CFQU Fleet Expansion – 2022
BNSF partner COFC Logistics buying 5,500 domestic containers
Ari Ashe, Senior Editor | Apr 22, 2022 2:27PM EDT
COFC sells containers and train capacity to non-asset intermodal marketing companies which in turn sell the services to intermodal shippers. Photo credit: Ed Varnado/Visions of Ed.
COFC Logistics, a domestic intermodal provider partnered with BNSF Railway, is purchasing 5,500 containers that will be delivered over the next 12 months, a move designed to provide an alternative for shippers who do not want to follow Schneider National’s move to rival Union Pacific Railroad next year. There is a market for an alternative, as multiple shippers told JOC.com at TPM22 last month that they were leery about following Schneider to UP because they favor BNSF. Schneider announced in January that it’s leaving BNSF at the end of this year to join UP, following a similar move from APL Logistics and Knight-Swift Transportation this Jan. 1. It’s a major shift because Schneider owns 25,000 domestic containers, the third largest in the US behind J.B. Hunt Transport Services and Hub Group.
J.B. Hunt last month announced plans to increase its container pool by 40 percent to 150,000 containers within the next three to five years, hoping to lure shippers back to BNSF. COFC CEO Garry Old said Friday the company will own 10,000 containers after this current order is fulfilled, providing yet another BNSF option. Unlike J.B. Hunt, COFC does not sell directly to shippers, but sells containers and train capacity to non-asset IMCs that in turn work with shippers. “With changes looming in the marketplace, we feel the time is right to expand our fleet,” Old told JOC.com, adding COFC will then double its fleet size again within the next three years. “We have been experiencing significant growth and demand for our service,” he said. “As we move through 2023 and the demand continues to increase, we will add up to 10,000 containers to our fleet.”
Some shippers want to work with smaller non-asset intermodal marketing companies (IMCs) partnered with COFC. The small to mid-size IMCs can deliver more access to decision-makers than at a large IMC. And some shippers do not have enough volume to pique the interest of large IMCs. Non-asset IMCs may consider the COFC-BNSF option as they find it harder to secure capacity on UP trains using rail-owned containers known as UMAX and EMP boxes. As large IMCs have grown their container fleet 17 percent year over year as of March 31, the rail-owned container fleet has shrunk 2.7 percent, according to Jason Hilsenbeck, founder of Drayage.com and LoadMatch, which tracks domestic container pools. Train capacity could increasingly go to Hub, Schneider, STG Logistics (formerly XPO), and Swift Intermodal, pushing out small and mid-sized IMCs and forcing them to search for alternatives similar to the COFC-BNSF partnership. Still, UP has cited investments into the UMAX and EMP containers as evidence it will not abandon any customers.
BNSF expansion
BNSF is building out its intermodal network to accommodate the growth strategies of J.B. Hunt and COFC. Crews are building 400 additional parking spots at the BNSF Cicero terminal outside of Chicago and 1,100 additional spots at BNSF’s Alliance terminal outside of Dallas. Both projects will be completed before the end of this year. Parking spots are part of BNSF’s “wheeled terminal” model in which overhead cranes take containers off trains and place them onto chassis, and then a yard hostler moves the combined units to parking spots. A truck driver later comes into the terminal to hook up to the chassis. When terminal operations are fluid, a wheeled terminal often provides a faster turn time than a traditional grounded terminal. Additional parking spots should allow BNSF to handle more containers per day. BNSF is also widening or adding more tracks in Arizona, Texas, and Kansas to support more intermodal trains.
Contact Ari Ashe at ari.ashe@ihsmarkit.com and follow him on Twitter: @arijashe.
