With the holiday season in full swing, shippers are looking ahead to 2024. Many companies are busy finalizing their transportation partnerships for the new year, and rail may be a more attractive option than in years past.
Next year’s transportation environment is expected to be colored by gains in three significant areas: service, sustainability and technology. Rail has been making serious gains across all three, making it a viable and affordable option for shippers.
“The environmental advantages of rail, greater supply chain transparency and new service solutions will all support growth in the rail market share versus trucking,” according to CSX Executive Vice President and Chief Commercial Officer Kevin Boone. “Although soft truck rates have muted conversion opportunities, the environment is improving for shippers to evaluate opportunities to achieve favorable supply chain economics with rail.”
Continued service improvements
Service levels are expected to improve throughout 2024 due to a combination of economic factors and new solutions being introduced to the market. Pandemic-related supply chain congestion has dissipated. At the same time, innovative transportation companies like CSX have ramped up their service offerings.
Service improvements in rail, specifically, have opened up new opportunities for shippers that have historically opted for other modes of transportation due to perceived inefficiencies in the more cost-effective rail space.
“Customers have long expressed a desire to increase their use of rail as a more cost-effective transportation solution,” Boone said. “As rail provides better service — including improved customer service platforms and more attractive service options — the past obstacles for shippers to take full advantage of rail economics are being overcome.”
CSX, specifically, has seen service gains over the past couple years, with improvements approaching record levels at the end of 2023. Those improvements include the introduction of innovative service solutions to provide shippers with valued-added services and dock-to-dock transportation products.
Sustainability gains
Environmental stewardship is expected to be top of mind for shippers in 2024. Companies will be working to meet their own sustainability goals, align with updated government-issued guidelines and meet the demands of their increasingly climate-conscious customer bases.
Transportation emissions are one of the biggest challenges standing between shippers and their environmental goals. This makes rail an attractive alternative to trucking, as it is naturally a cleaner way to move goods.
“Increased sustainability concerns across all industries have greatly strengthened the value proposition of rail, which is far more fuel-efficient than trucking,” according to Boone.
In general, rail is about four times more fuel-efficient than long-haul trucking, according to the Association of American Railroads. CSX has demonstrated a strong commitment to continued sustainability growth, promising to cut greenhouse gas emissions by over 37% between 2014 and 2030.
“At CSX, sustainability is the way we manage and operate our business to best serve our customers, care for the environment, secure profits and drive long-term prosperity,” according to the company’s sustainability statement.
Technology growth
Service and sustainability improvements have both been fueled by technology growth. Strong tech investments make it possible to run a more efficient — and cleaner — operation while simultaneously increasing supply chain transparency.
The relationship between technology, service and sustainability is evident at CSX. The company has focused its tech growth on everything from train inspection portals to developing hydrogen locomotives and investigating alternative fuel use.
This forward-looking approach to technology and innovation will ensure rail continues to be a viable — and increasingly attractive — transportation option for shippers of all shapes and sizes in the years to come.
Shippers across the board are also looking beyond 2024 in order to plan and enact long-term growth strategies. Many companies planning new facilities or substantially expanding existing operations are making a strategic choice to seek out rail-served sites.
CSX has developed a robust and flexible site search and evaluation platform — CSX Select Site — to assist companies in finding rail-served sites that meet a wide range of selection criteria in addition to rail access. These industrial development efforts have already succeeded in attracting many major projects to CSX-served sites and created a strong pipeline of future projects that will drive rail growth for many years.
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