Dog Days on the Desert

Posted by Fred Frailey
on Monday, June 15, 2009

Mobile Train            I’m just back from a week of full immersion along part of the second-busiest rail-freight artery in the country, BNSF Railway between Kansas City and Belen, N.M. Let me start by saying that things aren’t well. BNSF reports carloadings down 19 percent versus a year ago, and it sometimes seemed to me that all the lost business leaked from this, its Chicago-Los Angeles line, known as the Transcon. This is the route that two years ago could send 100-plus trains a day through Clovis, N.M., late in the week. Now, think 60 to 65.
           On Tuesday of the week I was out there, just 35 trains ran across the Clovis Subdivision, between Belen and Clovis. But look, I’m not complaining. Even 35 trains to watch is a lot, and these days 60 or 65 seems like heaven.
            As for what I saw, a few observations. J.B. Hunt is everywhere. Take away its containers, and BNSF would probably operate its railroad at a loss. Let me describe Hunt’s influence this way: BNSF intermodal traffic on the Transcon is a mix of international and domestic business. Based on what I saw those six days, domestic accounts for two-thirds of the intermodal traffic, and J.B. Hunt accounts for as much as half of the domestic intermodal volume.
            So stated another way, about a third of all the trailers and containers I saw carried a Hunt logo. United Parcel Service and Schneider National combined make up another quarter of the domestic intermodal volume. All other domestic intermodal shippers share the other fourth.
            The rich get richer, too. Independent transport analyst Ed Wolfe wrote clients last week of a conversation he had with a consumer-products manufacturer. That shipper said he has shifted his company’s intermodal business from Hub Group and Pacer because Hunt quoted rates 5 percent below those of the other two companies. This confirms my belief that Hunt, BNSF’s biggest customer, is getting market share right and left from its rivals. This may be helping BNSF versus its rival Union Pacific.
            That shipper revealed something else: that intermodal rates are down 5 to 7 percent from not long ago. Railroads have stated pretty categorically that they are not lowering rates to survive the recession or to steal business from one another. That may be true of carload traffic. But intermodal ratemaking remains a wild and wooly business, akin to a Turkish bazaar. What is BNSF’s Matt Rose to do when imports into Los Angeles and Long Beach plummet? The answer: Go after the domestic traffic that’s out there, any way he can get it. Any new business BNSF gets whose revenue exceeds marginal costs is a plus. Later, it can boost those rates.
            Let me leave you with an image. Possibly the strangest sight you will see today on a railroad is that of an intermodal train made up exclusively of trailers. It’s like a scene out of the early 1960s, before containers took hold and certainly before doublestack trains. But on the Transcon, here they are, in 2009. In a day’s time, you might see four such trains, most of them Z trains. (What is a Z train? One that carries time-sensitive UPS traffic or that of scheduled less-than-truckload carriers such as Roadway and Yellow.)
            My jaw dropped every time I saw a trailer train charging across the desert at 70 mph (see Z-NBYWSP from the Bay Area passing Ricardo, N.M., above). Shippers pay more to move trailers than they do containers. But the trailer business is out there to be had, and BNSF is willing. Seeing one of these trains is worth the price of a ticket to Transconland.



Fred W. Frailey
Special Correspondent

Comments
To leave a comment you must be a member of our community.
Login to your account now, or register for an account to start participating.
No one has commented yet.

Join our Community!

Our community is FREE to join. To participate you must either login or register for an account.

Search the Community

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy