Schneider Swaps CSX for Norfolk Southern in the East Starting Jan. 1

Schneider National will make Norfolk Southern its main rail carrier in the Eastern U.S. starting Jan. 1, replacing CSX. CEO Jim Filter told analysts on an Oct. 29 earnings call that the change opens room to win new freight and move more truckload shipments onto intermodal service, where containers ride the rails for the long haul and trucks handle the ends of the trip.

Filter declined to say how long the Norfolk Southern contract runs, calling the terms “confidential,” Trucking Dive reported.

Betting on a possible NS and Union Pacific merger

Union Pacific has been Schneider’s main West Coast rail partner since January 2023, when the carrier’s contract with BNSF ended. A merger between Norfolk Southern and Union Pacific is also possible. Filter said that if the deal goes through, he expects it to be “strategically beneficial for our organization.”

Filter also pointed to Norfolk Southern’s terminal network and its reach into U.S. population centers as reasons for the choice. He said the company wants to pull freight off the highway and onto rail faster than its competitors.

What Schneider brings to the railroad

Schneider owns its own containers and chassis (the wheeled frames that carry containers on the road) and employs its own drayage drivers, who haul boxes between rail ramps and customers. Filter listed those assets as an advantage in the new partnership. The company has run intermodal service for 35 years, and he said shippers weigh that history along with Schneider’s execution and financial stability.

He cited the company’s 2023 move to Canadian Pacific Kansas City as a model. Schneider had tried several ways to grow freight between the Upper Midwest and Mexico before switching to CPKC on that lane. Filter said the lane has since posted 19 consecutive quarters of growth, with better service, speed, reliability and cost.

Intermodal revenue in the third quarter

Schneider reported third-quarter intermodal revenue of $287.7 million, not counting fuel surcharges. That was up 2%, or $6.3 million, from a year earlier. The company credited higher revenue per order and a better mix of freight.

Executives said on the call that work on the company’s network leaves it ready to benefit as freight conditions improve and truck capacity tightens.

What it means for drivers and shippers

For shippers in the East, the switch changes which railroad carries Schneider’s intermodal boxes from Jan. 1. For truckers, Schneider’s stated goal is to convert more over-the-road loads to rail, which would move long-haul miles from trucks to trains. The company did not say how many loads or drivers the change will affect, and it gave no figures for expected volume on the Norfolk Southern network.

What to watch next

The Norfolk Southern arrangement takes effect Jan. 1. The outcome of the proposed Norfolk Southern and Union Pacific merger would decide whether Schneider’s two main U.S. rail partners become a single railroad.

Source: Yahoo Finance