Norfolk Southern is entering what it sees as a new chapter for its intermodal business, one in which competing with trucking will depend on more than transportation cost. The railroad increasingly wants to make rail freight easier to purchase, plan, track and manage, according to an executive reflecting on the company’s three decades of network development and customer-service improvements.
Shawn Tureman, vice president of Automotive & Intermodal Marketing, has spent 23 years at Norfolk Southern (NYSE: NSC). Speaking while attending the Intermodal Association of North America’s annual conference in Long Beach, he said the industry has spent much of that time asking whether intermodal could effectively compete with over-the-road trucking.
In his view, however, that question is no longer the one that matters most.
Rail already has structural advantages on longer-haul lanes, including scale, fuel efficiency, sustainability and broad network reach. The bigger issue is whether railroads have made the service sufficiently simple, reliable and visible for shippers and logistics providers to choose it consistently instead of a truck move.
That challenge has grown as supply chains have adapted to an increasingly on-demand economy. Shippers are now accustomed to services that are immediate, transparent and easy to control. Transportation decisions are therefore shaped not just by price, but also by predictability, ease of execution and the ability of a provider to accommodate business growth.
Trucking’s advantage, Tureman argued, is not necessarily limited to speed. A truck shipment can feel easier to manage because it generally means dealing with one provider, one movement plan and a clearer line of accountability.
Norfolk Southern’s opportunity is to provide that same degree of certainty and simplicity while preserving rail’s ability to move freight efficiently at scale.
The railroad has already seen stronger momentum in intermodal. Norfolk Southern’s intermodal volume increased 13.7% year over year in the past week, offering evidence that rail can attract freight away from the highway when the overall service proposition is competitive.
Three eras of intermodal development
Norfolk Southern divides the evolution of its intermodal business into three broad stages: building the network, competing more directly for the customer and, now, removing the friction that still makes rail harder to use than trucking in some situations.
First came the network
The first period focused heavily on infrastructure. After railroad consolidation in the late 1990s, Class I railroads invested substantially in intermodal terminals, double-stack routes, port connections and long-haul freight corridors.
Those investments established the foundation of the U.S. intermodal network and strengthened rail’s position as a long-distance alternative to highway transportation.
At Norfolk Southern, that effort included the development of what Tureman described as the most extensive intermodal network on the East Coast. The railroad expanded terminal capacity, built and upgraded connections between major freight markets and improved access to East Coast ports as well as inland distribution centers.
The result was a broader set of transportation choices for shippers and an intermodal system that evolved from an emerging freight option into a central part of the market.
But expanding the physical network did not remove the operational complexity customers faced.
Long-distance rail shipments could involve multiple railroads, terminal transfers, drayage providers and service handoffs. Even when rail offered advantages in cost or efficiency, inconsistent service and uncertainty could make it difficult for companies to integrate intermodal into closely managed supply chains.
“Cost alone does not shift a supply chain,” Tureman said. “Customers need confidence.”
The first era proved that intermodal could scale. It did not, however, fully solve the customer-experience problem. In many cases, customers still had to shape their operations around the railroad instead of receiving a transportation product built around their own requirements.
The service itself became part of the product
The second era, which Norfolk Southern places largely within the past 15 years, brought a greater focus on customer service, terminal performance, shipment visibility and consistency rather than on infrastructure alone.
The way shippers evaluated intermodal began to change. The question was no longer simply whether rail could move freight for less money, but whether it could help companies run their supply chains more effectively.
Could transit times be planned around? Would service remain consistent from one week to the next? Could customers track their freight and identify exceptions before they became larger problems? And could rail service be managed efficiently by operations teams, drayage partners and end customers?
Those questions elevated the importance of terminals, where shippers and truck drivers often have their most direct interaction with the railroad.
Norfolk Southern said it has concentrated on improving terminal flow, reducing bottlenecks, managing capacity and developing tools designed to make transactions easier for customers and drayage providers.
At the same time, the railroad has continued investing in the infrastructure behind the service, including East Coast port connectivity, inland ports, double-stack-capable corridors, strategic terminal capacity and high-performance routes serving expanding freight markets.
When terminals operate efficiently and connections remain dependable, customers encounter fewer pickup and delivery surprises, more reliable cutoffs and stronger freight visibility. They are also better positioned to recover when disruptions occur.
Norfolk Southern does not regard that work as complete. Tureman acknowledged that the railroad is not “perfect,” while arguing that the customer experience has improved significantly as the company has adopted a stronger culture of continuous improvement.
The broader objective is to turn rail into a service customers can confidently build their supply chains around, rather than simply a cheaper alternative that may come with greater operational complexity.
Union Pacific combination could define the next phase
The proposed combination between Norfolk Southern and Union Pacific (NYSE: UNP) is a central element of the railroad’s vision for a third intermodal era, one focused on removing structural friction from the freight network.
The transaction would connect Union Pacific’s western network with Norfolk Southern’s eastern system, creating a single-line railroad linking major West Coast markets to the Southeast, Northeast and other eastern destinations.
Supporters of the proposal argue that bringing the two networks together could reduce the complexity associated with interline freight movements between separate railroads.
Chicago and other major rail gateways are particularly relevant for transcontinental intermodal shipments. A railroad handoff can create another point where containers need to be transferred, transportation plans can change and delays can develop. From the customer’s standpoint, each handoff can introduce additional time, uncertainty and coordination requirements.
That complexity can ultimately push freight onto highways even when rail would otherwise be an appropriate option.
Under the proposed Union Pacific-Norfolk Southern combination, the companies said roughly 10,000 existing lanes could move from interline service to single-line service. Filings associated with the application also project the elimination of about 2,400 railcar and container handlings and approximately 60,000 car-miles per day.
The proposal also includes seven new premium intermodal lanes, giving customers a broader range of single-line options across the United States.
For shippers, single-line service could materially change the commercial and operational model. Instead of coordinating separate railroad sales teams, contracts, invoices, information systems and accountability structures, customers could work with a single provider for a larger share of a coast-to-coast shipment.
Norfolk Southern’s argument is that fewer handoffs and fewer physical touches should also mean fewer opportunities for delays and a clearer chain of accountability.
For freight moving from a West Coast port to the Southeast or Northeast, that could reduce the need to build additional buffer time into supply-chain plans around an inter-carrier transfer. Logistics providers could also spend less time coordinating moves across multiple railroads.
From a shipper’s perspective, the objective is to make intermodal look less like a complicated exception and more like a dependable and practical transportation option.
The wider strategic case is that a simpler rail product could help the industry capture a greater share of the long-haul trucking market, while also easing highway congestion and adding capacity to domestic supply chains.
Terminals remain the critical customer touchpoint
A larger transcontinental network by itself will not determine whether rail captures additional freight from trucking.
Customers continue to encounter the railroad at terminals, gates, ramps and drayage transfer points, making terminal performance one of the most important factors in any effort to increase intermodal volumes.
“The terminal is our storefront,” Tureman said.
That makes terminal readiness just as important as network integration and commercial simplification. A railroad may offer a longer single-line route, but the benefit can quickly disappear if drivers encounter long gate queues, containers are unavailable when expected, chassis are constrained, capacity is tight or service exceptions are difficult to identify and resolve.
Norfolk Southern has stressed the importance of preparing terminals before additional volume arrives. That preparation includes sufficient capacity, staffing, processes, power, technology and operating discipline to handle increased throughput.
When terminals are built and operated for velocity, customers can see the effects directly: faster gates, less driver dwell, smoother connections, stronger visibility and quicker recovery when disruptions occur.
The opposite is also true. An unprepared terminal can make intermodal difficult to use regardless of how strong the broader rail network may be.
Norfolk Southern has connected that terminal work to the potential opportunities created by a combined UP-NS system. The company is continuing to improve the day-to-day customer experience across its existing network while pursuing a longer-term model based on more integrated and accountable transcontinental rail service.
Moving beyond direct competition with trucks
The evolution Norfolk Southern describes follows a clear progression.
The railroads first built the network. They then concentrated on improving the service product. The next challenge is to eliminate the friction that remains at terminals, interline handoffs and other points where complexity can discourage customers from choosing rail.
The goal is not to ask shippers to tolerate the operational complications of intermodal simply because it costs less. Instead, Norfolk Southern wants to redesign the product so that more of that complexity is absorbed within the carrier network rather than transferred to the customer.
That approach would allow intermodal to compete on a broader set of factors: predictability, transparency, simplicity and accountability, alongside cost and capacity.
Tureman said that dependable terminal experiences, better visibility, fewer inter-carrier handoffs and a single accountable partner for long-haul movements could ultimately position intermodal as something more than an alternative to over-the-road transportation.
“It can become a preferred option for moving the country’s freight.”
