Dive Brief:
- Executives with Hub Group are optimistic the new cross-border intermodal service announced by Union Pacific, Canadian National and Ferromex owner Grupo México Transportes will lead to new business and give customers faster shipping times at lower cost.
- COO Brian Alexander told analysts on an April 27 earnings call that there is interest from customers with volume shipping over-the-road who want to convert to intermodal.
- “We have gained confidence in the stability of that and the consistency of it,” Alexander said, adding that the company continues to invest in intermodal even in a soft freight market because it is confident the service can help shippers save money, ultimately leading to long-term sustainable growth.
Dive Insight:
As shippers seek lower-cost options, Hub Group sees growth potential with its rail partner Union Pacific and the rail carrier’s new alliance with CN and Ferromex.
“So, we are really excited about the southern premium service that just got launched by our western partner Union Pacific,” President and CEO Phil Yeager said during the earnings call. “It's really going to help us, I think, take advantage of the nearshoring opportunity both in the near-term as well as longer-term.”
The new cross-border partnership allows Union Pacific, Canadian National and Ferromex to leverage their networks to create a new service from Canada to Mexico with a hub in Chicago. Railroads have been focused on creating new cross-border service in anticipation of increased North American trade fueled by the U.S.-Mexico-Canada-Agreement.
Yeager pointed to faster connections as a benefit of the new rail alliance.
“It's two to three days better than the best service,” he said. “And so we hope [it] can be a catalyst for growth and certainly it's going to be a focus area.”
Canadian Pacific Kansas City President and CEO Keith Creel said during the railrway’s earnings call on April 26 the company is prepared to compete with the Union Pacific, Canadian National and Ferromex’s Falcon Premium. He said CPKC will be able to deliver goods from Chicago to the Monterrey, Mexico area nearly two days faster than Falcon Premium’s advertised delivery time.
