eNews • October 2016
Promoting a Cost-Effective, Reliable and Competitive Transportation System

Railroads see intermodal match-back opening widening

North American railroads are pitching new match-back opportunities at inland operations in order to scare up business in what has become an historically weak market for the international intermodal sector.

Pairing agricultural exporters with consumer merchandise importers in the American heartland has been a long discussed, but often underutilized service among Class I railroads. It’s simply proven too much a financial burden to effectively reposition containers from metropolitan locations where there is excess supply to deficit equipment areas in rural locations.

There always will be a stronger demand for the inbound move than the outbound move, because imports typically consist of higher value goods that produce better profit margins for those moving them inland. Hurting from poor carload business and no longer seeing post-recession import surges, Class I railroads are seeing a widening window for match-backing as an historically strong harvest is set to hit the rails.

US containerized imports have grown much faster than the number of goods moved by train, partly as a result of shippers moving a greater share of cargo through East and Gulf coast ports. With limited intermodal access to the Midwest from the Gulf and shorter distances from the East coast to the heartland, railroads get less volume from the shift.

Not only are international intermodal shipments down - a whopping 10.9 percent year-over-year in July, which are the latest numbers on hand - but total intermodal traffic is sagging, down nearly 4 percent year-to-date, according to statistics from the Intermodal Association of North America and the Association of American Railroads, respectively.

“Intermodal market share is approaching 25 percent of the long-haul trucking market, including international movements,” the transportation research team at the multinational banking and financial services firm Barclays said, but adding that analysts there still “see plenty of growth runway.”

One way railroads can make their international intermodal services more cost effective is by gaining a load on the backhaul. At first glance, it’s a simple idea since importers and exporters, especially agricultural shippers, often have trouble securing a steady and affordable supply of containers for their commodities. But commodities tend to be low-priced, meaning that a long truck haul to reposition containers for a return trip can make it not worth railroads’ trouble.

Exporters and importers that are located in the same geographical region, such as the Midwest, can work out deals with shipping lines and truckers to exchange the empty containers at locations that are convenient for all of the parties. The importer saves money because the inland container interchange location is a shorter haul than returning the empty container by rail to a seaport. The exporter benefits from a steady supply of containers as well as from lower container repositioning costs.

According to Canadian National Railway, business at the Midwest Inland Port in Decatur, Illinois - a city less than 200 miles south of Chicago - has seen significant growth in container volume and the number of customers serviced at its intermodal ramp there.

The multimodal hub is privately owned and operated by Archer Daniels Midland Company, one of the world’s largest agricultural processors, and offers connections that bypass Chicago congestion to CN, as well as Norfolk Southern Railway and CSX Transportation.

CN initially provided once-a-week train service to the ramp in Decatur.

“The resulting growth in activity now supports train service three-to-four times per week - and activity continues to grow,” Mark Hallman, CN spokesperson, told JOC.com.

CN now moves import containers from the Port of Montreal and the Port of Prince Rupert to the Decatur facility to customers across the Midwest. ADM then reloads the empty 40-foot import containers with export loads of grain and processed products destined for global markets via CN's rail network and its Canadian gateways.

CN and its partners hope the momentum will attract new shippers.

“We are pleased to see rising volumes of imported containers arriving at our intermodal ramp via CN for area distribution in Illinois.” Dennis Whalen, vice-president of transportation and intermodal freight for ADM, said in a statement. “The resulting empty container capacity is essential to our efforts to grow exports of our products to global markets, especially in Asia."

Railroaders at Union Pacific Railroad see similar potential and have reported similar success with their railway’s match-backing opportunities as well.

“An example would be with ag-based shippers or (dried distillers grains) exporters,” the railroad’s assistant vice president of marketing and sales for international intermodal Mark Simon recently told JOC.com. “We’ll collaborate with a grain shipper or broker and identify opportunities to reposition empty containers from maybe a metropolitan area to a more rural destination.”

Source: JOC.com


The Soy Transportation Coalition is comprised of thirteen state soybean boards, the American Soybean Association, and the United Soybean Board. The National Grain and Feed Association and the National Oilseed Processors Association serve as ex-officio members of the organization.

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