By Kelly Shefelbine
The Business Case for Strategic Adaptation
During my 30+ years in the rail industry, including executive positions at CSXT and BNSF, I’ve witnessed numerous market cycles. But the current rail supply chain and intermodal logistics landscape presents a unique combination of challenges and opportunities that demand immediate strategic response. The next six months are critically important due to a rare convergence of factors: Q1 2025 offers the most competitive rates before projected 5-7% increases later in the year; the gap between truckload and intermodal rates has widened to an advantageous 30%; major infrastructure developments like CPKC’s doubled cross-border capacity are creating new opportunities; potential labor disruptions loom if ILA negotiations stall; and incoming tariff policies could significantly reshape trade flows. Based on my experience managing a $3.6 billion merchandise portfolio through comprehensive logistics optimization initiatives, I can confidently state: the next six months present a critical window for shippers to not only mitigate cost pressures but to gain competitive advantage through strategic supply chain optimization services.
Let me frame this with concrete metrics:
- Intermodal volumes have increased 8% year-to-date through November 2024 compared to the same period in 2023
- The current gap between truckload and intermodal rates has widened to approximately 30%
- Rail labor agreements and persistent inflation are projected to drive intermodal rate increases of 5-7% in Q4 2025
- CPKC’s completion of a $100 million second span over the Rio Grande has doubled cross-border intermodal capacity
The fundamental business case is clear: Shippers who act now to optimize their intermodal logistics strategy, enhance supply chain technology integration, and strategically position inventory can achieve 8-12% transportation cost advantages over competitors who maintain status quo operations. This isn’t just about cost containment – it’s about creating sustainable competitive advantage through industrial supply chain management sophistication that connects rail and trucking supply chains efficiently.
Immediate Action Items for The Next 90 Days
1. Strategic Logistics Optimization
From my years leading pricing strategy at CSXT, I’ve seen that logistics optimization across both rail and trucking supply chains delivers the most immediate impact on transportation costs. As experienced rail logistics consultants know, this requires detailed market analysis. Consider these targeted actions:
- Conduct lane-by-lane analysis of current truckload movements to identify conversion opportunities where the 30% intermodal logistics discount outweighs transit time considerations
- Leverage Q1 2025 for logistics procurement negotiations – this quarter historically offers the most competitive intermodal rates before anticipated increases later in the year
- Diversify rail carrier relationships – having led gateway agreements between Class I railroads, I can attest that maintaining options across multiple carriers improves both pricing leverage and network resiliency
- Evaluate critical service requirements – during my time leading our Industrial Products group at CSXT, we determined that approximately 40% of freight allocated to truck could move intermodal if proper service guarantees were in place
The data shows that shippers who systematically analyze and convert appropriate lanes through proper procurement logistics and supply chain management can achieve 15-20% cost reduction on those specific movements, even accounting for potential inventory adjustments.
2. Enhance Visibility Through Supply Chain Technology
My experience leading the “Ease of Doing Business” initiative at CSXT taught me that visibility isn’t just about tracking – it’s about leveraging advanced supply chain technology that creates predictability and enables logistics optimization. As industrial consulting services often emphasize, implement these proven approaches:
- Deploy API-connected supply chain technology solutions that integrate directly with rail carriers to improve data quality and eliminate manual tracking processes
- Establish early warning metrics for potential service disruptions, particularly focused on dwell time increases at key terminals
- Segment shipments by criticality and align tracking resources accordingly – when I led Customer Service at BNSF, we found that treating all shipments with the same urgency actually reduced overall service quality
- Implement dynamic ETA calculations that account for historical terminal performance and current network conditions
Properly executed technology enhancements from leading supply chain technology companies typically deliver 8-10% improvements in planning efficiency while reducing expedited freight costs by 12-15% during disruptions.
3. Immediate Risk Mitigation Strategies
Having managed through multiple service disruptions during my tenure at both CSXT and BNSF, I can confirm that proactive risk management is essential in this environment:
- Establish backup transportation plans for critical shipments, including alternative routing options and carrier relationships
- Implement buffer inventory for essential components – when I led our Agricultural Products unit, customers who maintained strategic inventory positions reduced production disruptions by 35% during network challenges
- Develop port diversification plans if your supply chain includes import components
- Create a disruption response team with clear escalation protocols and decision authority
When I was responsible for our Chemical Marketing segment at CSXT, we found that customers with comprehensive risk mitigation strategies reduced production impacts from transportation disruptions by over 40% compared to those without formalized plans.
Strategic Positioning for Mid-2025
From my vantage point in Montana, observing how resource-based economies interact with industrial corridors, I see several strategic positioning opportunities that require longer implementation timelines but deliver substantial value:
1. Inventory and Distribution Network Optimization
- Establish strategic buffer inventory positions at key distribution nodes – when I led Agricultural & Food Products at CSXT, customers who partnered with supply chain design consultants to position inventory strategically reduced expedited freight costs by 22% during service disruptions
- Consider nearshoring options with proper manufacturing site selection, particularly given CPKC’s unified network across North America and their substantial cross-border capacity improvements
- Evaluate warehouse site selection and Free Trade Zone opportunities to mitigate tariff impacts while maintaining optimal distribution positioning in your intermodal logistics network
- Reassess distribution center footprint to align with evolving intermodal service lanes – during my time at BNSF, we found that customers who optimized DC locations around high-performing intermodal corridors achieved 8-12% transportation cost advantages
One of my most successful initiatives at CSXT involved helping a major consumer products manufacturer redesign their distribution network around core intermodal corridors, resulting in a 14% reduction in overall transportation costs while maintaining 98.5% on-time performance.
2. Contract Structure Adaptation
Having managed pricing strategy for major rail carriers, I can share that contract structure often matters more than base rates:
- Re-evaluate fuel surcharge mechanisms – in the current environment, these can account for 12-15% of total transportation costs
- Negotiate for service guarantees with meaningful remedies – when I led our Industrial Products group, we found that clear performance metrics with defined remedies improved service compliance by 18%
- Explore volume-tiered pricing structures that align with your projected shipping patterns – flexible frameworks can deliver 5-7% cost advantages over rigid structures
- Implement multi-year agreements with annual adjustment caps to provide budget predictability amid market volatility
During my tenure leading Pricing Strategy at CSXT, we found that innovative contract structures drove 23% more volume growth than traditional transactional approaches while simultaneously improving margin performance by 8% – creating genuine win-win relationships.
3. Cross-Functional Alignment in Industrial Supply Chain Management
My most successful initiatives at both CSXT and BNSF always involved cross-functional alignment, a principle emphasized by leading due diligence consultants:
- Engage procurement logistics, operations, and sales in developing an integrated rail logistics strategy – when I led our Market Strategy group as market analysis consultants, we found that siloed approaches typically left 15-20% of value on the table
- Develop scenario-based contingency plans for potential labor disruptions or major service interruptions in your rail supply chain
- Align inventory management systems and transportation planning tools to optimize end-to-end industrial supply chain management costs, not just transportation expenses
- Create customer communication protocols for potential service disruptions that maintain transparency without creating undue concern
When I led Customer Service at BNSF, we implemented a cross-functional account management approach that improved customer retention by 14% while simultaneously increasing revenue per unit by 7.5% – demonstrating that alignment creates benefits for both customers and service providers.
Carrier-Specific Opportunities
Based on my extensive experience as a rail consultant working with all Class I railroads, here are targeted rail logistics services opportunities with each major carrier:
BNSF Railway
- Recently set new container volume records at Southern California ports
- Average car velocity has increased by over 3% in recent weeks
- Focus on their consistent West Coast import handling capabilities
- Leverage their new Barstow International Gateway development for improved port-to-interior flows
Union Pacific Railroad
- Reported 33% increase in international intermodal volume in Q3 2024
- Achieved 5% reduction in dwell time in recent weeks
- Only Class I railroad to reduce operating ratio and improve income in Q1 2024
- Capitalize on their recent service improvements and capacity investments
CSX Transportation
- New service connection with CPKC established in December 2024
- Highest revenue per revenue ton-mile among Class I railroads
- Explore their new CPKC connection for Southeast-Mexico routing options
- Leverage their strong East Coast port connections for import flexibility
Norfolk Southern
- Only railroad to register improvements in both dwell time and average train velocity in Q2 2024
- Recently shifted from RoadRailer to container trains for auto parts
- Evaluate their premium corridors connecting Northeast population centers
- Leverage their double-stack capabilities following clearance improvement projects
CPKC
- First and only single-line rail network connecting Canada, the US, and Mexico
- Revenue growth leader with 13.5% increase in Q2 2024
- Doubled cross-border intermodal capacity at Laredo gateway
- Capitalize on their unique single-line Canada-U.S.-Mexico network
Conclusion: From Strategy To Execution
Having led major change initiatives throughout my career as a logistics consultant, I know that supply chain optimization strategy without execution creates no value. As you navigate the next six months in your rail and trucking supply chain, remember these implementation principles:
- Phased approach delivers faster ROI – when I led our Yield Management transformation, we found that targeted, sequential implementation of logistics optimization initiatives delivered 35% faster returns than comprehensive redesigns
- Data-driven decisions outperform intuition – systematically test intermodal logistics shift opportunities with small volume allocations before major commitments
- Build cross-functional teams – the most successful transportation transformations I’ve led always involved procurement logistics, operations, finance, and commercial teams working in alignment with manufacturing site selection consultants when appropriate
- Measure and adjust continuously – establish clear KPIs and review cycles to identify opportunities for ongoing rail supply chain optimization
In my three decades of rail industry experience, I’ve observed that market inflection points like this one create disproportionate advantages for organizations that take decisive action while competitors maintain the status quo. The specific combination of rate dynamics, capacity changes, and market volatility we’re seeing creates a rare window for strategic repositioning that will yield benefits long after the immediate challenges have passed.
