The latest moves, which take effect on July 1, follow the same theme: Favoring high-density routes that support steel wheel interchange in Chicago and Memphis.
This round of changes is limited to domestic origins on UP and international origins on NS.
NS and UP will drop westbound interline international service in 78 lanes and make terminal changes for a dozen other origin-destination pairs.
UP and NS will drop domestic service from the City of Industry terminal outside Los Angeles to Buffalo, N.Y.; as well as from Dallas to Buffalo; Toledo, Ohio; and Taylor, Pa.
In 18 other instances, UP and NS will consolidate domestic service at higher-volume destinations. Traffic from Salt Lake City, Utah, to Bethlehem, Morrisville, and Taylor, Pa., for example, will now use the Norfolk Southern terminal in Harrisburg, Pa.
“In January and February, Union Pacific and Norfolk Southern rationalized small volume lanes to reduce train complexity. At that time, we also designed new high-density blocking that will increase the velocity on our interchange at our major interline gateways. The result of this initiative will be a more fluid and less complex interchange between the two rail carriers in Chicago and Memphis, which will reduce transit times and improve customers’ experience,” UP said in its May 31 service advisory.
“These changes are designed to reduce train plan complexity along key routes, allow for greater operational flexibility, and improve terminal fluidity in key markets,” NS said in its customer advisory.
Separately, NS also is dropping international intermodal service between Detroit and Baltimore.
UP and NS in January and February dropped joint service between 480 origin-destination pairs as they streamlined their intermodal operations as part of a shift toward operating plans based on Precision Scheduled Railroading.
Mr. Christmas: for those who read the Wall St. Journal, a publication most would agree is reasonably objective and soundly vetted, the assertion that all is well in the railway world seems a bit of a stretch. When a customer like J.B. Hunt voices dis-satisfaction with service, people should take notice. In a constantly changing physical and economic environment, the ability of a capital intensive service industry to anticipate where to go without serious mis-step is a challenge. Shrinking to a successful current size may well fall short of tomorrow’s demands. The real test will come during the next sharp recession; especially if accompanied by severe weather-related outages.
All of these prophecies of impending doom are so hilarious to read.
They’re not slacking off on maintenance, or experiencing increases in wrecks, or losing customers, or burdened with passenger service, or unprofitable lines. The industry is just about as strong as it has ever been.
Too many of you put way too much weight on the “hedge fund” strawman argument to be taken seriously.
” The railroads could make MUCH better use of automation. Bring trains from 5 western points to somewhere in the midwest, park them next to each other in a yard, and use an automated system to swap containers. Then send the resulting 5 trains on to 5 eastern destinations. “
With non-intermodal, this is called a “Hump Yard”. Could this also be done with Intermodal? It is so done in Europe.
Why not just close all lines down and say goodbye to all customers. Wouldn’t even need PSR. Just scrap everything in one big payout to Wall Street.
I find it hard to believe that a corporate combination isrequired to effect operational coordination of inter-regional traffic. A joint service should be doable if managements commit to it. It’s been done before and apparently is today in the former Conrail joint service areas.
The real test of PSR will occur when the next really sharp recession hits, especially if accompanied by serious weather-related outages. If the hedge funds pick up their marbles and head for the exits, watch the results. The system as currently constituted is more fragile from an operational standpoint than it has been since the early seventies. Physical or fiscal, or both, stressors have the potential to bring large sections to a grinding halt. If the STB feels the need to issue directed service orders to remedy an outage and the carriers feel they can’t respond, what then? RJ Corman can only do so much. A system without adequate redundancy is a system ripe for disruption, especially if burdened with a choke-point like Chicago
.
I think bigness is a problem when it results in the ability to bend government policy in a self serving direction. That’s indeed a big problem.
In the case of interchange friction though the problem is that the rail network is too *small* to manage frictionless transcontinental interchange under one management and incentive structure (let’s not even mention rate divisions and short hauling) and is therefore balkanized at the Chicago, Memphis, etc gateways.
Trucking networks don’t have THAT problem.
Too big to manage effectively due to inherent structural weakness is too big to succeed. GE proved that point. Papering over the holes with “dividends” borrowed from what should be a capital reserve is begging for grief downstream. Hedge funds pocketing the goodies will unhesitatingly decamp for the exits and likely grease the skids with short-selling. If the system breaks-again-we may see a Conrail II. What kind of mis-begotten monstrosity that would be can only be imagined. If the industry arrives at Conrail II in private hands, the current management will have a lot to answer for.
Herb Wildman I’m not aware that an interchange event shows up on the receiving carrier’s tracking system until it actually happens. So until that happens it’s possible that crews aren’t called let alone available to continue forwarding the interchange block. Same for having the dispatcher begin to line routes for this move. Again I assume that the best track availability dispatching depends on an ahead of time awareness of what’s coming at you. Thus what I call “interchange friction”. Now if everything ran to schedule most of the time this wouldn’t maybe be unsolvable. But I think variance is still much too high to allocate crews or track slots based on the presumed arrival schedule.
Very good point mentioned that I didn’t wanna get into originally because it does touch off certain debates, but I totally agree that having a pair of US transcontinental roads would be a net benefit for traffic flows, especially with PSR’s aggressive blocking strategies at play. Harrison wasn’t a dumb guy at all.
I disagree with the notion that the major intermodal lanes started out as “skinny”. Sure at one point there was only one single ATSF stacker between Chicago and LA, but there was still huge demand for that at the time. There’s a difference between the main core trunk routes and what we now call skinny routes, based on simple human geography. SLC-Scranton will NEVER be a high-volume route.
Also, with respect to Robert’s skepticism on the railroad’s current aim to “grow the business”, I’d argue that most of the major trunk lines and terminals are at or near fluid capacity, especially once maintenance requirements are factored in. One can only really get 70-90 freight trains per day over a double-track mainline and building a third track gives you another 40, but now the average utilization is way down and maintenance costs are way up. Point is, the core network capacity is for the most part now consumed, especially in terminals, leaving little room for volume growth unless the terminals can become better-run, which PSR does intend to do.
Now there is a decent argument that the rationalized yards from PSR would be additional capacity for traffic growth, but these yards are generally being cut with respect to classifying through traffic – and thus really aren’t cutting much if any rote capacity, because the traffic no longer needs to stop there at all. CSX didn’t really lose any manifest capacity by closing the hump at Stanley, OH – it may have actually done the opposite once all of the blocking is factored in.
Finally, the idea that the railroads are letting truckers “eat their lunch” has no merit once you keep in mind the above. Trucks and railroads ultimately compete on price and performance, so there is a natural balance there. Because in most places, there isn’t much unused rail capacity, it’s hard to argue that the railroads are being eaten alive by the trucking industry. Rather, the railroads are going after acquiring and keeping the best traffic mix for their continued financial success, ignoring and sometimes even pushing away traffic which isn’t worth their while. Not all traffic is worthwhile to haul.
Totally agree with what Robert Ash is getting at.
Steel wheel interchange can be time costly because interchange in general is problematic. Thus two truly transcontinental carriers (Harrison’s dream). If you can “block for destination ramp” at the origin ramp (which is totally a “PSR” concept when applied to carload and do whole block swaps en route (or in Chicago if whole block interchange) you can service more lanes with one high volume train AND serve a destination terminal closer to the receiver’s door. And that should be better than a lift remove, dray (in Chicago traffic), lift place.
And my understanding is that dray costs aren’t trivial (particularly when subtractive, think LA-Pittsburgh via Harrisburg) and minimizing that cost is part of the intermodal sweet spot also.
“So in many cases, the low-volume lines just don’t play well into the railroad operating plan – in any commodity.”
Well, that’s obvious. The thing is: today’s high-volume lanes all started as skinny lanes, short and fast trains operating point-to-point, and most likely losing money (or just not making enough). Had railroads adopted such divesting strategy back in the days, intermodal would not have been born.
This absolute focus on build-the-longest-train-ever-and-never-afford-to-run-a-short-train strategy is making railroads unable to start new service. Building traffic up to sizeable blocks requires patience; PSR allows none.
Railroads are just not interested in following the economy, as it evolves and shifts traffic flows.
I did sorta work Gerald McFarlane for a few years in 3PL logistics actually, that had domestic intermodal as well as carload transload business to boot. But as a business data intelligence developer I didn’t really develop and sell or execute service to customers. I’ve actually learned more in forums like this and Fred Frailey’s, from knowledgeable and experienced commenters. But that experience wasn’t devoid of lessons either.
And so you should know that SLC-Scranton is only an example of a principle that just maybe some of these lower (but not zero of course) volume lanes of long enough (per Alex Christmas) might be cost effective enough to service if the cost of the last short segment is competitive in a market where dray capacity might be thin.
And for Alex’s comment. Sure of course I’m aware there’s a nontrivial time and management cost for each lift, for each placement. I posted earlier a recognition that North Baltimore was a failure, and elsewhere about the attractiveness of steel wheel interchange over rubber tire (apart from the reduced platform fragmentation impact of the latter). But as someone who unfortunately never got the (promised) chance to observe ramp ops, you nicely explained why NB couldn’t work, and I appreciated that.
However, in my concept for segregating the last shuttle leg at the high volume ramp if *everything else* is grounded at that destination there’s *no net increase in lifts and zero placements* required if you just leave the N extra containers forwarded to the low volume terminal in the bottom wells where they were (yes slot management required) placed on the train at the origin ramp. Which is how they would be received (single stacked) when the low volume ramp is the origin.
Of course I understand when you really cost out an idea like this in light of the potential business (and don’t forget additional opportunity for – or incrementally less costly – empty triangulation drays when assessing a low volume lane’s potential) it might not net out. It’s an idea, and like any worthy of consideration until proven untenable.
But I’m also very skeptical that anyone is *even trying* to find novel ways to increase the VOLUME in those existing long DISTANCE segments outside of the easy pickings. Easy pickings that btw still don’t get executed well enough from a schedule reliability perspective to net enough money to actually take share away from truckers. Let alone working to get more volume using my possibly stupid and naive concept or anything else. Especially in this short-term-return milk-the-cash-cow customer-comes-second-at-best world we live in
For historical context, a must read is Rush Lovings’ “The Men Who Loved Trains” IUP 2006.
Alex, you bring up some great points. However, the railroads are defaulting too much traffic onto the highways without any thought from any policy maker as to the impact on overall costs to the consumer in highway congestion and environmental impact. As to eliminating particular lanes and much of the yard problems that go with that, particularly in Chicago, is due to the fact we still as a nation do not have a domestic transcontinental railroad. Too, why with intermodal is more time not spent in blocking lanes that overlap the traditional Chicago, St. Louis and Kansas clogging points. One reason that more steel wheel interchange is not done, because it makes, like you have rightly pointed out, not much economic sense. That economic barrier could be breached if we had at least two transcontinental railroads. New shipping lanes could make economic sense. Under the current systems, now the railroads just eliminate the service. Ultimately, not a path of success. Furthermore, if the railroads are pocketing rates of return on investment or operating ratios however one looks at it, is that translating to lower shipping costs for customers. I will admit I don’t have the data to state for sure, but PSR in my opinion is a vehicle for dividend improvement on a continually shrinking infrastructure. With that strategy, the railroads will only grow the business where shippers, do to volume, will not have much choice than choose rail. Growing the general business and providing quality service is now an ancillary need.
Whole lotta never-been-in-logistics folks talking about logistics here. There are several fundamental misunderstandings which have shown up below – let’s try and correct for some. For those of you who think this is just big bad PSR-whatever, there’s a lot less merit to that argument than you think.
First thing, railroads are best at VOLUME and DISTANCE, and trucks are much better suited to the so-called “skinny” traffic lanes. So in many cases, the low-volume lines just don’t play well into the railroad operating plan – in any commodity. Railyards are hugely complex to run – and difficult to run well. Yards are already the source of most operating problems on today’s railroads – and have always been the bottlenecks in the system. In general, simplifying the operating scheme will yield better service because it isn’t asking the yard managers and crews to completely reshuffle every train.
Many of these intermodal lanes require a ton or work to pre-block the containers when they’re originally loaded, which often makes a fairly significant mess, especially if one gets loaded in the wrong spot. CSX’s North Baltimore concept was supposed to solve this, but then you run into terminal ops again. How many of you have actually stood there and watched intermodal terminal ops? Do you know what an IBC is? Stands for inter-box connector – it’s the device used to couple stacked containers together. Going from a fully loaded double-stack train to an empty one and back to stacks takes FOUR passes of the carmen to unlock, then remove, then add-back and finally re-lock the connectors. The cranes are mind-bendingly slow. All of those short video clips of intermodal cranes working in documentaries? They’re almost all sped up. Each of those widespan cranes at North Baltimore, BNSF LPC, etc can do maybe one lift per minute – maybe. Go watch Drayton Blackgrove’s drone video of North Baltimore if you don’t believe me. They just don’t move that fast.
So doing the intra-yard “shuffle” is super time-consuming and complex. Steel-wheel interchange gets even worse. There are literally hundreds of containers which cross Chicagoland each day via “rubber tire” moves to get from one railyard to another. This happens for a number of reasons, again the chief of which is the inability of the railroads to easily classify containers. Once you take the box off the train, you may as well take it straight to another carrier for reloading, in many cases. It probably will even save time, in many cases.
Then consider that with the exception of on-dock ports, nearly all containers end up on trucks for origination or final delivery. This “dray” move is thus generally a requirement no matter how close the railyard is to the final destination. And remember that railroads are great for VOLUME at DISTANCE.
Consider a box from Salt Lake to Detroit via UP and CSX – and let’s say North Baltimore is still an intermodal sort yard, like it used to be. Perhaps UP has enough traffic from SLC for CSX in general via North Baltimore to have a straight cut. If they don’t, well then you’re looking at another shuffle, but if not, the box will still get shuffled in North Baltimore, literally a 3-4 hour drive from Detroit. May as well have the trucker pick it up in North Baltimore and be done with it. Or, as is often the case, just have UP leave it in Chicago, which is only 5-6 hours from Detroit. This is the “new” plan, which eliminates complexity for the railroads at the expense of minimal volume.
You see, the railroads are pretty bad at these “skinny” lanes – it just doesn’t fit their business model and what they’re best equipped to do. The vast majority of shipments are within a reasonable drive from the larger metropolitan terminals, so the railroads have decided to re-focus on volume and price and away from trying to be the “be all, end all” shipper of containers.
UP, NS, CSX, etc are all trading a small fraction of their overall intermodal volume for greatly reduced complexity and costs. Not all traffic is good traffic. Some traffic just ends up getting in the way of the bread and butter VOLUME at DISTANCE.
Also, most intermodal service is NOT high-margin. Some of the UPS/Fedex type stuff is, but a lot of it simply isn’t. The railroads have much less pricing power over it because of the trucking competition, compared to the bread-and-butter unit commodity moves like grain and coal, where the railroads exert much more pricing power.
The railroads are all hugely profitable and intermodal volume, despite the route cuts and lackluster freight demand, is steady. As the article mentions, most of this traffic can simply take alternate routes on the railroad with a longer dray, via larger terminals.
Railroads are a business – their job is to make money. Do not fall into the belief that VOLUME equals PROFIT. The railroads are trying to make the most amount of money doing the least amount of things possible – as with all businesses. Efficiency and thus profit margin are what drives the bottom line.
So, enjoy the trains trackside. But keep in mind that they’re there to earn money, not move as much freight as possible.
Paul Bouzide: under the doctrine of minimalism holding sway today, proposals such as yours probably can’t be tried for lack of facilities, equipment and manpower. Managements marching into the future with eyes firmly glued to a rear-view mirror can’t escape deviation from mediocrity. Apparent short-term profitability at the expense of long term durability is the siren call of the speculator. Exploiters have shoved out the developers who actually knew how to run a business. Resource starvation will eventually take a toll that can’t be ignored. Traffic levels over time will tell the tale, not quarterly reports, which are all too subject to, shall we say, adulteration .
It’s interesting to note the investment of CN in port facilities in Halifax and Quebec City which complement its terminals in Vancouver and Prince Rupert. These aren’t going to prosper on the strength of PSR operations. When fully deployed,the new east coast facilities have the potential to eat the lunch of NS and CSX on european traffic destined for the mid-West. I don’t believe Boston has ever been in the running, but northern N.J. and Norfolk may be in for a rude awakening, as will hoped for development in Baltimore.
It hasn’t happened yet but it’s not beyond possibility that rail-dependent shippers will form regional associations and demand usable blocks of time to run …X cars and locomotives on all that plant freed up by PSR operations. Growth simply can’t be accommodated on the nation’s highways. Track being used at less than 70% of feasible should be ripe for private line use. Contracts specifying liquidated damages for unreasonable delays or denial of service would enforce reasonable terms.
In the meantime, it would behoove the industry to develop equipment and methods to make the old peddler freight a viable proposition for carload lots. It shouldn’t be too hard to design a road/rail vehicle able to quickly deploy and pluck random cars from a consist over a reasonably level surface. Reconstituting REA would be too much to hope for for LCL. The concept worked until the trains became lethally unreliable. Still in use by FedEx and UPS.
Funny, the trucking industry has no problem making money in these lanes. Ironically, they took away the boxcar loads 50 years ago now they are coming back for the trailer and container loads. Great job railroads!
The suits at these railroads do not car how much traffic moves to the highway and long as they can make more money providing phony schedules under PSR for bulk, mediocre, generic service. Thus far the railroads dwindle while the STB fiddles.
Reading most of the comments below makes it seem that no one as ever worked in the intermodal business…I have, I’ll bet over 10+ years ago, but I can tell it’s still the same now as then. It’s actually cost and time prohibitive in some of those low volume lanes, and no matter how much you sell the service or rates it will never attract high volumes…just how much product do you think moves between SLC and Taylor(Scranton), PA. Also, serving the Ohio Valley, Indiana, Michigan and Wisconsin from a Chicago, IL is both a time saver and depending on the destination less expensive as the delivering carrier can a pick up a back haul going Westbound.
Note that the back haul going westbound can either be another intermodal load or it can be a local move between one of those states adjacent to Illinois and going to Chicago environs…that happens more often than you think.
A lot of the canx lanes are’t totally going away. It’s just the RR’s aren’t offering interline service. IMC’s and container owners can still arrange the crosstown connection in Chicago. For instance, UP Sparks to NS ERAIL has already been canx. But I can still build a lane routed SPKS – UP -GLOBL2-TRUK-NS LANDERS – NS ERAIL.
Many of the remaining lanes will be steel wheel interchange instead of a rail-hired drayage interchange.
Here’s maybe another way to serve low volume ramps while maintaining attractive reinvestment margins.
Imagine a high volume intermediate eastern terminal like Harrisburg or Columbus on NS. Instead of block swapping from those to some up to 24 hours later NS train to these low volume destinations, run short 1 crewperson shuttle train turns to these terminals from the high volume terminal. To deal with the platform fragmentation issue, ensure that all boxes for the low volume destination are loaded on the bottom of consecutive wells, stack high volume terminal boxes on top and “filet” off the boxes that get grounded at the high volume ramp. Switch out the car(s) with remaining low volume terminal boxes and depart.
The shuttle turn boomerangs with low volume originating boxes that can be stacked with high volumes before departing on the “big profitable train”.
All of this assumes “attractive reinvestment margins” will lead to capacity capital investments in the high volume line segments and terminals. Which I think we are all rightly skeptical of under the PSR low OR regime. As well as acceptance from the crafts, but since this represents incremental additional work for otherwise PSR-furloughed train crews, maybe it’s not a pipe dream.
I’m wondering if these lanes were at least marginally profitable in the “good old days” before the cloud of psr descended upon both UP and NS. And I’m also wondering if both will redeploy the assets and employees currently used to handle these lanes in an effort to grow more profitable business or if the assets will simply be stored and employees furloughed in an effort to further “juice” the respective OR’s?
Steve Kranish wasn’t this exactly the CSX North Baltimore concept?
It didn’t work. Maybe a failure of execution. Maybe a failure of design throughput. Maybe both. The original design was for unsorted ocean box intermodal direct from the container ship. Less time sensitive and with a huge time savings on preblocking for eastbound trains. But then international got a big chunk taken out of it with the Inland Empire distribution center model, some of which for long haul was replaced with much more time sensitive domestic intermodal.
Whatever the cause 4 day transit times from Memphis to low volume eastern terminals via a North Baltimore shuffle didn’t cut it. I will grant that Memphis-Louisville-Cincinnati-North Baltimore on CSX is a slow and therefore train crew intensive and therefore expensive run. Kinda like NS Memphis-Harrisburg now that I think about it.
See some of Steve Ditmeyer’s non-Trains comments re customer horror stories at the STB hearings. Be careful what you wish for Mr. Railroad; big bad re-regulation may be right around the corner.
This is necessary to stay truck competitive and grow volume on the high density lanes.
On the service front, steel wheel interchange greatly reduces interchange time and not having small blocks for low density terminals reduces block switching time and platform fragmentation (where some wells can’t get double stacked or some platforms on a 3 well car go bare).
On the growth front it’s a truism that railroading is an traffic aggregation business and so margins that lead to spending on capacity are only sufficient at high volumes. And intermodal – particularly time sensitive domestic intermodal – already has lower margins than carload and bulk because of all the handling and moving parts required for door to door service.
The only problem with this scheme is the long drays and availability of dray capacity. And even here not all long drays are equivalently bad. Dallas to Chicago with a dray to Toledo/Detroit is additive. Same for SLC to Harrisburg with a dray to Morrisville/Philly. A dray from Harrisburg to Taylor or Bethlehem is less additive but still not horribly subtractive.