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Class I Railroads Struggle With Network Congestion as Intermodal Traffic Surges

The nation's four largest freight railroads are experiencing a sharp slowdown in intermodal train speeds as shippers redirect cargo to rail amid high fuel prices and rising trucking expenses. BNSF intermodal volume climbed 9.5% in the second quarter, reaching 15% growth in the week ending June 21. Speed declines have hit multi-year lows across the network, with BNSF and Union Pacific at 10-month lows, Norfolk Southern within 2% of a 20-month low, and CSX at seven-year lows. Industry observers note the surge represents the largest volume increase in years, straining operational capacity. Norfolk Southern is hiring crews at roughly half its terminals to address crew shortages in some areas. CSX has opened 40 conductor positions. Railroads face a critical window to accommodate the traffic surge without ceding market share back to trucking once rate volatility stabilizes.