Union Pacific is going to be the intermodal carrier for Schneider National in the western part of the U.S. beginning in 2023.
Union Pacific (NYSE: UPN) announced the agreement Wednesday morning. The relationship will begin in January of next year.
“Schneider’s intermodal business is a great fit for Union Pacific’s diverse network,” UP Chairman, President and CEO Lance Fritz said in a prepared statement released by the railroad. “We look forward to growing in the intermodal space together.”
Based on what Schneider (NASDAQ: SNDR) reported in its 10-K annual report for 2020, the deal with Union Pacific will mark a significant shift in its intermodal business. In that report, Schneider reported that its intermodal business’ “primary contracts” were with BNSF and CSX (NASDAQ: CSX). Given that BNSF competes in the West with UP, the new arrangement is likely to be a hit to BNSF’s business.
Darren Field, the president of the intermodal division at J.B. Hunt (NASDAQ: JBHT), made reference to the possible shift on the company’s fourth quarter earnings call Tuesday. “We are aware of another channel that certainly left BNSF and went to Union Pacific, and certainly, that presents an opportunity, I mean, those lifts were occurring on BNSF, we are aligned with BNSF in a growth strategy, we have discussions with BNSF daily about our efforts to grow together and we have a lot of focus in that area in 2022,” Field said.
In that 10-K, Schneider signaled that it was facing possible limitations in its western intermodal business. “One of our competitors has a preferential contractual arrangement with BNSF, which limits the market share and relative profitability of the services we provide through BNSF,” the company wrote in the report. “In certain markets and rail corridors, rail service is limited to a few railroads or even a single railroad due to the lack of competition.”
Despite those limitations, Schneider’s intermodal business was strong in 2021, based on nine months’ worth of financial reporting. For the first nine months of last year, the intermodal business reported revenue of $825.5 million, up from $705.4 million in the previous year. Operating income in the segment was $100.6 million for the nine months, exactly doubling from the first nine months of 2020.
Schneider did not break out intermodal revenues or income based on region.
“We are excited to have Schneider be a part of our intermodal service offering,” Kenny Rocker, UP’s executive vice president for marketing and sales, said in the statement. “Schneider’s operational excellence and focus on growth, combined with the strength of Union Pacific’s intermodal network are a natural fit.”
FreightWaves will continue to cover this story.
The FREIGHTWAVES TOP 500 For-Hire Carriers list includes Schneider (No. 7) and J.B. Hunt (No. 4).
More articles by John Kingston
Public-sector efforts to boost truck parking face path filled with hurdles
Coal in the stocking: Truck transportation jobs up just slightly in December
Werner’s chairman gets big FTC penalty for not disclosing stock purchases
Supply Chain AI Symposium
Past the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
Future of Rail Symposium
Reshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
F3: Future of Freight Festival
Industry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
Past the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
The Old Post • Chicago, IL Register NowReshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
The Signal at Chattanooga Choo Choo • Chattanooga TN Register NowIndustry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now