Insights - July/August 2017 - 14

west to east for NS, he said. Since the
early 2000s, the amount of intermodal
cargo NS receives has steadily
reversed from 70 percent received
from western railroads to the same
percentage now from the east, largely
from ports, he said.
International intermodal volume
rose in 2017's first quarter at both NS
and CSX.
"As ships have gotten bigger and
Heller
liner companies have wanted to keep
assets on the water longer," Heller said, "the larger ships are
bringing challenges. The East Coast ports are not set up for that.
They need cranes, trucks and cargo handling space. They are
jumping through hoops to handle that infrastructure requirement."
"Ports have to be able to handle cargo faster," Heller said.
"That is a challenge for us as a railroad as we move cargo
inland. We have pretty well kept pace with the changes in cargo
flow. That's something we need to continually look at and work
with our port partners so that we can collectively handle the
business."
Harris said Virginia "is not experiencing any challenges to our
landside operations" because of focused planning for adequate
labor, berth space, equipment and information flow.

Landside Handling is a Nationwide Focus
"With respect to landside issues from larger vessels, the
port has been working with stakeholders for the last few years
on supply chain optimization," Sanfield said. "While there is
always more to do, we've seen significant progress on efficiency
throughout our terminals."
The landside intermodal challenge is compounded by the
arrival of ever-larger ships at one time, replacing a more even
cargo flow in the past. For example, Virginia achieved TEU growth
despite 12 percent fewer vessel calls in the first half of 2017.
Whatever the cargo trends turn out to be, the advent of larger
ships is testing intermodal supply chain capabilities, Rodrigue
said.

'Surges'
"What has happened in the ports is that we are seeing
increasing problems when they see the new ships sailing in,"
Rodrigue said. "The worst thing they can get is the surges - more
cargo in the same amount of time at the port. The larger ships are
being worked in the same amount of time because their owners
want to keep them moving, so more trucks and equipment are
needed. There are also more moments of lower activity [for all the
businesses at the ports]."
For truckers, Rodrigue said, a paradox is also evolving when
there are more loads in that concentrated period but overall
growth isn't that significant. "It's a slow adjustment," he added. "If
there are more post-Panamax vessels, we will notice it more and
more, with effects on both trucker appointment systems and rail
schedules."
The Hofstra professor envisions a reckoning period ahead for
the public. "The costs of the higher vessels are being assumed by
the ports," he noted, in the form of dredging and other expenses
just to keep their traffic from moving to other ports. "Once the
14 Intermodal Insights | July/August 2017

public realizes the extent of the costs, there will be a backlash -
and a reality check," he added.
However the immediate future unfolds, there is significant
potential for further growth, and market share shifts between
coasts, experts believe.

Intermodal Service Improvements
Continue, Retail Expert Says
Jess Dankert, vice president
of supply chain for the Retail
Industry Leaders Association,
or RILA, believes strongly that
intermodal service has made
quite a bit of improvement since
the West Coast port disruptions
of nearly three years ago and the
volume shifts resulting from the
Panama Canal expansion last
year.
Dankert
"Intermodal is in a good spot,
and has a good outlook for the future," she said in an interview. "There is an increased focus on supply chain fluidity that
has benefited from the larger discussion of how to improve
the entire logistics process."
The reason, said the official from the association that
represents Coca-Cola, Lowe's, Target and other key retailers,
is simple.
"Our members and anyone shipping anywhere in any
quantity are looking at diversifying their supply chain, and
intermodal helps them do that," she said. "They are trying
new things in changing markets in pursuit of optimizing their
network."
Overall, Dankert believes the Panama Canal expansion
hasn't brought any seismic changes in logistics. Rather, the
June 2016 event has continued the longer-term trend of a
slight shift in cargo moving through East instead of West
Coast ports.
"It remains to be seen how much that will change," she
added.
She also said "it's still a little early to gauge" how much
impact the ocean carrier alliances that began operating April
1 will have on intermodal and the supply chain. "Hopefully, we
will see some of the promised benefit in terms of better support for customers and better service overall."
While intermodal is providing increased value, there are
several question marks about the future direction of the
supply chain. One of them is the effect of potential changes
in global and North American trade based on the Trump
administration's rhetoric and policy stances. A second is the
outcome of the discussion regarding infrastructure improvements that is underway in Washington. Still another question is how to adjust to changes brought by e-commerce on
retailers.
"There are always hiccups and disruptions," Dankert said.
"But there is a lot more recognition of the importance on
focusing on the consumer and planning to meet that customer's needs."

Table of Contents for the Digital Edition of Insights - July/August 2017