Friday, April 1, 2011

Railroads Ready to Handle Predicted Record Peak Season

Bringing the perspective of the railroad sector to the Port of Long Beach "Pulse of the Ports" industry panel on Wednesday, Clarence Gooden, Executive Vice President and CCO for CSX Corp., forecast a record-setting fall peak in intermodal rail traffic and said the railroads are prepared with increased equipment and support.

Gooden predicted that 2011 will see a record-setting year in the number of intermodal shipments by the railroads, surpassing the industry peaks of 2006.

"Intermodal shipments in 2006 were about 3.7 million containers and trailers that we moved, [growing] to somewhere about 3.84 million containers [in 2011] in the intermodal business," Gooden said.

He predicted that intermodal rail shipments would increase 10.1 percent in the first quarter over the same period in 2010, increase 8.2 percent in the second quarter, 6.7 percent in the third quarter and 8 percent in the fourth quarter.

Gooden also predicted that the third quarter would see the largest volumes of intermodal rail shipments in 2011, with 2.14 million international TEUs and 1.7 million domestic and transload TEUs handled.

"It looks like we are going to have a very traditional peak this year, with goods and services beginning to increase somewhere around August – a very dramatic and traditional peak," Gooden said.

From a rail perspective, Gooden said that a successful peak revolves around three major components: container capacity, train capacity and the intermodal network capacity.

On the issue of container capacity, Gooden said that the drop in worldwide container-to-slot capacity from three-to-one to two-to-one over the past decade means that the existing containers will have to be turned around faster to maintain efficiency.

Gooden said that CSX expanded their national rail asset fleet last year to handle an extra 3,000 TEUs and will further increase this amount in 2011 by another 8,000 TEUs of capacity.

On the issue of train capacity, Gooden pointed out that CSX has added more than 400 additional locomotives to their asset fleet since the recovery began in early 2010, with plans to bring several hundred more online in 2011.

In addition to increasing the number of locomotives in the system, the rail industry has also drawn down the number of rail flatcars in storage to increase the number of flatcars in service at any given time. Gooden also said that 2011 will be the largest single-year increase in new double-stack railcars added to the network.
"We currently have the capacity to put on over 100-plus trains a day if the need arose," Gooden said.

On top of the predicted record-setting intermodal traffic this year, CSX is also beefing up their assets to deal with an ongoing boom in coal shipments, which require a great deal of rail assets due to the sheer tonnage being hauled, and an expected bumper harvest in grain which is also expected to require a large amount of rail equipment. CSX also handles about 88 percent of all the fertilizer shipments in the US, which require a great number of rail assets.

"We think we have a great balance of service in terms of being able to handle this traffic as we move forward," Gooden said.

Another factor to providing adequate service, Gooden said, is in providing enough crews to man the trains.

"In the unemployment numbers you continue to see, the rail industry has been an anomaly," Gooden said. The main reason for that, he said, is the massive turnover the industry has experienced in the past several years and the hiring needed to keep staffing at proper levels. He pointed out within the next several years, more than half of the 30,000 CSX employees will have been hired in the previous five years.

"At CSX we have about 13,000 train and engine service employees and this year we plan to hire over 3,000 [workers] to either replace those to cover attrition or in anticipation of where we have growth in our business," Gooden said.

A final factor, he said, was track capacity.

"All throughout the recession, in fact since 2004, we have been investing $1.5 billion to $2 billion a year in our company and its infrastructure," Gooden said, resulting in the addition of more than 600 miles a year of new track.
"We are working hard to keep that infrastructure up and to enable us to be able to serve our country and its transportation needs."