Rail Rivalry: Schneider’s Bold Move to Norfolk Southern from CSX

Schneider National is transferring its eastern intermodal operations from CSX to Norfolk Southern, a strategic move aimed at boosting growth and enhancing capacity. This partnership, announced alongside Schneider's Q3 earnings, positions Norfolk Southern as Schneider's exclusive eastern rail partner alongside Union Pacific in the West.

Michael Baumgardt, EVP of Intermodal and Logistics at Schneider, highlighted the decision was driven by the desire to be closer to customers and reduce truck freight to intermodal where it makes sense. Norfolk Southern's VP Shawn Tureman noted the railroad had been building toward this for years and aims to double its intermodal franchise again by 2024.

He emphasized that intermodal is becoming increasingly attractive due to truckload rates being over 30% higher than intermodal rates. The primary capacity constraint, according to Baumgardt, is dray capacity and driver supply, which Schneider's company-driver model is well-equipped to manage. Both executives stressed the merger with CSX was not the driving force behind this agreement, though they acknowledged it could enhance service, reliability, and speed.

Norfolk Southern has been preparing for this transition, with plans to pull forward infrastructure investments. Upon completion, the goal is to ensure a seamless handoff with minimal impact on customers. This transition is part of Schneider's broader growth strategy, which includes dedicated and intermodal services. Schneider reported intermodal revenue growth in Q3, with dedicated revenue per truck rising 3.1%.