Western Railroad Discussion > New UMAX pool on UP and CSX will be UMXU containers

A futher update on the UMAX thread posted below;
The new pool UMAX containers will be old CSXU and PACU containers that are remarked as UMXU containers. UP will use the old Pacer PACU for this new joint CSX pool. This UMAX pool will be very similar to the UP-NS joint EMP pool that has operated for years.
This would explain the UP purchase of the old Pacer Stacktrain equipment.

Not really new traffic with this new pool, just an easier way of doing business for customers that will not have to use interline UP - CSX service as in the past.

UP is buying and maintaining new business by supplying equipment to customers. BNSF goes in the opposite direction and supplies no equipment to intermodal customers.

gmojim

Let’s be clear about what UMAX is. UMAX is UP’s latest effort in controlling big box intermodal rates.
A few months ago, UP “renegotiated” (bought out) their contract with Pacer. This UMAX deal is a similar “renegotiation” (buy out) of the UP contract with CSX Intermodal (CSXI). The difference is the price UP paid; Pacer was cheap because of their financial situation, whereas CSX drove a hard bargain.
The business plan that both Pacer and CSXI had with UP was that of a middleman. Pacer and CSXI dealt with the challenges of box ownership and management and they paid UP a flat fee to move these boxes on UP.
Last year when Pacer was still around, shippers had 3 box choices on the UP railroad, PACU, CSXU and EMPU. EMPU prices were set by UP and NS directly. Pacer and CSXI set the price the shipper paid on their boxes and paid UP a flat fee to move the box, making a profit on the difference. These two middlemen competed with UP for the same traffic and everyone ran on UP so their existence also kept the rates down. UP saw this as a bad situation. It is one thing to compete with another railroad but quite another to compete with a middleman that is moving the traffic on your railroad. To add insult to injury, these two contracts were negotiated before fuel surcharges were even thought of. It is widely suspected in intermodal circles that Pacer and CSXI did not pay UP a fuel surcharge. This was a tremendous windfall (currently railroad intermodal fuel surcharges are about 20%).
Now UP will have greater control in pricing of all big boxes moving on their railroad.

On the horizon, look for Buffet Northern Santa Fe to renegotiate (buy out) the contract with JB Hunt.

1moose exactly correct on the UP deals.

gmojim