Intermodal Blog

A New Era for Intermodal

March 3, 2014
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When the Staggers Act became law and railroads were economically deregulated, I interviewed a CEO of one of the Class 1 railroads about rail contracts and other changes brought about by the new law.

In the course of the conversation, he said that his background was actually in marketing. His friends had asked him when he joined the railroad, “Why do you want to work for a railroad, they don’t do any marketing?” In fact, the railroads were notorious for being so slow to change that it was difficult to see any evidence of advancement in the attitude of most railroad senior management.

This rail executive’s view at the time was that things were about to change. He was right, and one of those changes was that his railroad was acquired and merged into another Class 1. But beyond that – there were plenty of mergers occurring at the time as a result of provisions of the Staggers Act – change was slow to come.

Shortly after that, I was talking to Phil Yeager, founder of Hub Group. He had left his job with a railroad because he could not convince them of the value of marketing and selling intermodal service. He decided to put it all on the line and start what we now refer to as an Intermodal Marketing Company.

The rise of Hub Group and others has created a distinct industry segment. His first intermodal move, he admitted, was his own household goods shipment for his relocation to Chicago. One of the more outspoken truckload carriers, J.B. Hunt, showed up at the Intermodal Expo a few years later with his Stetson and his “aw shucks” persona in full form to announce an agreement with the Burlington Northern Santa Fe for the railroad to start handling JB Hunt domestic containers. To say people were shocked is an understatement, but today intermodal dominates the carrier’s revenues.

Through all of this, intermodal was considered a pretty risky move for shippers as well as these pioneers of the mode. Today, much of that risk is gone and rail intermodal is an important part of most supply chains’ transportation mix. Intermodal has proven its value and has enjoyed growth and earned the respect of the railroads. It stands on the threshold of a new era of growth as the challenges mount for long haul truckload. And while a lot of long haul conversions have taken place, regional opportunities are proving intermodal is not just a mode for transcontinental freight moves.

Whether rail intermodal is an origin or destination leg of an international move or strictly a domestic move, it is hard to imagine the U.S. transportation network without it. And as regional drays and short haul rail options increase the use of intermodal in lanes below 500 miles, the mode is clearly on the threshold of a new era. Based on its proven results, this time around, change should come a little faster and easier.

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