Latest news with #intermodal
Yahoo
a day ago
- Business
- Yahoo
UP-Norfolk Southern Merger Would Control Nearly Half of US Rail Container Traffic
A merger for Union Pacific and Norfolk Southern wouldn't just take a step toward creating a transcontinental railroad—it would bring the lion's share of the industry's intermodal container traffic under one roof. According to data from the Surface Transportation Board's (STB) Rail Service Metrics, 46 percent of intermodal containers shipped on a Class I U.S. railroad in 2024 rode on a Union Pacific or Norfolk Southern railroad car. More from Sourcing Journal CK Hutchison Seeks 'Major' Chinese Investor in $23 Billion Port Sale As Union Pacific and Norfolk Southern Confirm Merger Talks, CSX Won't Rule Out M&A 'Unacceptable': BGMEA Blasts Bangladesh Container Handling Fee Hike After the railroads already confirmed Thursday that they were in 'advanced discussions' about a potential merger, Bloomberg reported on Saturday that a tentative agreement between them could take place as soon as this week. The combination of Union Pacific and Norfolk Southern would usurp the current market share leader, BNSF. That railroad had a 30-percent stranglehold on containers across all rail carloads in 2024. While BNSF had 5.07 million carloads carrying containers last year, Norfolk Southern filled 3.94 million, while Union Pacific had 3.75 million. BNSF would be falling behind on both container market share, and overall carload market share (27 percent for BNSF, 43 percent for the potential merging companies). The surfacing of the UP-NS unification talks and the fight for market share has put BNSF in a spot where its own West-East deal may make the most sense for the company. In the wake of the initial reports of the merger, another report came out tying BNSF to a possible takeover of another railroad, with the company supposedly partnering with Goldman Sachs to prepare for a deal. While Warren Buffett, the chairman of BNSF parent Berkshire Hathaway, shot down the Goldman speculation, that hasn't quelled chatter that CSX may be in the railroad's crosshairs as an acquisition target. CSX carried 2.8 million carloads with containers in them, or nearly 17 percent of total market share in 2024. Combined with BNSF's total, a potential merger would outperform the UP-NS total container market share by a percentage point, at 47 percent. Across all metrics, BNSF and CSX would surpass Union Pacific and Norfolk Southern for total market share across all commodity types, at 44 percent of all carloads. The Union Pacific-Norfolk Southern fusion would lead the way in other major commodities including chemicals (49 percent), metals (54 percent) and motor vehicles and equipment (49 percent). A day after both railroads confirmed the merger talks, the STB launched a merger resources page on its website. Under federal law, rail mergers involving Class I railroads must be formally submitted to the STB for review. The STB's information includes a sample timeline that depicts how a Class I railroad merger application might flow through the regulatory review process. However, as it currently stands, even a tentative agreement between Union Pacific and Norfolk Southern would require more than a year for any final decision was approved. Such a review starts when the railroads notify the board of their intent to merge, with applications filing their application between three and six months after that notice. When accounting for the application's acceptance or rejection, as well as comments on the application decision, recorded filings from interested parties and a possible hearing, a final board decision would be made over a 19- to 22-month period. After BNSF and Canadian National Railway called off their own merger in 2000, rail deals throughout the U.S. stalled out. After the companies axed the plans, the STB adopted the tougher consolidation rules, noting that future M&As would be required to enhance competition and serve the public interest. Only one major merger has materialized in the time since. Canadian Pacific's $31 billion acquisition of Kansas City Southern that formed Canadian Pacific Kansas City (CPKC) was finalized in March 2023, two years after the companies announced plans to merge. This deal was largely able to go through the STB's regulatory process due to the small size of KCS, with the merging companies remaining the smallest of the Class I North American railroads. The combination also had the fewest overlapping routes compared to if KCS merged with another large railroad. With the Trump administration and appointed STB chair Patrick Fuchs holding meetings focused on updating the agency's framework and reducing regulatory barriers, it remains a possibility that the timeline for a regulatory review could shorten. As more questions come into play regarding the possible merger, Norfolk Southern is set to report its second quarter earnings on Tuesday morning. The company recently had a major change at the top in June, indicating another shift in direction less than a year after former CEO Alan Shaw was ousted. Last month, the railroad's board of directors appointing former Delta Air Lines CEO and executive chairman Richard Anderson as the railroad's new independent board chair. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Truckload's diminishing distance
Chart of the Week: Outbound Average Length of Haul – USA SONAR: The average length of haul for truckload tenders in the U.S. fell to 533 miles last week—down approximately 70 miles, or 11%, from the same time last year, according to SONAR's tender data. While the Outbound Average Length of Haul Index (OALOHA) has dipped lower in the past, it has only reached this level during brief periods. Weak overall demand has kept the truckload market from meaningfully rebounding, but the loss of longer-haul freight is compounding that stagnation. Is there any reason to believe this trend will reverse in 2025? The primary driver behind the declining average is the shift of long-haul freight to intermodal, though demand for regional truckload moves has also softened. Freight moving less than 100 miles, however, has remained relatively resilient. Just in case Companies began increasing average lead times on orders in early 2024 as Red Sea attacks disrupted international shipping. While this didn't reach COVID-era levels of service breakdown, the disruptions were enough to cause some inconsistency. As a result, many goods arrived in the U.S. with extra buffer time for domestic movement. Inventory levels have been climbing unevenly over the past year, according to the Logistics Managers' Index (LMI). This follows a strong period of destocking in 2023, driven by collapsing goods demand and over-ordering — a pattern that remains fresh in the minds of importers and may continue to suppress aggressive restocking in the near term. Tariffs and the renewed trade war have amplified the pull-forward effect this year, reinforcing the shift to earlier, bulkier ordering cycles. Intermodal has benefited significantly from longer lead times and accelerated shipping schedules. Last week, international loaded container volumes moving by rail were up 7% year-over-year, while domestic intermodal volumes remained flat. Intermodal is inherently more cost-effective, especially for long-haul moves across the country. With more freight landing at large ports—those best equipped with major rail terminals—the shift to rail has intensified. Notably, intermodal is replacing not just any truckload freight, but some of the most impactful long-haul runs. For example, a Los Angeles to Chicago route takes a truck about four days—capacity that intermodal is increasingly absorbing. Deals getting done A breakthrough trade deal with Japan last week, which includes a 15% tariff rate, suggests the beginnings of trade de-escalation. A significant trade partner — the agreement is a positive signal that some fog is lifting from the uncertain trade environment that defined the first half of the year. At the same time, inventory carrying costs have surged. The LMI's inventory cost component rose above 80 in June — its highest level since early 2022 — making it harder for companies to justify holding excess goods. A calmer trade climate, easing geopolitical risks, and rising holding costs could push shippers back toward just-in-time inventory strategies later this year. While economists and the Fed are forecasting a sluggish finish to 2025, that may not matter much for truckload. With capacity still showing signs of tightening and long-haul demand near a floor, even modest demand shifts could cause a meaningful market reversal. If shippers pivot back to leaner inventories and faster domestic cycles, long-haul trucking could quickly return to relevance. About the Chart of the Week The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on for future reference. SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time. The FreightWaves data science and product teams are releasing new datasets each week and enhancing the client experience. To request a SONAR demo, click here. The post Truckload's diminishing distance appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
5 days ago
- Business
- Yahoo
Union Pacific expands domestic intermodal service
Union Pacific has announced a pair of new domestic intermodal lanes, with new service linking the Pacific Northwest with Chicago as well as between Memphis and Dallas. On Saturday, UP (NYSE: UNP) will launch daily service from Tacoma, Wash., to its Global 4 terminal in Joliet, Ill., outside Chicago. 'This service will be complementary and in addition to the current domestic service from TacSim to Global 2. Service into the heart of the southern Chicago warehouse district offers shorter drays and more cost-effective access to a wide range of the metro and seamless drayage to reach markets beyond Chicago,' UP said in a customer advisory. Service has already begun between UP's terminal in Marion, Ark., across the Mississippi River from Memphis, and the railroad's intermodal terminal in Mesquite, Texas, in the Dallas area. 'We've recently initiated service between Memphis, TN (Marion, AR) and Dallas, TX (Mesquite, TX) to offer a solution to convert over-the-road freight to intermodal. This service is also available seven days per week — streamlining your logistics in the South,' UP said. Subscribe to FreightWaves' Rail e-newsletter and get the latest insights on rail freight right in your Pacific posts record financial results Five takeaways from the State of Freight for July: What earnings and the indices are saying about the market Union Pacific and Norfolk Southern confirm advanced merger talks CSX profits fall on lower revenue, higher costs The post Union Pacific expands domestic intermodal service appeared first on FreightWaves.
Yahoo
7 days ago
- Business
- Yahoo
Railroad operator CSX beats quarterly profit estimates on higher volumes
(Reuters) -CSX reported second-quarter profit above analysts' estimates on Wednesday, driven by improving intermodal volumes. Intermodal shipping, which involves two or more means of transportation for goods and accounted for 14% of its overall revenue in 2024, saw a 2% rise in volume during the quarter. CSX chief executive Joe Hinrichs said on Wednesday that while uncertainty continues to impact select industrial markets, the company remained focused on completing two major infrastructure projects that will "strengthen our position to execute on many profitable growth opportunities ahead." Shares of the Jacksonville, Florida-based company rose 2% in extended trading. The railroad operator is reportedly in discussions to appoint financial advisers as it explores strategic options amid growing speculation of a potential merger with its West Coast peer BNSF Railway, owned by Warren Buffett's Berkshire Hathaway. Meanwhile, according to reports, larger rival Union Pacific is exploring a potential acquisition of Norfolk Southern, a move that could create a $200 billion coast-to-coast rail network and significantly reshape the U.S. freight industry. CSX maintains a fleet of more than 3,500 locomotives and about 51,000 freight cars, according to its website. However, any merger would be subject to approval from the Surface Transportation Board, a regulatory body that oversees railroads. On an adjusted basis, it reported a profit of 44 cents per share, above the analysts' average estimate of 42 cents per share, according to data compiled by LSEG. The company reported revenue of $3.57 billion in the quarter ended June 30, missing estimates of $3.58 billion. The company's operating margin was 35.9% for the quarter, down by 320 basis points from last year.
Reuters
7 days ago
- Business
- Reuters
Railroad operator CSX beats quarterly profit estimates on higher volumes
July 23 (Reuters) - CSX (CSX.O), opens new tab reported second-quarter profit above analysts' estimates on Wednesday, driven by improving intermodal volumes. Intermodal shipping, which involves two or more means of transportation for goods and accounted for 14% of its overall revenue in 2024, saw a 2% rise in volume during the quarter. CSX chief executive Joe Hinrichs said on Wednesday that while uncertainty continues to impact select industrial markets, the company remained focused on completing two major infrastructure projects that will "strengthen our position to execute on many profitable growth opportunities ahead." Shares of the Jacksonville, Florida-based company rose 2% in extended trading. The railroad operator is reportedly in discussions to appoint financial advisers as it explores strategic options amid growing speculation of a potential merger with its West Coast peer BNSF Railway, owned by Warren Buffett's Berkshire Hathaway (BRKa.N), opens new tab. Meanwhile, according to reports, larger rival Union Pacific (UNP.N), opens new tab is exploring a potential acquisition of Norfolk Southern (NSC.N), opens new tab, a move that could create a $200 billion coast-to-coast rail network and significantly reshape the U.S. freight industry. CSX maintains a fleet of more than 3,500 locomotives and about 51,000 freight cars, according to its website. However, any merger would be subject to approval from the Surface Transportation Board, a regulatory body that oversees railroads. On an adjusted basis, it reported a profit of 44 cents per share, above the analysts' average estimate of 42 cents per share, according to data compiled by LSEG. The company reported revenue of $3.57 billion in the quarter ended June 30, missing estimates of $3.58 billion. The company's operating margin was 35.9% for the quarter, down by 320 basis points from last year.
