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Pacific Stock Transfer offers a complete range of stock transfer services, with a competitive fee structure including; same day service on most transactions, comprehensive data management, corporate actions, shareholder meetings, and dividends.
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6725 Via Austi Parkway Suite 300
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Latest Pacific Services News
Aug 9, 2018
CSX's intermodal Efficiency Drive Cuts Some Union Pacific Services Share: Up to two-thirds of intermodal service between CSX and UP face disruption. Union Pacific Corporation (NYSE: UNP ) customers sending freight east of the Mississippi have fewer options as the west's main rail line blames changes on the part of its eastern peer CSX Corporation (NYSE: CSX ). In a customer notice sent last week , the line cut 197 of 301 origin-destination pairs provided through network interconnects between the two. Among the metro destinations affected are Baltimore, Charleston, Buffalo, Pittsburgh, Portsmouth, Savannah, Nashville and Columbus. Requests for comment from CSX and UP were not returned by publication time. On the company's second quarter conference call, CSX chief executive James Foote said that domestic intermodal revenue was "relatively flat on a year-over-year basis because of the line rationalizations that we went through in the fall of 2017." Although intermodal amounts to 44 percent of volume carried on the CSX network, 2017 revenue per unit is the lowest of CSX's segments at $633, up just 3 percent from 2016. He says the company plans to further revamp the unit in the coming months. "Our intermodal network needs a ton of work in order to become the efficient part of our system that it needs to be and we're just really beginning to get in there and start to figure out how to rationalize that big part of our business, so we can become much more efficient and have a much better product for our customers," Foote said on the conference call. For its part, UP said its domestic intermodal business saw a 7 percent increase in the second quarter, thanks to tight truckload capacity. Beth Whited, chief marketing officer of UP, said the company is courting beneficial cargo owners to "make sure that we're able to express the value that Union Pacific can provide." The service changes mean most eastbound UP cars will wind up in the Chicago area. UP will also continue to offer intermodal service with Norfolk Southern Corp. (NYSE: NSC ) to several of the regions affected. Deutsche Bank equity researchers say CSX delivers to over 30 destinations from the interchange with UP at Chicago. But the destinations affected by the move may not represent too much in terms of freight volume as they "are very low density. From CSX's perspective the move makes sense." "Despite . . . bluster from shippers with respect to impending service disruptions, we believe actual implications are minimal, while being highly favorable for the efficiency of CSX's intermodal network," Deutsche Bank said. The bank estimates up to one-third of the lanes being closed have no traffic at all, with the most dense lane having relatively small amounts of container traffic per day. Deutsche Bank estimates the revenue associated with the 197 lanes accounts for "less than 1 percent of CSX's revenue, which implies an even smaller amount for Union Pacific." Moreover, there can be "incremental efficiencies to the carriers intermodal networks with traffic destined for Tennessee, Florida, Georgia and the Carolinas now interchanging through Memphis versus Chicago prior, which we estimate reduces distance traveled by about 700 miles." But shippers will feel a direct impact due to the changes. Brian Bowers, an intermodal veteran with experience at Hub Group and Schneider International, says the changes will hit a variety of retail shipments at an inopportune time. "The timing of this move is horrendous in the middle of the fall surge and in the middle of all types of capacity issues," he said. Bowers, who currently serves on the board of advisers to Freightwaves, says shippers could be forced to take containers off at Chicago and re-ramp them to another yard, forcing more containers onto city streets and tying up dray trucking. "CSX makes a wide ranging decision that will eliminate service to a lot of markets or complicate service to certain markets," he added. For example, UP shipments to Baltimore will now have to shift onto the Norfolk Southern line at Harrisburg or to CSX in Chambersburg, both of which destinations will require draying or surface trucking to bring containers to their final destination. "All the intermodal pricing that has been quoted to Walmart on down to Joe's grocery is based on delivery to Baltimore, not Chambersburg," Bowers.