CSX executive discusses railroad trends and themes at NEARS conference

Kevin Boone, EVP, Sales & Marketing, for Jacksonville, Fla.-based Class I railroad carrier CSX, touched upon various topics relating to the freight rail carload and intermodal sectors at the Northeast Association of Rail Shippers (NEARS) 2021 Fall Conference, which was held in Portland, Maine last week.

Making things easier for shippers to do business with freight railroads is a key theme for CSX, Boone observed.

“Today, it is not really easy to do business with a railroad,” he said. “We don’t provide the insights and visibility that we should. It is not perfect, but we are going to continue to develop that.”

But that is something that is starting to change, according to Boone, as CSX has started to invest a lot into technology over the last three years into things like tracking and tracing freight through the railroad and is doing the same in 2021 and into 2022 as well.

Another focus, for CSX, he pointed to, is how shippers are evaluating their supply chains today, noting how three steel plants are being considered to be built in the United States.

“We want to be involved in that and for those plants to be located on the CSX railroad,” he said. “That is important to me. We are going to use our real estate portfolio and incent our customers to locate on the railroad.”

This mindset is key and needed, Boone explained, in that over the last four-to-six decades, railroad customers have not valued rail access.

“We see a lot of businesses that are not physically touching the railroad anymore,” he said. “So, we are highly domestic in our transload capabilities so we can reach those customers.”

The company’s transloading capabilities have improved, too, due to CSX’s acquisition of Quality Carriers, which Boone said has brought in chemical customers it provides transloading services it had never been able to previously reach.

“It is going very well, and customers are embracing this idea,” he said. “The only thing holding us back is equipment, which will come. We will have more equipment next year and move more freight over the railroad. It is a win-win for everyone.”

Addressing the supply chain, Boone said the top question he has fielded over the last eight months is: when will the supply chain see some normalization? 

“From trucks to chassis and ports and containers, a lack of drivers and a lack of labor at warehouses and production facilities, we have seen these market challenges everywhere,” he said. “Sprinkle in some challenging weather and conditions have been really tough this year. There is no doubt about it.”

One of the most challenging things, he pointed to, is record drayage times at its intermodal terminals, an industry-wide issue.

“Containers can sit for over a week,” he said, “and on average our international containers can sit for more than 10 days, which is five-to-six times longer than what we saw just last year. It is start and stop. We get one week of visibility from most of our customers. They don’t know when ships are coming and can’t tell us what is happening. It is a tough environment to operate in, and it is tough to create fluidity. There are more than 70 vessels waiting outside the Port of Long Beach, waiting to get into the port. It is incredible and creates a lot of challenges for us. We are continuing to invest so we can meet those needs. It is a challenging market, and we see a lot of fluidity in the system.”

Another challenge he cited was labor-related constraints.

“Every customer I talk to is dealing with labor constraints,” he said. “We will have containers in a warehouse waiting 10 days to unload. Our domestic intermodal business should be growing in high single-digits right now, given the demand out there, but it is down currently quarter-to-date. There is no container availability…containers are not moving from the warehouse into the market. It is a real challenge for us.”

Boone also discussed CSX’s definitive agreement last December to acquire North Billerica, Mass.-based short-line railroad carrier PanAm Railways Inc.

“We see PanAm as an opportunity to expand efficient Class I rail service in an important region of the country,” he said. “We see many benefits and opportunities that include: supporting and expanding regional economy and relieving highway congestion; offering single-carrier service from Maine and eastern Canada into the United States; access new ports and provide customers with more options; continuing to streamline operations to our customers and deliver a more consistent service product; leveraging our industry-leading technology that will provide more environmentally-friendly service and also leverage the customer-facing tools we continue to invest in. This will provide the customer with more visibility to manage their supply chain.”