Dive Brief:
- Norfolk Southern and Schneider National are partnering to scale domestic intermodal capacity across the eastern U.S., according to an Oct. 29 press release.
- Through the partnership, Norfolk Southern will become Schneider’s primary East Coast rail provider. The railroad’s eastern U.S. rail network and infrastructure investments will combine with Schneider’s intermodal services and assets, per the release.
- The transition will begin next month, with the companies targeting Jan. 1, 2027 as the official implementation date, Schneider President and CEO Jim Filter said during an Oct. 29 earnings call. A dedicated transition team including representatives from both companies is already in place.
Dive Insight:
By tapping into Norfolk Southern’s broader eastern network Schneider will expand its logistics reach and help pursue truck-to-intermodal conversion opportunities, Filter told analysts. Previously, CSX had served as Schneider’s primary rail provider since 2008, a Schneider spokesperson said in an email.
“As we transition our primary eastern rail provider to Norfolk Southern, we'll expand access to key markets, increase network flexibility and create new opportunities to better serve our customers,” Michael Baumgardt, Schneider EVP of intermodal and logistics, said in the release.
The agreement builds on the railroad’s investments across its intermodal network, which spans 22 states, per the release. Some of the company’s recent projects include a new service between Cincinnati and Atlanta, as well as double-stack clearance improvements between the Midwest and New England. The railroad is also undergoing terminal expansions in Ohio, Michigan, North Carolina and Illinois. The railroad is also working to improve pavement, truck access routes and storage areas at several facilities.
Meanwhile, Schneider’s portfolio includes regional and long-haul truckload, expedited, dedicated, bulk and intermodal, as well as 23,900 chassis and 26,800 containers. The transport company also has more than 60 intermodal rail hubs in North America.
The partnership comes as Norfolk Southern pursues a merger with Union Pacific. Filter said the potential tie-up is the “icing on the cake” of its agreement with Norfolk Southern.
“A potential combination of Norfolk Southern and Union Pacific could provide additional upside through new single-line services and improved connectivity, but those benefits are not assumed in our current expectations,” Filter said on the Oct. 29 earnings call.
He noted that the 2023 Canadian Pacific and Kansas City Southern merger, which created a transnational railway between the U.S., Mexico and Canada, showcased the “long term opportunities that an effective single-line rail network can provide.”
“A combination of Norfolk Southern and Union Pacific stands to see similar benefits to speed and reliability on a broader scale while also introducing new Intermodal lanes,” Filter said. “We see compelling value from positioning Schneider to be the only fully asset-based provider on the first single-line transcontinental railroad in the United States.”
Many shippers and industry groups raised concerns over the proposed transcontinental railroad, citing possibly weaker competition and higher rates. Meanwhile, trucking executives and industry experts identified some pros and cons of the deal. According to Filter, the merger can provide a larger scale of reliability.
“There's a big part of the center of this country that just isn't served by intermodal because you have two railroads that make very short hauls and then have to have a rubber tire or steel wheel crosstown that are going to be very difficult,” Filter said. “This opens up a big chunk of the country, and so we're really excited about that.”
Trucking Dive's Larry Avila contributed to this story.
