New rail service to rival trucking
Houston Business Journal - by Angela Apte
A new rail service is on the fast track to significantly cut shipping costs between Houston and the northeastern United States.
Norfolk Southern Corp. is hoping to divert 50,000 loads a year from truck to rail on a direct, single-line service originating in Port Arthur and traveling to cities in New York, New Jersey and Pennsylvania. Nationally, Norfolk Southern wants to convert 1.1 million truckloads from highway to rail annually.
The service, launched in June, has already attracted a number of Houston users, including several major corporations.
Norfolk Southern initiated the service after the company's May acquisition of Conrail and the subsequent absorption of a collection of their routes. It also coincides with a national marketing push to convince shippers of food products, chemicals and electronics that anything moved by truck can be moved by train cheaper and faster.
"Transportation for shippers is dictated by price and service -- what it costs and how quickly it can get there," says Owen Blackmore, intermodal manager at Norfolk Southern. "The new service is very price-competitive, very service-minded, and it's been a huge success."
So far, the service is running five days a week, originating in Port Arthur and terminating in New Jersey. Houston shippers deliver goods to the new Port Arthur facility -- built last year in a joint venture with Kansas City Southern -- for loading and delivery to the Northeast.
Before, shippers wanting to use the route had to cobble together services from the railways that owned the line. But thanks to the Conrail acquisition and a haulage agreement with Kansas City Southern, shippers now deal with only one railway company.
OPENING UP OPTIONS
Many local shippers who have tried out the new service are pleasantly surprised, especially after last year's meltdown in wake of the merger between the Union Pacific and Southern Pacific Railways that cost Texas shippers millions.
"I was skeptical when they came in and said they're going out of Port Arthur," says Dick Reichenbach, traffic manager at Riviana Foods Inc. "We tried it and it's been working."
Riviana moves about 20 containers of food products a week from Houston. Diverting from a combination of truck and rail through Chicago, the new Norfolk Southern service takes Riviana goods from Port Arthur through Mississippi, Georgia, Virginia and Pennsylvania, arriving at Riviana's Edison, New Jersey warehouse two days faster than the old service.
While shippers like Riviana are seeing direct results, the railroad's real customers are intermodal marketing companies -- freight forwarders who oversee the loads and organize routes for the manufacturers.
John Redden, CEO of Mark VIII, moves shipments for clients that include Occidental Petroleum and Lyondell Chemical Co.
Like Riviana, Occidental was moving freight to the East from five shipping locations in Houston via St. Louis with six-day or seven-day service.
That same freight is now moved in four days for less cost.
"Port Arthur has opened up all kinds of options for all kinds of people" says Redden. "It's another choice for that market, and it's created competition with the Union Pacific. Previously, a lot moved up on the UP to St. Louis."
Mark Young, president of the HUB Group, says his shipping company has gained about 15 new shippers using the line.
"It provides us with a significantly better service to the Eastern part of the U.S. It's something that is truck-competitive, which we're always looking for," says Young.
For his client, Chronos Chemical, Young was pulling shipments of materials from a plant in Beaumont coming back to Houston and sending freight via St. Louis or Chicago. He now utilizes the Port Arthur terminal.
Young adds that the service has benefited not only the shippers already moving to the Northeast, but those who have been shut out of the market because of transportation costs.
"It's giving shippers an opportunity to move products into an area they couldn't before because the highway price was just too uncompetitive. Some of the business is coming from manufacturers who couldn't ship to that part of the country."
Latest News |
Most Viewed Stories |
Most Emailed Stories |
