BNSF touts service gains as hub moves away

Written by John D. Boyd - Journal of Commerce Saturday, 06 June 2009 12:54

WASHINGTON, D.C. — BNSF Railway is touting recent gains for its intermodal service expansions in the wake of Hub Group’s decision to switch most traffic to rival Union Pacific Railroad, and a spokesman said BNSF doesn’t understand why Hub is making the move.

BNSF is still the largest intermodal railroad, although intermodal shipment consolidator Hub will shift 8,400 of its domestic 53-foot containers over to UP while leaving BNSF handling only 1,400. The move could put more than $100 million annually in UP’s coffers.

Hub notified customers and BNSF this week that it would start moving over to UP within a week, a process that could take several months. “Hub Group has been a valued BNSF customer, and we look forward to maintaining that positive relationship,” said BNSF spokesman Patrick Hiatte.

But Hiatte said “we wouldn’t presume to speculate about the reasons for the change. We frankly don’t understand the decision and therefore can’t comment on it.”

Hub President and Chief Operating Officer Mark Yeager told Journal of Commerce his firm should achieve significant efficiencies by putting most boxes on UP, similar to the network gains it gets in the East where Norfolk Southern Railway handles all its moves.

Yeager said the gains include cutting drayage costs by not having to move containers between rival railroad terminals. And he said UP’s supply of carrier-owned containers fits in well with Hub’s asset-light business model. BNSF, by comparison, has pushed customers to provide their own equipment.

Hiatte underscored that “we will continue to provide best-of-class intermodal transportation,” which he described as “record on-time performance, velocity and service offerings.”

It also has far and away more intermodal volume than other carriers, originating 1.48 million loads through May 30 compared with 971,000 at UP, according to the latest data from the Association of American Railroads.

BNSF’s on-time service reaches 99 percent on some lanes, Hiatte said, while the improving velocity of its premium intermodal trains has them traveling more than 625 miles a day on average while expedited service tops 800 miles.

That allowed it to cut average train moves by 12 hours in the first quarter from a year earlier. Although some of that reflects the lower overall demand for rail service in a slump, some is also efficiency gains the company expects to be permanent.

Meanwhile, it cut nearly a day off its trips from the Pacific Northwest to Chicago and Memphis by adding a full-train express service. And with eastern-U.S. railroad CSX Transportation ship it launched a new Southeast container service into East Coast ocean port areas of Charleston, S.C.; Savannah, Ga.; Miami and Tampa in Florida plus Orlando in the state’s interior.

So far at least, BNSF’s moves have paid off. The AAR reports show that through the first 21 weeks of this year it lost less business than its rival in the severe freight downturn, as BNSF intermodal traffic fell 15.6 percent against 21.5 percent for UP.

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