The move—which some analysts and industry observers may have inferred as a pre-merger-announcement strategy prior to Berkshire Hathaway’s declaration that it wasn’t interested (see below)—follows Union Pacific and Norfolk Southern’s July announcement that they plan to merge and create the first U.S. transcontinental railroad. However, one analyst said the agreement suggests that CSX and BNSF don’t have much of an appetite for a full-on merger, and are instead trying to find merger-like synergies without a formal consolidation.
BNSF and CSX said they will introduce direct domestic intermodal services between Southern California and Charlotte, N.C., and Jacksonville, Fla.; service between Phoenix, Ariz., and Atlanta, Ga., in an aim to convert over-the-road freight to rail; and direct international intermodal services between the Port of New York and New Jersey, and Norfolk, Va., and Kansas City.
These new services “will offer immediate value for customers,” according to the railroads. BNSF in a Aug. 22 online customer notice reported that the Phoenix to Atlanta service is available now, with the other new services beginning in September.
According to BNSF and CSX, two new 10,000-foot sidings will be added between Phoenix and Flagstaff, Ariz., “enabling more efficient meet/pass operations on the route connecting to BNSF’s Southern Transcon.”
“This collaboration between BNSF and CSX demonstrates the power of partnership, delivering greater flexibility, efficiency and value for our customers,” BNSF Group Vice President of Consumer Products Jon Gabriel said. “We are looking forward to these offerings providing immediate, streamlined service to the supply chain across key markets nationwide.”
“Through this new connectivity, CSX and BNSF are connecting Western and Eastern U.S. markets, creating faster, more reliable service,” commented Drew Johnson, Vice President, Intermodal Sales and Marketing at CSX. “Together, we’re opening access to key markets and strengthening options for our mutual customers.”
Separately, Schneider, CSX, and Canadian Pacific Kansas City reported last December that they would offer a new intermodal service “providing continuous rail service between points in Mexico and Texas and points in the Southeastern United States.”
8/26 UPDATE
“[Berkshire Hathaway Chairman] Warren Buffett is not in the market to buy another railroad but he met with the CEO of CSX earlier this month and discussed cooperation to make freight rail more efficient, he told CNBC’s Becky Quick on Monday [Aug. 25],” CNBC reported after Berkshire Hathaway’s BNSF and CSX announced their intermodal services partnership. According to the media outlet, “Buffett and CEO-designate Greg Abel met with CSX CEO Joseph Hinrichs in Omaha, Nebraska, on Aug. 3 in his office alone without any advisors present. They made clear to Hinrichs that they would not make a bid for CSX, but believed they could cooperate more to gain some of the same benefits that would come from combining the two companies.“
Union Pacific and Norfolk Southern on July 29 announced their agreement to, in a combined cash and stock transaction valued at more than $250 billion, merge and create the first U.S. transcontinental railroad. Union Pacific is the acquiring company.
