That’s become the new normal for the nation’s rail and intermodal operators.
DIFFERENT STRATEGIES
“There are different strategies being used to plan for need based on size and scope of the client, the complexity of their supply chain, and the industry vertical they’re operating in,” observes Todd Davis, senior vice president of sales for intermodal service provider STG Logistics, which generates some $2 billion in revenues annually.
In his discussions with customers, he’s found that “the number-one struggle is forecasting,” driven mostly by uncertain tariff and trade policies, and their effect on trade flows, sourcing strategies, and costs.
“There is a lot of ‘whack a mole’ going on,” Davis observes, likening it to defeating one problem in one area only to have another pop up in a different area. Unlike the tariff situation in the spring, “this one has a lot more moving parts” that shippers have had to contend with, given the multiple tariff levels being applied, at different times, to different countries and commodities.
With all this at hand, “think of the team of supply chain planners inside a company, trying to secure capacity based on one forecast, only to have that forecast change a week later and then a week after that. All that ripples right down to the carrier,” Davis notes.
“We see a lot of start and stop, going through spikes and lulls,” he adds. “How does that influence pricing and costs? [Uncertainty] affects how we plan our network, position capacity, and operate to meet the client’s service needs—which are as exacting today as ever.”
Such a roller coaster of a market also demands resilience and agility, Davis emphasizes. “What we all want is that even keel [of demand] so we can [plan] our service for customers, ensure there’s capacity when and where they need it, and provide that predictability they expect.”
STG is the fourth-largest private intermodal asset owner in the U.S., deploying some 15,000 53-foot intermodal containers and 2,700 trucks and drivers performing drayage services for domestic as well as import/export boxes. It is also a leading LCL (less-than-containerload) consolidator and operates local and regional container freight stations throughout the U.S.
NOT FOR THE FAINT-HEARTED
Maintaining, building, and consistently operating a national rail network is not for the financially faint-hearted. It is perhaps the most capital-intensive of all the surface transportation sectors. In some cases, that means joining forces. Case in point: Union Pacific’s announcement of an $85 billion plan to acquire Norfolk Southern, which would create the first U.S. transcontinental railroad.
The new company would control rail routes across 43 states, connecting approximately 100 ports. The combination of Union Pacific’s western routes and Norfolk Southern’s eastern network would connect over 50,000 miles of track and could potentially yield billions in cost savings.
While some constituencies oppose the deal because, in their view, it would consolidate capacity in a negative way, reduce competition and jobs, put rail safety at risk, and increase costs, proponents argue the merger will improve supply chain efficiency, reliability, and transit times through economies of scale and streamlined operations.
“This merger is a win-win for our customers, our employees, and the American economy,” said a Union Pacific spokesperson. “We’ve spoken to hundreds of customers who are excited about faster and more reliable service, competitive single-line pricing, and end-to-end visibility across a transcontinental network—while protecting good union jobs.”
The spokesperson also cited the benefit of creating “safer, less-congested roadways through the conversion of truck traffic to rails.” The merger awaits the approval of the U.S. Surface Transportation Board.
Then there is the example of the Burlington Northern Santa Fe Railway (BNSF). It has invested over $17 billion in its network over the past five years, and in 2025, will pour in another $3.8 billion.
“We continue to leverage our industry-leading capacity, including the largest intermodal facilities in North America, the only three capable of processing 1 million containers a year,” notes Zak Andersen, BNSF’s chief of staff and vice president of communications. BNSF expanded its key Southern Transcon route, which stretches 2,200 miles between Southern California and Chicago, and has nearly completed the project to double, triple, and quadruple track capacity. On its Northern Transcon route, it has added nearly 100 miles of double track, 12 new and extended sidings, and 1,200 miles of centralized track control. It also is building three new state-of-the-art logistics parks, in Phoenix, Denver, and Barstow, California.
These infrastructure investments are helping BNSF “stay ahead of demand and have the capacity needed to be more truck-like, all while driving significant supply chain savings to cargo shippers,” Andersen notes.
BNSF also in late August announced a new coast-to-coast direct domestic intermodal service product with fellow Class 1 railroad CSX that will bridge the two networks and provide customers with immediate transcontinental offerings. It encompasses intermodal service between Southern California; Charlotte, North Carolina; and Jacksonville, Florida. It’s also launching a new service between Phoenix and Atlanta “aiming to convert OTR [over-the-road] freight to rail,” the company said. Also coming online is a new direct international intermodal service that connects the Port of New York & New Jersey and Norfolk, Virginia, with Kansas City. The company expects to announce additional service enhancements soon.
All the initiatives are intended to help customers navigate a challenging market by providing more reliable, available, and consistent intermodal rail service across the board, Andersen says. “We have seen and heard a wide variety of strategies from our customers this year,” as they work through a laundry list of tariff-related and other disruptions to their business and their freight flows. Yet BNSF has persevered with a singular goal: offering solutions to customers, he says. “The capacity we have invested in allows us to flex up and deliver when our customers need us the most.”
The market for intra-North America north-south service has seen change as well. In the two years since the Canadian Pacific and Kansas City Southern railroads combined into a single company under the CPKC name, it has become “the first and only single-line railway connecting Canada, the United States, and Mexico, positioning itself as a key player in North American rail transportation,” the company says.
Among its offerings are its Mexico Midwest Express service between Chicago and Mexico, “presenting a competitive alternative to trucking,” the company says. In cooperation with CSX, CPKC also has opened “an east-west Class 1 corridor” providing Southern U.S. shippers with expedited transit times, increased capacity, and more sustainable freight options between Canada, the U.S., and Mexico. It continues to make significant investments in its network, among them, completing the second span of the Patrick J. Ottensmeyer International Railway Bridge in Laredo, Texas, which more than doubles the previous capacity of this critical trade gateway. Lastly, the company is taking delivery this year of 100 new Tier 1 locomotives to improve fleet reliability and maintain service.
MANAGING THE EBBS AND FLOWS
Anne Reinke, chief executive officer of the trade group the Intermodal Association of North America, believes the industry has done a good job helping shippers manage the ebbs and flows of freight so far this year. On the one hand, there was the “air pocket” of lackluster freight demand that ensued shortly after the initial China tariffs were imposed in March. On the other, there were some bright spots when those tariffs were eased.
“It was like the tale of two cities,” she recalls. As the surge of ocean container freight made its way across the Pacific in the summer, ports, rail lines, and intermodal operators prepared ahead of time. “Excess capacity was there to help with the surges [in July and August],” she notes. “We didn’t have the congestion or equipment shortage issues like during the pandemic. The industry was able to preemptively move assets in place ahead of time and stave off any of those issues.”
Reinke believes most shippers are satisfied with the amount of intermodal capacity in the market today as well as with service levels. “Compared to the pandemic, service levels have dramatically improved,” she notes. “And that makes us excited to get our message out about the great opportunities available with intermodal. We can advertise it as on par with over-the-road trucking.”
Reinke also sees more opportunity coming intermodal’s way given the toll the extended freight downturn has taken on the trucking community. Rising costs and new regulatory burdens also are forcing more, mostly smaller, operators to park their rigs.
“There are fewer OTR operators who want the really long runs versus those who want the middle and short routes,” Reinke says. “Those [shorter routes] are the best use of OTR resources, in our view.” Longer runs are where intermodal can be very competitive service- and cost-wise, she notes. And while “we love our trucks because we partner with them on the drayage side, we want to achieve the highest and best use for each mode,” Reinke says. Longer-haul intermodal has advantages in cargo security, theft prevention, asset and fuel optimization, and environmental sustainability, she adds.
GETTING CREATIVE
Michael Baumgardt, senior vice president of intermodal for trucking and logistics services giant Schneider, oversees a complex operation that deploys some 27,000 containers and 23,900 chassis in a dedicated, integrated intermodal network providing end-to-end service. Its principal rail service providers are Union Pacific in the Western U.S., CSX in the East, and CPKC for north-south Mexico-U.S. transit. Those networks are backed by Schneider’s extensive asset-based and company driver-staffed over-the-road truckload resources, which are among the largest in the U.S.
Those resources, Baumgardt believes, allow Schneider a level of flexibility and control that is unmatched in the market, mixing and matching services and assets “that can solve virtually every problem the customer brings to us.
“Our scale and unique position as a fully asset-based provider enables us to get pretty creative,” he says, adding “a lot of our customers are taking advantage of that optionality. So if they have something that needs to speed up or slow down, we have reliable solutions so there is no interruption in their supply chain.”
Like most providers, Schneider has witnessed a constantly adjusting market this year as “some shippers built up inventories [early] and [others] decided to stay on the sidelines and wait and see,” he notes. “It’s fair to say tariffs did have an impact on intermodal volumes.”
What’s top of the list with customers? “It starts with service. Rail performance has been really strong and consistent for some time.” Next, he says, is visibility “and how we can help them find ways to offset higher costs from tariffs and other factors.” Last is resilience and agility, being able to quickly solve problems as they arise. That, Baumgardt emphasizes, is where Schneider’s portfolio is particularly capable of creating flexible solutions as customer supply chains shift, evolve, and adapt.
“The old perception that you had to trade off inconsistent or [slower] service from intermodal [versus truck] is being taken off the table,” he says. Going forward, “we see really big opportunities for truckload conversion [to intermodal],” particularly in longer-haul lanes.
FUELING THE GROWTH ENGINE
J.B. Hunt is the nation’s largest intermodal service provider, known for its extensive network and long relationship with its core rail service provider, BNSF Railway. J.B. Hunt controls a fleet of more than 125,000 company-owned intermodal containers and a drayage fleet of around 6,300 trucks. The company completed some 2.1 million loads in 2024 and this year, celebrated its 35th year providing intermodal service. It plans to expand its intermodal container fleet to as many as 150,000 boxes by 2027.
“Intermodal has been a growth engine for us” and one that the company continues to invest in, says Spencer Frazier, J.B. Hunt’s executive vice president of sales and marketing. And despite an up-and-down year in 2024, the market is relatively stable, capacity is available, and service has been strong, all of which is enticing more shippers into using the mode. “The network is in a great place; our container and driver capacity, power, and ability to manage flow and meet demand is as good as it has ever been,” he notes. “Now it’s about what do our customers need.”
As shippers pulled forward orders earlier in the year, “we did see [an uptick] in international container volumes, which resulted in a surge in demand ahead of the normal summer spike in [inland-point intermodal] traffic,” observes Jon Gabriel, group vice president of consumer products at BNSF. Yet by preplanning for the surge and forward-positioning equipment, “we handled more volume on the BNSF network [during the surge] than in the pandemic’s supply chain crisis,” he notes. “We had better throughput and productivity at the docks, the ports stayed clean and fluid, [and] port dwell remained at low levels.” He adds that BNSF early on forward-posted 100 extra locomotives to Southern California and also bolstered resources in Chicago and other key sites.
Both Frazier and Gabriel cited the benefits of their Quantum product, a premium, high-service intermodal offering created jointly by BNSF and J.B. Hunt that targets service-sensitive highway freight. It uses dynamic mode selection, proactive planning, and a dedicated, co-located joint team to resolve disruptions before they impact the customer. Shippers have been attracted to the service for its consistency, on-time performance, and cost and sustainability benefits, the two companies say.
“Where we have seen the most improvement has been in our ability to flex up with customer demand,” Gabriel notes. “If there is a shock or some type of disruption in the supply chain, we’re resilient and can flex up to meet that.”
One interesting development on the technology front has been BNSF’s efforts to improve productivity and throughput at its Alliance, Texas, facility, which, at 500 acres with capacity for 8,000 containers, is the largest inland rail facility in North America.
By stitching together data from constant scanning of drones, fixed cameras, and other tracking devices with sophisticated software, a real-time view of the yard and its container inventory is produced. Drivers on their smartphones get specific turn-by-turn instructions on where in the yard to pick up a container, and then the shortest and fastest route to the container’s loading position on the outbound train—which can be a mile long. “We’ve shaved off 25 miles of travel loading per train,” Gabriel says. “Time is money. We’re loading trains about an hour faster. We can depart the trains earlier and get the next one in quicker.”
Gabriel estimates that, when scaled across the BNSF network, this efficiency gain has created some 500,000 containers’ worth of new capacity for the railway and its partners—all of which are poised to take advantage of even greater opportunity to grow market share. “We think there are another 7 million to 11 million [OTR truckload] shipments that can come off the highway and run intermodal,” he concludes.
