Class Is continue to maneuver for long-term intermodal growth despite short-term uncertainties

By Bridget Dean, Associate Editor

Uncertainty was more than just a buzzword in first-quarter 2025, as intermodal stakeholders and supply-chain members attempted to prepare themselves for a changing international trade landscape. But a volatile economy is still a functioning one, and the Class Is pushed forward with intermodal growth objectives despite a looming threat of lower traffic in the near future.

Volume wasn’t an issue in Q1. A flood of imports boosted intermodal volume in North America, as U.S. retailers stockpiled their inventories before the Trump administration placed tariffs on some of United States’ largest trade partners, notably China.

Overall volume rose 6.3% compared with the same period in 2024. It was the sixth consecutive quarter of year-over-year traffic growth, Intermodal Association of North America (IANA) officials wrote in the organization’s quarterly intermodal market report.

Volume exceeded 4.5 million 20-foot equivalent units (TEUs), the strongest Q1 since pandemic-era 2021, when loadings totaled 4.6 million TEUs, according to IANA.

Yet, there is a strong potential for a volume downturn later in 2025 as the impacts of the Trump administration’s tariff frenzy set in. Those impacts had not yet been reflected in Q1 traffic data, says IANA President and CEO Anne Reinke.

When the products being held in Asia due to tariff uncertainty are shipped, BNSF aims to be ready to help get them to shelves in a timely manner.

BNSF Railway Co.

Q1 traffic data also shows intermodal container volume climbed 8.5% over the same period in 2024 to 2,331,041 TEUs and domestic container volume rose 5.6% to 2,105,752 TEUs. Meanwhile, trailer volume fell by 18.2% to 118,057 TEUs.

As for regional growth, only one of the 10 regions monitored by IANA posted an intermodal volume decrease — the Northeast, at 3.6%. The Northwest gained 23.1%, followed by the Southwest with a 13.3% increase. IANA credits front loading on the West Coast for that boost.

In terms of international container activity, the Northeast region again was the sole decliner, at 7.6%, due to labor and congestion issues, IANA reports.

“When truck rates are down, which they are, and there’s excess capacity in the trucking marketplace, [Northeast] intermodal is just not as popular,” says Reinke.

Because the lengths of haul tend to be shorter on the East Coast, trucking has a much larger market share, leading to a more competitive environment for railroads than on the West Coast, where cargo is hauled across much longer distances.

For all of 2025, IANA expects international intermodal volume to fall by 1% due to the expiration of exempted tariffs on items such as vehicles and smart phones. Unfortunately for the Class Is, which derive business from demand, the market is also showing initial signs of a recession. Consumers’ confidence, and therefore purchasing behavior, has shown signs of decline in the spring, IANA says.

Reinke notes similarities between the ports’ conundrums in Q1 2025 and pandemic-era problems.

“The ports are concerned because they can’t store containers [on site]. They’re not a storage facility,” she says. “If those containers are not actually picked up because they were ... ordered and then the tariffs change in transit, [there is] potential for having ports that are congested with containers.”

Another factor on Reinke’s mind? Employment figures. When port workers, truckers and railroaders are laid off due to diminished traffic demand, it’s difficult to get them back once shipments begin to pick up. At least in Q1, employment figures were mostly good, Reinke says.

“There are some drayage companies ... that have had layoffs in several of their operations, because they just don’t have the work to sustain the workforce,” she adds.

An unpredictable environment

The volatility of the international trade market has made it difficult to predict what the next quarter — and beyond — holds. Exceptions to tariffs and fluctuating trade agreements between the United States and other countries makes predictions a moving target, especially for intermodal market analysts.

Independent transportation analyst, consultant and Progressive Railroading columnist Tony Hatch is among them. Analysts have, for the most part, made their predictions for Q2 and beyond wide ranging, he says.

He’s hopeful the trade sparring won’t impact long-term market predictions, which he explored in his recent white paper “Intermodal at the Crossroads” [see Resource Center menu and scroll to "Intermodal at the Crossroads" link] that was mostly written in summer 2024 and published for IANA in February 2025.

“If [the tariffs] stick, this will be the biggest change in American political and economic thought for eight years,” Hatch says. “That would be pretty devastating to any outlook written last summer.”

He, too, compares what is occurring at U.S. ports to the pandemic effect, or a “boom and bust” cycle when there are bursts of shipments coming in prior to or during reprieves in tariffs, then a lull in shipments when costs rise.

Constant supply-chain disruptions aren’t good for any of the chain participants, Hatch says. Hostility created by tariffs also damages relationships between the United States and countries it has built trade relationships with. For example, China has invested heavily in other soybean exporters, which has hurt U.S. soy farmers, Hatch says. He believes the tariffs have damaged the United States’ trade reputation.

“Some people say that the very instability is part of the negotiating tactic. I think that implies a level of consideration and thought that ... there’s no evidence of,” Hatch says.

That market instability and the fluctuating costs from tariffs have made planning and investing riskier for companies that depend on a stable income each year. If consumers spend less, retailers buy less, businesses put the brakes on development projects, and railroads ultimately have less freight to haul.

What railroads do have the opportunity to do is try to remain resilient and agile throughout this period of uncertainty, continue to improve their existing services and accept a slightly higher cost base to be prepared for the inevitable economic recovery, Hatch says.

The tariff climate improved slightly in late May, but the future of Trump’s favorite trade add-on remains in limbo. On May 28, the tariffs were struck down by a three-judge panel on the Court of International Trade, which opined that President Trump exceeded his authority in implementing tariffs without congressional approval.

The administration has immediately appealed the ruling to the U.S. Court of Appeals for the Federal Circuit. Although the status of tariffs remains up in the air, the economy likely won’t remain down for the count for an extended period.

“The economy will eventually rebound. There’s so many things you have to wait and see. But you know, as Warren Buffet once said, you don’t get rich betting against the American economy,” says Hatch.

The Class Is can’t afford to take a wait-and-see approach when it comes to intermodal, one of their key traffic segments and growth drivers — especially in terms of long-term growth. So, they’re pushing forward with partnerships and projects to better serve their customers and develop the services shippers are demanding. Following are some examples of those efforts.

UP: In the business of growth

Union Pacific Railroad is nearing completion of its new Kansas City Intermodal Terminal (KCIT), which is slated to open in mid-July west of downtown Kansas City, Missouri. Once operational, the terminal will double UP’s capacity in the Kansas City market, says Eric Gehringer, UP’s executive vice president of operations.

UP worked with its customers to determine the right route, location and size of the new terminal, which will meet the needs of existing and new customers looking to grow in the Kansas City market.

Customers were seeking a service that could transport products from Los Angeles to Kansas City in a short period of time, or in about 70 to 75 hours, says Gehringer. The KCIT is expected to mostly handle such commodities as grains, consumer goods, refrigerated products and pet foods.

Construction on the terminal began in late 2024 at a UP-owned location west of downtown Kansas City and near three interstates. The gating system at the terminal will feature UP’s Fast Gate precision gating technology, which will make trucking operations smoother.

“When it comes to an intermodal facility, you basically have three things that you need to make it work. You need tracks, you need parking spaces, and you need equipment,” Gehringer says. “We’ll have more than enough of these parking spaces for what our customers are forecasting.”

In terms of cranes, UP will have multiple types on site to make the KCIT as versatile as possible. Some customers would prefer that containers be unloaded from a train onto a stack on the ground, while others want their products to be loaded onto a chassis right away, Gehringer says.

“Kansas City Intermodal Terminal will be able to do both,” he says.

In total, the facility will feature four working tracks where trains containing both domestic and international containers will be offloaded and reloaded. The KCIT will have plenty of space for UP to expand it beyond four tracks, Gehringer says.

Room to grow was an important factor in choosing the location, since UP’s existing intermodal terminal in Kansas City is land-locked. Together, UP and its customers determined the existing facility wouldn’t be able to handle growing demand in Kansas City and opted to invest in a new terminal that can be expanded.

When a customer asks to grow their business with the Class I, the answer is yes, says Gehringer. UP spends up to $3.4 billion per year in capital expenditures, with at least $600 million to $700 million dedicated to commercial facilities such as the KCIT.

“We’re in the business of growth, and we’re making the appropriate investments quickly to support that growth,” says Gehringer.

BNSF and NS: Collaborating for faster service

BNSF Railway Co. and Norfolk Southern Railway in early April announced a collaboration with the Northwest Seaport Alliance — the cargo operator for the ports of Seattle and Tacoma, Washington — to develop a faster service product for intermodal traffic moving from the Pacific Northwest (PNW) to Chicago.

Many customers had shared with BNSF a desire for a competitive route from the PNW to the Midwest. Coming out of the pandemic inflationary period, cutting inventory costs from the supply chain is a top priority in 2025, says Jon Gabriel, BNSF’s vice president of consumer products. Reducing container dwell time is a cost savings measure for customers.

“The Northwest Seaport Alliance put a lot of emphasis over the last [year] to reduce container dwell,” Gabriel says. “They’ve really tried to lean into rail moves or on-dock movements.”

BNSF, NS and the seaport alliance created a service product to bring Chicago-bound intermodal traffic directly to NS’ Ashland terminal in Chicago in just six days. This reduces the previous route by three days and is the fastest route from any PNW gateway in North America, BNSF officials said in a press release.

The seaport alliance plays a crucial role in cutting down the total time of transfer by building the point-to-point trains in fewer than two days from when the container lands on dock. Those trains are then moved on BNSF’s Northern Transcon route all the way to Chicago, where cargo can be sorted for its next destination.

Prior to this offering, BNSF would take all Chicago-bound traffic from the ports on a southern route to Fort Madison, Iowa, where traffic would be sorted between different carriers’ destinations. After a 48-hour sorting process, BNSF could begin hauling its Chicago-bound traffic north. This detour added 240 miles to the full trip, Gabriel says.

“Relationships [are] key in making products like this work, and I certainly think it’s a great demonstration of multiple partners coming together, aligning, integrating to make a more seamless shipping experience for the cargo owner,” he says.

With uncertainty mounting at the ports, reliable service, capacity and timely deliveries are what cargo owners are asking for from their carriers, Gabriel adds. When the products being held in Asia due to tariff uncertainty are shipped, BNSF aims to be ready to help get them to shelves ahead of the back-to-school push and holiday season.

CPKC and CSX: All about optionality

Canadian Pacific Kansas City and CSX launched an interchange in Alabama on Dec. 1, 2024, to provide customers using the CSX network the ability to transport products out of and into Mexico via CPKC’s lines.

It’s an opportunity for shippers using the CSX network to gain access into Mexico, or vice versa, for CPKC customers shipping cargo across the border to gain access to the CSX network, says Jordan Kajfasz, CPKC’s assistant VP of domestic intermodal.

It’s an opportunity for shippers using the CSX network to gain access into Mexico, or vice versa, for CPKC customers shipping cargo across the border to gain access to the CSX network, says Jordan Kajfasz, CPKC’s assistant VP of domestic intermodal.

The interchange has received positive feedback from the intermodal market in the months since the two Class Is began interchanging cars, says Kajfasz. Although the interchange is running, CPKC and CSX remain in the early days of infrastructure improvements, and additional work will occur in the future. Both railroads already have invested in track acquisition and upgrades.

“Having optionality for customers is always a benefit. Having competitive choices is a benefit, and not every customer uses just one railroad,” Kajfasz says.

Shippers have voiced their desire for the service product to the two Class Is, he adds.

There is always a desire for optionality in the marketplace, and while there are multiple options for crossing the U.S.-Mexico border, not all connect to the locations shippers need to be.

For example, CPKC’s Mexico Midwest Express Service between San Luis Potosi, Mexico, and Chicago was inaccessible to customers on the CSX network. On the other side, CPKC shippers utilizing the express service were unable to reach regions in the Southeast on CSX’s network. With the new interchange running, that problem is solved, Kajfasz says.

The interchange is benefiting more than just intermodal customers, too, he adds.

“If you’re an automotive manufacturer and your facility is served by CSX, and you want to access investments we’ve made ... in our auto compound at Dallas, at our Wiley facility, you didn’t have that option before, or certainly not as a direct and premium service as we’re able to offer now with our interchange,” Kajfasz says.

The collaboration highlights how Class Is are trying to set themselves up for long-term growth while meeting the demands of their customers. By creating more shipping options, CPKC and CSX are creating greater flexibility for customers during an unpredictable time.

“We are very happy with the growth we’ve experienced so far,” said Andrew Johnson, CSX’s assistant vice president of domestic intermodal marketing, in an emailed statement. “By establishing this service, CPKC and CSX have been able to offer shippers more choices and increased capacity through a reliable interchange.”

Email questions or comments to bridget.dean@tradepress.com.