Dive Brief:
- Schneider National says its new partnership with Canadian Pacific Kansas City railroad opens more western U.S. shipping lanes and is a step in helping the company grow its intermodal business.
- President and CEO Mark Rourke told analysts during an earnings call last week that new and existing rail partnerships place the company in a strong position to recover volume. Like many carriers, Schneider has faced a soft freight market in recent months.
- The new corridors with CPKC come months after Schneider shifted a 30-year partnership with BNSF to Union Pacific in January to seek further growth.
Dive Insight:
Schneider’s partnership with CPKC is part of a broader strategy to double intermodal business by 2030.
Another advantage of the deal for Schneider is CPKC’s experienced operations team in Mexico City, where the company has been doing business for more than 30 years.
Intermodal represented 27% of the carrier’s Q1 revenues.
James Filter, EVP and group president of transportation and logistics, noted customers have been more concerned about the environmental impact of intermodal, which provides opportunities for shippers seeking to lower greenhouse gas emissions.
The company sees growth opportunities in intermodal, noting the potential for increased volumes and earnings without adding containers. But lack of service demand is hindering growth, Filter said.
“So, it's a combination of what we're seeing from West Coast imports, as well as overall economic activity,” Filter told analysts.
Accordingly, CPKC noted the emissions improvements offered by combined railroads in diverting volume away from more emissions-heavy longhaul truck shipments. Like Schneider, Knight-Swift Transportation Holdings has already signed an agreement for intermodal rail service with CPKC.
“Diverting 64,000 long-haul truck shipments to rail annually with new CPKC intermodal services will reduce total truck vehicle miles travelled by almost 2 billion miles over the next two decades,” CPKC and Knight-Swift said in an April 25 announcement.
