Dive Brief:

• CSX and Canadian National Railway will offer a new intermodal service beginning Oct. 7, connecting Montreal and Southern Ontario to Philadelphia, New York, New Jersey and the New York City metropolitan area, where CSX currently offers service, according to a press release.
• "This new intermodal offering aims to convert long-haul trucks to interline rail services," Keith Reardon, senior vice-president of consumer product supply chain at CN, said in a statement. "Trains will run directly into the heart of the metropolitan markets of Toronto and Montreal via CN intermodal yards, making this partnership a natural opportunity for both railroads."
• Intermodal revenue at CSX was down 11% in the second quarter. CN posted a 15% bump in intermodal revenue during the same period.

Dive Insight:

Taking freight off of the highways and onto the rails is arguably Canadian and U.S. railroads' number one goal and the aim of this partnership.

"Answering a need expressed by our customers, this new service positions us to capture market share from trucks and increases capacity in these expedited lanes, as larger container ships call at the Port of Philadelphia and Port of New York and New Jersey,” CSX CEO Jim Foote said in a statement.

Many Class I railroads are banking on intermodal freight representing a major part of their future growth. CN has been particularly bullish, making two recent trucking acquisitions and suggesting there may be more on the way. CSX too has been committed to intermodal growth, with Foote as one of the most vocal rail leaders espousing that the railroads need to transform into a premium service.

In January, Foote said providing a "valuable service" is "changing the dynamics and we are starting to get business from truck that historically moved on rail that's now coming back because of the changes we have made."

It may seem counterintuitive that Class I's like CSX would cut intermodal pairs and "rationalize" networks in the name of precision-scheduled railroading (PSR) — potentially leading to less comprehensive and less attractive intermodal service.

Foote and other PSR-believers have historically contended the efficiency and reliability that come from PSR will be a benefit to customers and make the rails more competitive with the highways. Some vocal customers disagree.

Actions like this new partnership don't happen overnight, but the addition of new intermodal service does represent a departure from the last year or two of service cuts.

By July, a "puzzling" economy and softening trucking market combined with fewer intermodal lanes caused CSX to adjust its 2019 revenue projections down, so this move may be a sign that the railroad sees the value in adding service, on top of chasing the utmost efficiency.