Intermodal, Drayage & Chassis

Special Report

COMMENTARY

By Larry Gross

Since the announcement of the proposed acquisition of Norfolk Southern( NS) by Union Pacific( UP), there has been a strong focus on interline intermodal. Questions are being asked as to what volume might be unlocked by greater connectivity. New interline services are being announced.

Merger proponents say that single-line service is the only avenue to capturing more intermodal share. That may be true. But a big reason is that the willingness of railroads to cooperate on interline intermodal has declined over time. Each week, the Association of American Railroads( AAR) publishes two figures for each reporting railroad: the number of intermodal loads originated on that railroad, and the number of intermodal loads received by that railroad in interchange. Typically, the eastern rails receive a greater percentage of their volume in interchange, while the western rails originate a greater percentage.

However, the sum of all loads received each week can be compared to the sum of all loads originated to determine the percentage of total intermodal activity that involves more than one railroad.

The chart below performs such a calculation on the AAR data dating back to 2005. The analysis clearly shows that the percentage of intermodal loads interchanged has undergone a long-term decline. In 2005, the percentage of interchanged loaded units was nearly 22 %. Most recently, it has been running in the low 15 % range. The percentage of loads interchanged has dropped by one-third.

Rail cooperation trails prior eras despite post-pandemic uptick

Percentage of intermodal loads interchanged between North American railroads, with 12-week moving average

0.3

0.30

0.1 0.20 10

0.20

L

Source: Association of American Railroads

Total 12-week moving average

L

© 2026 S & P Global

Clearly, cooperation, in the form of steelwheel interchange, has fallen out of fashion. Railroads have become less willing to do the necessary work that is intrinsic in the interchange of volume on rail. Run-through trains have become scarcer. Why?

Surely, precision scheduled railroading, in the form of the laser focus of railroads regarding lowering the operating ratio( OR), has played a role. The railroads have demonstrated an inability to increase volume, and rates are capped by the truck competition. The only way to lower the OR is to take out cost.

Railroads have become less willing to do the necessary work that is intrinsic in the interchange of volume.

Putting together blocks for steel-wheel interchange requires switching and therefore generates costs. However, there is no direct revenue offset to the switching function performed for a connecting carrier. It is an easy decision to eliminate the steel-wheel handoff with its attendant switching costs and rely on a rubber tire transfer at the interchange point. The railroad’ s cost is reduced while the revenue is retained.

However, that’ s not the end of the story. While the individual railroad’ s cost is lower, the cost of the door-to-door intermodal move is undoubtedly raised by the inclusion of two additional terminal lifts plus the expensive crosstown dray. Costs are transferred from the railroad to the user. Some moves have been able to withstand this added cost pressure, but other moves have surely gone back to the highway.

In recent times, mergers— both completed( CPKC) and announced( UP-NS)— have triggered competitive interline services in response. Examples include the Canadian National-UP- Ferromex Falcon Service between Canada and Mexico, and various recent BNSF-CSX joint services. However, we haven’ t yet seen an uptick in the interchange percentage.

But supply chains don’ t pivot on a dime. Change generally takes time. Perhaps we will soon see the beginning of a grand reversal in this trend, and greater cooperation will become the new standard.

email: lgross @ intermodalindepth. com

18 Journal of Commerce | February 2, 2026 www. joc. com