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Western Railroad Discussion > UP intermodal gains since PSR took effect


Date: 01/13/22 09:33
UP intermodal gains since PSR took effect
Author: memphisfreight

Since PSR was announced on UP they have gained the following on the intermodal side..

Hyundai contract 
SWIFT/Knight contract  (saw a Sunset train yesterday and counted about 90 Swift boxes on it)
Increased Schneider National on many lanes (before PSR Schneider was not shipping on UP to any noticeable volume)
APL Logistics 
XPO / Amazon business 
new service out of Minneapolis to the west coast

From what I can tell they haven't lost any of their existing large contracts.  They are still a major hauler of UPS on almost all lanes with even some volume between City of Industry and Chicago. LIkewise for Fed Ex.  Many UP trains are now hauling Walmart trailers and containers in significant numbers.      

Some of this new business appears to have been taken at the expense of BNSF.   I'm sure the definition of "PSR" is seen differently from the rail perspective to the corporate office, but from just the numbers it appears to have been effective in this arena.  



Date: 01/13/22 10:25
Re: UP intermodal gains since PSR took effect
Author: Zephyr

They lost a huge chunk of volume from former APL, now CMA/CGM on the International side.

The Knight/Swift contract on BNSF had expired prior to PSR.  Made very good sense for them to leverage a portion of their volume against the BNSF.



Date: 01/13/22 12:46
Re: UP intermodal gains since PSR took effect
Author: FiestaFoamer

Yes, the APL / CMA CGM loss is pretty substantial, and does cut into the gains made elsewhere. 

But your point is an interesting one. I even occasionally see some Maersk containers going east on ZBRG2 (I think the part of it that gets set out at North Platte for points southeast). -- something else that, to my knowledge, didn't really happen before PSR.



Date: 01/13/22 13:58
Re: UP intermodal gains since PSR took effect
Author: wyeth

memphisfreight Wrote:
-------------------------------------------------------
> Since PSR was announced on UP they have gained the
> following on the intermodal side..
>
> Hyundai contract 
Marine/International container contracts are traded frequently between the major railroads because they are mostly based on price (whom ever has the lowest bid gets the contract).  Back in the "SP days", SP had many of these contracts out of Southern California, maybe some of the reason being their proximity to the ports and southern route main lines, but there was also a lot of speculation that SP would underbid these contracts to get the business.  Now maybe UP can say "with the huge amounts of money we're saving with PSR, we can underbid these contracts now"; however BNSF operating ratio is pretty close to that of UP, so that's not likely the case.  A more probable explanation is that UP bid lower than BNSF (in which this actually might contradict PSR as PSR says the railroads are suppose to only focus on high margin business).

> SWIFT/Knight contract 
Some have noticed and said that basically, the Swift/Knight service network fits in better with UP's service network (Southern California, sunbelt states, Rocky Mtn states), this might have a lot to do with them going over to UP.  At least as far as I can tell, Swift often used the more "second" class of service on BNSF, their "Q" train network, that might also fit in well with UP's service networks (ie lower prices).

> APL Logistics 
APL  as long been a UP customer.

> XPO / Amazon business 
Amazon is a heavy BNSF user as well.

> new service out of Minneapolis to the west coast
BNSF service to the PNW is far more competitive (direct access to BNSF "Z" train network).  Maybe with UP trying to tap into Twin Cities - California intermodal business, BNSF may do the same (BNSF could place it on the ZSTPCHC train, then transfer to a California bound Z-train at Chicago), but I've got the feeling that BNSF doesn't see much here so resources are better spent elsewhere (BNSF Twin Cities intermodal terminal is extremely busy already and has no additional capacity) but who knows, maybe they will)...

> From what I can tell they haven't lost any of
> their existing large contracts.  They are still a
> major hauler of UPS on almost all lanes with even
> some volume between City of Industry and Chicago.
> LIkewise for Fed Ex.  Many UP trains are now
> hauling Walmart trailers and containers in
> significant numbers.      
BNSF is by far the much larger intermodal partner with UPS (UP gets UPS mostly only in corridors where it has a mileage advantage over BNSF, or BNSF doesn't serve that market), and FedEx (FedEx Freight and FedEx Ground) is also a VERY heavy user of BNSF intermodal service.

So in summary, it appears that much of UP's intermodal gains have been the usual exchange of marine contracts between the carriers; and on the domestic side, either new volume users of intermodal (XPO, Walmart, Amazon) or where UP has a competitive advantage.  I honestly do not think that "PSR" has anything to do with it (and I'm certainly not a huge BNSF fan).  In my opinion, PSR will more likely show to have negative impacts to UP's intermodal business (and the rest of the Class 1 railroads) due to bad service issues - this will likely become more visual in the future when the economy slows up and there becomes more slack in the supply chain again (ie BNSF and the truckers get more capacity back and they all start fighting over the leftover rail business again).




Edited 1 time(s). Last edit at 01/13/22 13:58 by wyeth.



Date: 01/13/22 14:05
Re: UP intermodal gains since PSR took effect
Author: memphisfreight

UP's Schneider National gains are the direct result of that coming off BNSF.  3 years ago UP hauled virtually no Schneider whatsoever.   That is all not brand new biz.  

"APL Logistics" I believe is a domestic service using 53 foot containers.  I have never seen any on UP trains up until the past few weeks. 

The Swift business going to UP now is substantial and formerly rode on BNSF.   

I understand the ebbs and flows in contracts but I think all of this is a net gain for UP. They predicted they would be able to "go after" traffic if they implemented PSR.  That appears to be the case.    

   


  



Date: 01/13/22 14:22
Re: UP intermodal gains since PSR took effect
Author: jgilmore

Yeah but how much of UP's supposed gains came off the street, esp. due to PSR? That would be much more interesting and telling to know...

JG



Date: 01/13/22 14:28
Re: UP intermodal gains since PSR took effect
Author: callum_out

You look at that new FedEx ground facility in KIngman and it darn sure it's going on some UP site in a
similar setting.

Out 



Date: 01/13/22 14:59
Re: UP intermodal gains since PSR took effect
Author: Lackawanna484

jgilmore Wrote:
-------------------------------------------------------
> Yeah but how much of UP's supposed gains came off
> the street, esp. due to PSR? That would be much
> more interesting and telling to know...
>
> JG

Great question.

Of late, I've seen a lot more trailers on UP, esp FedEx, than I've seen before.

Posted from Android



Date: 01/13/22 17:36
Re: UP intermodal gains since PSR took effect
Author: tomstp

There has been a lot of trailer traffic on UP for some time on the T&P route.



Date: 01/13/22 20:04
Re: UP intermodal gains since PSR took effect
Author: memphisfreight

Word around here a few months ago is that BNSF decided not to handle trailer traffic anymore at their Memphis hub, focusing on containers, and some of that trailer biz went to UP (Total Transportation, Marten and some Fed Ex).    So if that's the case it's not the same, but at least UP was open to it.   BNSF seems to be successful at getting truckers to buy container fleets, have noticed R+L, GO and others lately.  



Date: 01/13/22 22:48
Re: UP intermodal gains since PSR took effect
Author: coach

Meanwhile, the money is in carload business, which should be a big focus for the RR's---we've all heard the stories of intermodal being "marginal".  Carload needs equal consideration from the RR's, and I hope the government steps and forces the issue.



Date: 01/14/22 08:34
Re: UP intermodal gains since PSR took effect
Author: ntharalson

There are several interesitng points here I would like to address.  First:  SP getting the business by underbidding everyone.  What this overlooks is that SP's service was so bad, Santa Fe picked off the contracts one by one.  This point is made in the update Santa Fe History book by Frailey (sp).  Second:  BNSF has already started a St. Paul to west coast intermodal service over the Southern transcon. This train runs via Galesburg.  Lastly, all this talk about service lanes makes speculation on who might bid for the Meridian Speedway of the CP/KCS merger even more interesting.  IF BNSF gets it, they would become immediately competitive with UP into the southeast.  And the point about BNSF abandoning trailer traffic to Memphis is interesting because that seems to be the only place they're doing that.  And I have seen a Yellow/Roadway box on an all container train in Missouri.  One wonders if the truck driver shortage is driving companies to use more containers.  

Nick Tharalson,
Marion, IA



Edited 1 time(s). Last edit at 01/14/22 08:36 by ntharalson.



Date: 01/14/22 09:59
Re: UP intermodal gains since PSR took effect
Author: memphisfreight

ntharalson Wrote:
-------------------------------------------------------
.....  Lastly, all this talk about
> service lanes makes speculation on who might bid
> for the Meridian Speedway of the CP/KCS merger
> even more interesting.  IF BNSF gets it, they
> would become immediately competitive with UP into
> the southeast.....  

> Nick Tharalson,
> Marion, IA

Interestingly enough, NS stopped servicing trailers on this lane a few years ago, at least to UP.  The ZAILC/ZLCAI trains used to carry a dozen or so trailers on peak days.   So if BNSF gets rghts to Shreveport wonder if NS would hold onto that restriction?   



Date: 01/14/22 16:01
Re: UP intermodal gains since PSR took effect
Author: 57A26

One could argue that PSR keeps them from developing more intermodal business.  They had a chance to add some IM business out of Cedar Rapids IA (Beverly).  A couple of the cereal companies there approached the railroad about using IM.  Admittedly modest at first, it might've had the potential to grow.  Even that modest beginning would've netted them $6 million a year with minimal investment and no additional trains or jobs needed.  

Local management was trying to develope this.  (Just as over the last 10 or so years local managers at varioous locations have tried to develope business that would've netted between $5 and $10 million a year.)  Once Omaha found out about it, they shot it down.  Supposedly with the locals being told to "mind their own business."

Much of that unwanted business could've been handled with the existing level of work force and trains.  Reportdly, one grain shuttle move on a one train a day branch was nixed because the extra work event (picking up/setting out a block of covered hoppers) might lead to an employee having an injury. 



Date: 01/14/22 17:13
Re: UP intermodal gains since PSR took effect
Author: Lackawanna484

"hustling for business" is a lost art in many industries

unfortunately



Date: 01/15/22 15:19
Re: UP intermodal gains since PSR took effect
Author: pbouzide

coach Wrote:
-------------------------------------------------------
> Meanwhile, the money is in carload business, which
> should be a big focus for the RR's---we've all
> heard the stories of intermodal being "marginal".
>  Carload needs equal consideration from the RR's,
> and I hope the government steps and forces the
> issue.

I think the capital spend per revenue carload (industry spurs, running track, signaling rework) and the operating cost per revenue carload really is too high to make business sense for the C1s. Apart from large volume shippers or larger transload/storage points. 

I think the economics favors short lines, especially with continuing subsidy for getting to 286K infrastructure and PTC when needed. That or expanding the Conrail Shared Assets concept in more metros.

On that latter point, can you even imagine how contentious that would be in a place like greater Houston though? CPKC would love it. UP would fight it with every fiber. And BNSF would probably net gain, but I'm not sure what they get on their own trackage plus the Port Terminal compared to UP. 



Date: 01/16/22 08:57
Re: UP intermodal gains since PSR took effect
Author: ns1000

The Class 1s don't WANT the business.

And in many cases, they have a "monopoly" and they KNOW it (i.e. charging more for poor service...I could think of some other words to use).

Posted from Android



Date: 01/19/22 08:56
Re: UP intermodal gains since PSR took effect
Author: deefrank87

And now they have the Schneider contract so what's really going on over bnsf?

Posted from Android



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