Intermodal traffic rose 12.6% amid high diesel prices and tight trucking capacity
Union Pacific, Norfolk Southern and CSX each posted higher quarterly revenues and profits. The gains came as U.S. shippers moved more containers and truck trailers from highway freight routes onto rail, The Wall Street Journal reported.
The Wall Street Journal reported that soaring diesel prices and tight trucking capacity spurred demand for more-efficient rail. The report attributed part of the trucking-capacity constraint to immigration enforcement affecting immigrant drivers. Shipping goods by rail is around three to four times more fuel-efficient than using a truck on a highway, giving rail an advantage as fuel costs rose and available trucking capacity diminished.
The Association of American Railroads reported that intermodal containers and trailers transported by U.S. railroads increased 12.6% from a year earlier in the week ended Oct. 17. CSX volume rose 5% in the third quarter, Union Pacific volume increased 6% and Norfolk Southern volume grew 3%.
The three companies also benefited from fuel surcharges, although fuel expenses weighed on margins. Higher revenue and volume therefore did not eliminate the cost pressure associated with increased fuel prices.
Union Pacific CEO Jim Vena said the company and Norfolk Southern continue to work toward closing a $71.5 billion deal that would combine their networks. The transaction is expected to close in mid-2027.
The proposed combination has faced resistance from federal regulators, customers and rivals who argue it would increase freight prices and reduce competition. Union Pacific and Norfolk Southern sent regulators supplemental information in July that included commitments to provide faster and more reliable service.
Separate items in the same logistics report covered steelmaking, the Panama Canal and air cargo. The Wall Street Journal’s Kelly Cloonan reported that U.S. Steel, owned by Nippon Steel in Tokyo, plans to invest nearly $3 billion in a new hot strip mill near Pittsburgh. U.S. Steel said the investment would replace aging equipment with modern steelmaking technology and increase annual production capacity to about 3.5 million tons from 2.2 million tons.
A hot strip mill makes steel slabs into thin coils used to manufacture products including vehicles, appliances and construction materials. U.S. Steel said the investment would expand the range of steels it can produce and improve its ability to compete in the automotive, appliance and line pipe markets. The company expects initial production at the new mill in late 2029.
The report also quoted Mikal Bøe, CEO of maritime nuclear-power company Core Power: “The beauty of nuclear propulsion is that speed is free.”
Panama Canal transits during the 12 months ended Sept. 30 increased 4.1% from the previous fiscal year, according to the Panama Canal Authority. Strong energy and containership activity drove the increase.
The Wall Street Journal said deadly global conflicts have disrupted civil aviation, leaving fewer and longer safe-journey options, particularly between Europe and Asia. Benjamin Katz, Daniel Kiss and Jason French reported that Flightradar24 tracking data showed Houthi strikes on Saudi airports over the past month upended one of the few remaining routes used by airlines.
Outside rare, complete airspace closures or foreign bans, airlines choose where to fly based on regulator warnings and input from private security agencies, the report said. FedEx has added hours to flights to places such as Dubai. Its new route flies closer to China to minimize time in Afghan and Pakistani airspace, adding five hours to the journey.
The report’s episode preview said Saudi Arabia’s economic transformation was facing a new security test and that local opposition was disrupting data-center projects involving billions of dollars.
MSI previously reported in June that rising trucking rates were pushing U.S. companies back to intermodal rail as carrier capacity tightened. The latest figures show that shift persisting, with third-quarter volume increases at CSX, Union Pacific and Norfolk Southern, while fuel expenses continued to weigh on margins.