Norfolk Southern: New intermodal era about removing rail friction

Norfolk Southern’s intermodal business is entering a new phase in which success will depend less on simply matching trucking on cost and more on making rail freight easier to buy, plan, monitor and use, according to a company executive reflecting on the railroad’s three decades of network development and customer-service evolution.

Shawn Tureman, vice president of Automotive & Intermodal Marketing marking 23 years at Norfolk Southern (NYSE: NSC) while attending the Intermodal Association of North America’s annual conference in Long Beach, said the industry has spent much of that period asking whether intermodal can compete with over-the-road trucking.

That question, the executive argued, no longer captures the central challenge. Intermodal has long held advantages in scale, fuel efficiency, sustainability and reach on the longer-haul lanes where railroads compete.

The more consequential question is whether railroads have made the service simple, reliable and visible enough for shippers and logistics providers to choose it consistently over a truck move. That customer-experience challenge has become more pressing as supply chains adapt to an on-demand economy.

Shippers are increasingly accustomed to service that is immediate, transparent and straightforward to manage. They are evaluating freight options not only on transportation price, but also on predictability, ease of execution and whether a transportation provider can support their growth.

In that context, trucking’s advantage is not always transit speed alone. A truck move can appear simpler because it typically involves one provider, one movement plan and a more direct line of accountability. Norfolk Southern’s opportunity, Tureman said, is to offer comparable ease and certainty while retaining rail’s ability to move freight at scale.

The railroad has recently shown stronger intermodal momentum. Norfolk Southern’s intermodal volume rose 13. 7% year-over-year this past week, pointing to evidence that rail can capture business from the highway when its service offering is competitive.

Three eras of intermodal Norfolk Southern’s view of the business can be divided into three distinct periods: Building the network, competing for the customer, and removing the friction that continues to constrain rail’s ability to win freight from trucks. The first era centered on network construction.

Following railroad consolidation in the late 1990s, Class I railroads invested extensively in intermodal terminals, double-stack routes, port connections and long-haul freight corridors. Those investments created the backbone of the U. S. intermodal system and established rail as a viable long-distance alternative to highway transportation.

For Norfolk Southern, that meant developing what Tureman characterized as the most extensive intermodal network on the East Coast. The railroad added terminal capacity, built or upgraded routes connecting major freight markets and improved access to East Coast ports and inland distribution centers.

The investments gave shippers an additional way to move goods over long distances and helped turn intermodal from a developing freight option into a central part of the transportation market. But the network buildout did not eliminate the complexity facing customers.

Long-haul rail moves frequently involved multiple railroads, terminal transfers, drayage providers and service handoffs. Even in lanes where intermodal delivered a cost or efficiency advantage, customers could face service variability and uncertainty that made rail more difficult to incorporate into tightly managed supply chains.

“Cost alone does not shift a supply chain,” said Tureman. “Customers need confidence.” The first era demonstrated that intermodal could scale, but it did not fully resolve the customer experience. In many cases, customers had to adapt their operations to the railroad rather than receiving a product designed around their needs.

Service becomes the product The second era, which Norfolk Southern places largely in the past 15 years, shifted the industry’s attention from physical network development to customer service, terminal performance, visibility and consistency. Shippers began to judge intermodal differently.

Rather than asking only whether rail could move freight at a lower cost, they increasingly asked whether it could help them operate more effectively. Could they plan around transit times? Would service be consistent from week to week? Could they track freight and anticipate exceptions?

Would the rail service be simple for their operations teams, drayage partners and customers to manage? That change raised the importance of the intermodal terminal, where shippers and truck drivers often experience the railroad most directly.

Norfolk Southern said it has focused on terminal flow, bottleneck reduction, capacity management and tools intended to make it easier for customers and drayage providers to transact with the carrier. The railroad also has continued