UP beefs up intermodal service

Mark Szakonyi, June 20, 2014, Journal of Commerce

 

Union Pacific Railroad has added 11 intermodal train starts between Northern California and Portland, Oregon, and Chicago this year, potentially allowing the carrier to grab business from customers frustrated with BNSF’s ailing service.

 

Following a ramp-up in its premium service on its Portland-Chicago line in May, UP now offers westbound service six days a week and eastbound service five days a week. UP launched its premium service from Oakland and Lathrop in January and added frequency in April. The railroad will also operate premium service between Northern California and Chicago five to seven days a week, depending on direction and origin, and destination points. Premium services on both lines provide four-day delivery in the morning.

 

Although BNSF said its intermodal service is steadily improving, the railroad apparently has had to pull back on its expedited service goals for Pacific Northwest and Chicago routes. The railroad has also lagged most of its Class I counterparts in terms of average intermodal train speeds, a key barometer of service reliability.

 

BNSF’s Northern Corridor has become a chokepoint for traffic, largely because of healthy agriculture exports and shipments tied to domestic energy production in the Bakken formation. As a result, BNSF is spending about $1 billion to improve and expand capacity on the corridor.

 

UP’s service has also faltered because of a backlog of cargo caused by severe winter weather, but the railroad is less tied to the energy sector, which has been a benefit.

 

The new services are geared to domestic intermodal volume and builds on the success UP has had in handling more 53-foot container traffic. UP domestic volume rose 8 percent year-over-year in the first quarter and 5 percent in the last three months of 2013.

 

Unlike BNSF, UP has its own fleet of containers, which it says is the industry’s largest. The railroad has more than 100,000 containers that are used only on the UP network and those of other Class I carriers with which it interchanges cargo.

 

Although international intermodal volume is showing signs of accelerating, intermodal traffic growth has been the real standout over the last few years. U.S and Canadian domestic volume expanded 4.1 percent year-over-year in the first quarter, compared with a 1.1 percent increase in international traffic in the same period, according to Intermodal Association of North America statistics.

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