railroads.” As an example, Union Pacific’s recently launched on-dock service at Port Houston, which allows intermodal containers to be offloaded from ships directly to railcars as well as its cross-border service Falcon Premium.

Union Pacific recently launched on-dock service at Port Houston, which allows intermodal containers to be offloaded from ships directly to railcars as well as its cross-border service Falcon Premium, Union Pacific said.

Similarly, the COO of a trucking partner of the railroad expressed optimism about the Falcon Premium in an earnings call.

“We have gained confidence in the stability of that and the consistency of it,” the COO said.

Union Pacific said the railroad’s expanded services can help businesses, adding that “as the economy stabilizes and grows, we’re excited to be part of it with the intermodal service offerings that we have.”

Norfolk Southern focuses on safety, reliability
Safety has been a priority for Norfolk Southern in the wake of last year’s train derailment in East Palestine Ohio, safety has been a priority for the railroad, President and CEO said during the conference.

The railroad faced headwinds following the incident, Union Pacific said but it drove internal changes which have led to heightened safety and improved network performance.

“As we moved through the year, we promised to make a [safe] world even safer,” Union Pacific said. The railroad’s main line accident rate overall was down over 40% in 2023, which contributed to Norfolk Southern’s intermodal segment closing the year with its best service performance in over six years.

Union Pacific agreed with other executives’ assessment that service will help railroads win business from trucking. There are signs bulk products including metals are poised for a recovery, Union Pacific said.

“They’re optimistic,” Union Pacific said, referring to raw metals shippers. “And I know that as we provide our metals customers a better service product and increased velocity of our equipment, they’re going to present us with more business.”

Manufacturing investment in the Southeast, particularly around EVs and automotive, also presents opportunities for intermodal growth, Union Pacific said.

“We serve nine of the top 10 states for doing business and we see a lot of investments in manufacturing,” Union Pacific said. “There are a lot of good things that are driving growth opportunities.”

Opportunities in chemicals
It was believed a targeted focus on hauling chemicals can secure more intermodal business for railroad.

Chemical hauling represents more than $900 million in revenues for the railroad.

The railroad in 2021 acquired bulk liquid chemical hauler Quality Carriers which operate 100 terminals served by 2,500 drivers.

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