Dive Brief:
- CSX Transportation is working closely with shippers to capture truck-to-rail conversion opportunities, Maryclare Kenney, SVP and chief commercial officer, said in a Q3 earnings call.
- “We'll look at their truckload file confidentially for them. We'll evaluate the truckload file and show them where there's lanes that are opportunities for intermodal conversion and then give them visibility to what service looks like in those lanes,” Kenney told analysts.
- Kenney said CSX’s approach helps shippers feel more comfortable shifting freight from truck to rail as trucking market conditions tighten.
Dive Insight:
Continued elevated diesel costs, reduction in trucking availability and high truck rates continues to benefit CSX’s intermodal segment, Kenney said.
Diesel prices remains a top concern in the trucking industry. As of Oct. 19, diesel fuel was $6.28 per gallon, up from $2.66 a year ago, according to the U.S. Energy Information Administration. The trucking market is also experiencing tighter capacity due to additional compliance requirements and a driver shortage.
“Conversions from the highway remains strong, and the new service offering through Birmingham, Myrtlewood, Baltimore and other areas are performing well and attracting new business,” Kenney said during the call.
CSX is seeing truck-to-rail opportunities differently depending on the commodity being transported. For example, forest products usually have high truck utilization, Kenney said. With tighter trucking capacity, the railroad is aiming to capture market share in the sector, although its efforts haven’t yielded improvement on the demand side yet.
Chemical volumes are also a strong option for rail conversions. CSX reported a 7% increase YoY in chemical volume in Q3 due to truck-to-rail conversions, Kenney said. She added that waste and petroleum products also present “good opportunities.”
Other railroads have also reported a positive shift in higher truck-to-rail conversions.
Norfolk Southern, for instance, noted growing rail demand in its domestic intermodal segment and chemicals, President and CEO Mark George said in a recent earnings call. The fuel savings for shippers from using rail is enabling Union Pacific to win more business, EVP and CFO Jennifer Hamann said on the railroad’s Q3 earnings call last week
CSX in particular has been vocal about benefiting from truck-to-rail conversions. The railroad said back in April that it was looking for ways to capitalize on the conversion trend and shared an optimistic view of the market for rail opportunities.
