Intermodal markets: CSX's trucklike service

After markets closed this afternoon, CSX reported its financial results for the first quarter of 2020, giving us a look at how eastern rail intermodal networks are performing (tomorrow western railroad Union Pacific reports).

There are a couple of things that jumped out at us: CSX successfully sold domestic intermodal capacity to make up for a decline in international volumes, making overall intermodal volumes flat on a year-over-year basis. What’s more, the railroad only took a 2% reduction in revenue per unit to achieve that.

The substantial improvements made to CSX’s intermodal service, as reflected in its operating metric ‘Intermodal Trip Plan Performance,’ may be key here. CSX defines intermodal trip plan performance as essentially on-time performance for loaded and empty containers destined for a customer. In the first quarter of 2019, CSX’s intermodal trip plan performance was 78.3%; in the first quarter of 2020, it had improved to a truck-like 98.4%.

In fact, the future of North American intermodal may be growing density in fewer lanes with more predictable service. CSX’s network is tighter than the western railroads and involves shorter lengths of haul – in the first quarter of 2020, the railroad took in an average of $639 for every intermodal move – but so far, its model seems to be finding some traction.