Hub Group breaks into boxcars - Rail Update - Brief Article

Railway Age, Jan, 2002

Hub Group is now marketing boxcars for Class I railroads, offering customers who lack a railcar siding the same service it offers intermodal customers. Hub arranges drayage from the shipper's dock, cross-docking into railcars, management of the rail haul, and cross-docking and drayage to the receiver's dock. Small and mid-sized customers get cheaper transportation, the railroads get new traffic, according to Hub Group.

After startup in local markets in November 2000, Hub Group began to offer the service on its website, concentrating first on high-density finished products like food, beverages, pulp and paper, and manufactured products. Program manager Burke Anderson of Hub Group Boston is looking to expand business into metals and military shipments. Expected revenues for 2001 are $24 million; Hub Group's business plan calls for annual revenue of $100 million by year-end 2004. Traffic is averaging 400 carloads a month.

Some rail industry observers say that U.S. Class I's made a major error in the 1960s and 1970s, when TOFC and COFC traffic began to grow. Instead of marketing to and serving intermodal customers directly, the Class I's sold space at wholesale rates to intermodal marketing companies, losing a significant portion of intermodal revenue. This arrangement is different, according to Jim Howarth, merchandise manager for CSX Transportation. For example, CSXT and UP offer a boxcar program between wineries in Napa Valley, Calif., and Oregon for which Hub Group serves as the exclusive sales and logistics agent. CSXT is not giving Hub Group a general wholesale rate, but a negotiated rate for specific customers.