Western Railroad Discussion > Hub Group switches traffic-Update

As per the Journal of Commerce article on their website, BNSF stated they didnt know why Hub Group made the change all their service levels are at 90 per cent or better.

It appears to me the UP went to Hub with a cost saving deal for three years and swooped the account as Hub Group denies requesting any rate reduction. It is pretty obvious the BNSF didnt have any counter bid since they stated they didnt know why Hub Group made the move.

Dale Smith

mearsksealand Wrote:
-------------------------------------------------------
> As per the Journal of Commerce article on their
> website, BNSF stated they didnt know why Hub Group
> made the change all their service levels are at 90
> per cent or better.
>
> It appears to me the UP went to Hub with a cost
> saving deal for three years and swooped the
> account as Hub Group denies requesting any rate
> reduction. It is pretty obvious the BNSF didnt
> have any counter bid since they stated they didnt
> know why Hub Group made the move.
>

Dale,

Your previous thread answered the question very well. UP offered Hub a deal with equipment provided, whereas BNSF did not offer them equipment. That is a huge difference. I am sure Hub and the other IMCs that invested in equipment are feeling very big pain during this downturn. BNSF's service is excellent, but during the downturn UP's service has gotten very good. BNSF's competitive advantage has been minimized and is now trumped by the equipment difference.

The RRs were shrewd to push the equipment ownership risk onto the IMCs during the up part of the economic cycle. Now, during the down part of the cycle, with excess equipment everywhere, UP has taken the initiative and wrested the Hub traffic away from BNSF. Did the article say how many years the deal applies for, or if there is a volume cap for which equipment will be provided? I'm curious to see how much risk UP is taking.

Best regards,

Rob L.

This corresponds with UP offering additional days of service in several intermodel lanes. Additionally UP seems to have plans to re-enter the Oakland-Texas market which was largely given up to BNSF several years ago. And you have to wonder if this might have something to do with the tunnel work on Donner...


AM

Rob L.

It is a three year agreement.

Dale Smith

> >
>
> Dale,
>
> Your previous thread answered the question very
> well. UP offered Hub a deal with equipment
> provided, whereas BNSF did not offer them
> equipment. That is a huge difference. I am sure
> Hub and the other IMCs that invested in equipment
> are feeling very big pain during this downturn.
> BNSF's service is excellent, but during the
> downturn UP's service has gotten very good. BNSF's
> competitive advantage has been minimized and is
> now trumped by the equipment difference.
>
> The RRs were shrewd to push the equipment
> ownership risk onto the IMCs during the up part of
> the economic cycle. Now, during the down part of
> the cycle, with excess equipment everywhere, UP
> has taken the initiative and wrested the Hub
> traffic away from BNSF. Did the article say how
> many years the deal applies for, or if there is a
> volume cap for which equipment will be provided?
> I'm curious to see how much risk UP is taking.
>
> Best regards,
>
> Rob L.


Rob L is exactly correct, my point is this deal has been going on for 2+ years after UP started buying new equipment for the EMP pool. I worked for Hub G in 04 and 05 and there was very little business on UP at that time.

Interesting to note that most top management for BNSF are former truckers, and the best BNSF domestic intermodal customers are trucking companies with their own equipment. The BNSF new logo even looks like a trucker. I have been in the freight business for 38 years and the truckload truckers like Hunt, Schneider, Swift, Knight, Interstate Dist, Werner, etc. are the easiest carriers to do business with and offer the best service.

gmojim

One more item on this subject. As was mentioned, UP service has improved with the slowdown in rail volumes. I work for an IMC and about 2 hours ago , our corporate intermodal chief mentioned that the UP of today does not look like the old UP of just 2 years ago. Service is much better.
Boomer would be happy to know the K-MNOA is flying out to Oakland. I have loads on the train most days, and 2 days after departure from Marion AR, the train is west of Cheyenne WY. The train crosses the Mississippi River 2 times between Marion AR and Oakland, while running up to St Louis from Memphis. That is very good time.
UP has announced this week several lanes that will have new schedule improvements with faster transit.

Over at BNSF, we have loads on the Z-WSPLAC9 and such trains that are running from Chicago to LA in 45 hours.

gmojim

gmojim Wrote:
-------------------------------------------------------
> UP has announced this week several lanes that will
> have new schedule improvements with faster
> transit.
>

Would any of these include the ZBRLC? Some changes in crewing the train just took place, which should eliminate the several hour wait at Stockton/Lathrop that had become normal.

Also, we have a new train running: the ZLTLC & ZLCLT between LA & Lathrop.

When is this all supposed to take place??

ble692 Wrote:
-------------------------------------------------------
> gmojim Wrote:
> --------------------------------------------------
> -----
> > UP has announced this week several lanes that
> will
> > have new schedule improvements with faster
> > transit.
> >
>
> Would any of these include the ZBRLC? Some changes
> in crewing the train just took place, which should
> eliminate the several hour wait at
> Stockton/Lathrop that had become normal.
>
> Also, we have a new train running: the ZLTLC &
> ZLCLT between LA & Lathrop.

Yes, service from LA to Seattle goes from 4 days to 6 days a week and 1 day faster transit.
Southbound service also improved.

gmojim

washbryan schedule to take place next week

Dale Smith

mearsksealand Wrote:
-------------------------------------------------------
> washbryan schedule to take place next week
>
> Dale Smith


Thanks Dale... Traffic must be picking up anyway on our intermodal trains, The last couple weeks the ZSEMN and the KPDG1 have been fairly large trains.. So what I am gathering from this then is the I-5 traffic should pick up but the Portland/Chicago traffic should stay the same? Also the ZSEMN to Marion Ar. traffic should pick up also??

gmojim Wrote:
>
> Yes, service from LA to Seattle goes from 4 days
> to 6 days a week and 1 day faster transit.
> Southbound service also improved.
>
> gmojim

1 day faster on the I-5 corridor is a VERY big deal. That should attract more business if the gains can be held.

washbryan

This is traffic primarily out of California to the eastern points of US

Dale Smith

gmojim Wrote:

> this deal has been going on for 2+ years after UP started
> buying new equipment for the EMP pool.

I believe it was 2 years ago when HUB bought (or took over lease) of the
STAX containers. (STAX was a joint UP/CSX program similar to EMP). The
containers were re-stenciled UPHU for HUB and they operated on UP and NS
routes only. The other HUB boxes are HUBU and HIGU? The HUBU boxes were
originally BNXU before BNSF decided they didn't want to own boxes any more.
I believe that all of the HUB boxes that run on BNSF lines have the "HUNT style"
(triangle shape) top pick locks and that the chassis have a different type of
lock. If HUB wants to use these boxes on UP they may have chassis issues.

1moose Wrote:
-------------------------------------------------------
> gmojim Wrote:
>
> > this deal has been going on for 2+ years after
> UP started
> > buying new equipment for the EMP pool.
>
> I believe it was 2 years ago when HUB bought (or
> took over lease) of the
> STAX containers. (STAX was a joint UP/CSX program
> similar to EMP). The
> containers were re-stenciled UPHU for HUB and they
> operated on UP and NS
> routes only. The other HUB boxes are HUBU and
> HIGU? The HUBU boxes were
> originally BNXU before BNSF decided they didn't
> want to own boxes any more.
> I believe that all of the HUB boxes that run on
> BNSF lines have the "HUNT style"
> (triangle shape) top pick locks and that the
> chassis have a different type of
> lock. If HUB wants to use these boxes on UP they
> may have chassis issues.


You are correct. The red Hub Group containers are HGIU and leased or owned by Hub and run BNSF. Will be interesting to see if any end up on UP with this deal.

gmojim

UP and SP had/have nasty little habits of making promises, getting business, doing a great job for a while (as in the Pacific Coast Express - ask Don May or Gordon Trucking) or not at all (UPS and the Bullet Train...). They don't weem to have a great history of making an overall commitment with follow-through on a system-wide quality program: ie: make service promises, get the traffic, keep delivering to the existing customer base while you get NEW traffic. So will a lot of new Hub volume result in service deterioration for other shippers? BNSF has seemed to do a good job of maintaining overall service at high levels while adding new shippers or expanding volumes for existing ones, up until the collapse of volumes this year. Having looked at UP's performance metrics for the past 6 mos or so, they are improving but that may be lot more a function of not a lot of traffic than a commitment to quality.

BruceDGillings Wrote:
-------------------------------------------------------
> UP and SP had/have nasty little habits of making
> promises, getting business, doing a great job for
> a while (as in the Pacific Coast Express - ask Don
> May or Gordon Trucking) or not at all (UPS and the
> Bullet Train...). They don't weem to have a great
> history of making an overall commitment with
> follow-through on a system-wide quality program:
> ie: make service promises, get the traffic, keep
> delivering to the existing customer base while you
> get NEW traffic. So will a lot of new Hub volume
> result in service deterioration for other
> shippers? BNSF has seemed to do a good job of
> maintaining overall service at high levels while
> adding new shippers or expanding volumes for
> existing ones, up until the collapse of volumes
> this year. Having looked at UP's performance
> metrics for the past 6 mos or so, they are
> improving but that may be lot more a function of
> not a lot of traffic than a commitment to quality.

Bruce;
You are correct, it is very easy to give faster service today with the 25% reduction in total traffic and less trains on the track.

gmojim

1moose Wrote:
-------------------------------------------------------
> gmojim Wrote:
>
> > this deal has been going on for 2+ years after
> UP started
> > buying new equipment for the EMP pool.
>
> I believe it was 2 years ago when HUB bought (or
> took over lease) of the
> STAX containers. (STAX was a joint UP/CSX program
> similar to EMP). The
> containers were re-stenciled UPHU for HUB and they
> operated on UP and NS
> routes only.

1moose;
Forgot to mention this earlier; Not sure that any old STAX containers are assigned to Hub G.
All the Hub containers I have seen look to be old EMP containers or new EMP containers, there could be some old STAX, not sure. All the Hub containers on UP that are white or green are EMP pool assigned to Hub, Hub does not own or lease them, they are provided from the UP EMP pool. That is the big deal where Hub decided to go to UP when UP said they would provide the assigned equipment for Hub.
Hub owns or leases the red HGIU's that have run on BNSF in the past.

gmojim

gmojim Wrote:
-------------------------------------------------------

> 1moose;
> Forgot to mention this earlier; Not sure that any
> old STAX containers are assigned to Hub G.
> All the Hub containers I have seen look to be old
> EMP containers or new EMP containers, there could
> be some old STAX, not sure. All the Hub
> containers on UP that are white or green are EMP
> pool assigned to Hub, Hub does not own or lease
> them, they are provided from the UP EMP pool.
> That is the big deal where Hub decided to go to UP
> when UP said they would provide the assigned
> equipment for Hub.
> Hub owns or leases the red HGIU's that have run on
> BNSF in the past.
>
> gmojim

I believe that all of the STAX boxes that were UP owned
became UPHU's. The STAX boxes that were owned by CSX still
are and have been re-stenciled CSXU. Look at the HUB logo
stickers on these boxes, they are in the same location and
same size to cover up that STAX logos and are in the wrong
location to cover old EMP logos. I believe you are also
correct in that HUB also has some former EMP boxes stenciled
as UPHU. HUB also got some green UPHU's last year at the same
time that the green EMP's were made. Regardless of what they
used to be or what the ownership/lease deal is, they are for
the exclusive use of HUB and the deal likely has a different
per diem schedule than "regular" EMP boxes. I believe Deboer
Trucking also has some boxes but I do not recall if they are
former NACS or EMP or STAX.

1moose;
Correct, all the assigned UP pool Hub units have a different
per diem schedule than "regular" EMP boxes. Just like the HUBU's
were part of BNSF NACS pool and had the special per diem.

gmojim