Jeff Heller, vice president of intermodal and automotive at Norfolk Southern, recently spoke with SMC³ about the impact the tight trucking capacity market is having on the intermodal industry. During the Jump Start 2019 supply chain conference, Heller will speak on the “Intermodal in the post-ELD world” panel, explaining current concerns he’s hearing from shippers who have been impacted by tight capacity.
The trucking market is currently experiencing extremely tight capacity. How do you think the market got to this point, and where should shippers looking for capacity turn?
The over-the-road market faces a number of challenges in the current environment resulting from a confluence of a tight labor market, a strong economy driving up demand and electronic logging devices helping to tighten capacity. Intermodal – both in terms of the EMP rail container product and private container fleets – has been able to provide the market with a solid alternative for capacity.
Is this capacity tightness a passing development, or will 2019 look much the same as this year?
We expect favorable economic conditions to continue into 2019 driving demand, with no significant change in the forces currently driving the market. Over the longer term, we will see the capacity situation adjust. Supply and demand will shift toward an equilibrium as all parties adjust capacity and prices accordingly.
What are some of the benefits of intermodal shipping compared to truckload shipping?
Norfolk Southern will continue its long history of investing in intermodal as we head into 2019 and beyond. Our prior investments in intermodal terminals in key markets, including Atlanta; Columbus, Ohio; Charlotte, North Carolina; Harrisburg, Pennsylvania; and Memphis, Tennessee, began as far back as 2001.
As we look to the future, we are evaluating potential options for expanding terminal and domestic container equipment capacity in key markets that will enable us to grow our intermodal franchise in step with the overall market demand. In addition, Norfolk Southern is investing in new technologies designed to improve terminal efficiency, speeding the movement of our drayage partners in and out of our facilities.
This will strengthen the value of the intermodal product by increasing the efficiency of the entire supply chain.
Do shippers in this tight market want to stick to their shipping precedents, or are they more open to trying new ways of shipping?
There is no doubt that change is difficult in any organization. However, we are finding that shippers want and need to evolve their transportation networks as conditions dictate in order to be successful. While intermodal door-to-door service might seem more complex than simply ordering a truck, Norfolk Southern works with qualified third party partners who have developed strong relationships with vendors across the supply chain to provide the most efficient and reliable transportation solutions for shippers.
When capacity in the trucking market eases up, will these shippers return to trucking?
In our experience, once shippers switch to intermodal services, they tend to stick with it to varying degrees. Every shipper has a unique set of price, capacity and service points that they continually trade off in order to develop a network that suits their business needs. We believe that intermodal service will play a prominent role in each of those decisions.
Jump Start 2019 is a three-day logistics and supply chain conference produced by SMC³ to facilitate meaningful knowledge transfer and collaboration among logistics and transportation professionals from carrier, shipper, logistics service provider and technology verticals. Learn more and register today at http://www.smc3jumpstart.com.