Union Pacific to operate international intermodal terminal in Phoenix

November 29, 2023

Union Pacific is beefing up its intermodal offerings through two new options: an international intermodal terminal in Phoenix that will serve the U.S. Southwest and the addition of more inland market destinations for its on-dock rail service at Port Houston.

New international intermodal terminal slated in Phoenix

UP (NYSE: UNP) expects to open in the first quarter of 2024 a new international intermodal terminal in Phoenix, which the railway says will provide a rail option for those seeking a connection between the ports in the Los Angeles Basin and the U.S. Southwest.

Although the terminal, which will be owned and operated by UP, will be located at the company’s rail yard in downtown Phoenix, it will have capacity to grow as customer demand grows. The facility will be serving international intermodal shipments when it opens, but service could grow to include domestic containers, according to UP’s website.

“We are excited to offer regional shippers and receivers in Arizona a fast, sustainable rail option to move product into and out of Southern California that is cost competitive and removes trucks from our nation’s congested highways, with an ability to expand offerings and grow in the future,” Kenny Rocker, UP executive vice president of marketing and sales, said in a Wednesday news release.

The facility will also have drayage support from Duncan & Son Lines, a family-owned logistics firm in Buckeye, Arizona. The firm has experience providing international container drayage from the ports of Long Beach and Los Angeles, UP said.

“Duncan and Son Lines is proud to be working with Union Pacific on this innovative rail solution, which will give our customers another service option to reduce truck emissions,” David Duncan, vice president of operations at Duncan & Son Lines, said.

According to FreightWaves market expert Mike Baudendistel, one thing that makes Phoenix attractive as an intermodal location is that it is an unattractive destination for long-haul truckers since it is often hard to get reloaded. This is shown via a negative headhaul score, which indicates there is more demand for inbound than outbound loads. Phoenix as a backhaul market could also be relevant if UP expands this service to include domestic intermodal. (FreightWaves SONAR) To learn more about FreightWaves SONAR, click here.

UP’s plans come as its competitor BNSF (NYSE: BRK-B) sought to acquire over 3,000 acres in Phoenix in 2022 as a long-term investment.

“This land is adjacent to the BNSF rail line [in Phoenix’s West Valley] and BNSF determined it could be a good long-term investment,” the company said in a May 2022 email to FreightWaves. “BNSF looks forward to working with state and local governments in Arizona, as well as customers, to determine how best to develop the land into an economic engine in the West Valley.”

UP to add more inland market destinations for its on-dock rail service at Port Houston

Union Pacific also said Wednesday that it plans to expand its on-dock rail service at Port Houston by adding access to four more inland markets.

Starting Friday, customers will have access to on-dock rail service at the Barbours Cut Container Terminal to four more UP intermodal facilities: Chicago Global 4; Kansas City, Missouri; Memphis/Marion, Arkansas; and Port Laredo, Texas. The rail service will be available for those seeking to transport imports, exports and empty containers.

According to UP’s website, on-dock rail allows containers to be placed onto flatcars from the ships, thus eliminating the need for a dray carrier to transfer a container to a separate facility.

In May, UP said it was expanding intermodal service at Port Houston by offering on-dock rail at Barbours Cut for containers bound to five U.S. markets: Denver, Salt Lake City, El Paso, Texas, and Los Angeles and Oakland, California.

UP said it was offering the service expansion in cooperation with Port Houston, ocean carriers and beneficial cargo owners.

(Image: Union Pacific)

BNSF had also announced in May that it planned to provide an expanded intermodal offering between the Barbours Cut Container Terminal and BNSF’s intermodal facility at Alliance, Texas, for those seeking access to the Dallas-Fort Worth and Denver markets.

All these service expansions come as Port Houston has indicated that it plans to invest $520 million in capital improvements at Barbours Cut Terminal through 2032, UP said.

Import shipments at Port Houston have grown considerably in recent years, according to this SONAR chart, necessitating on-dock intermodal services to additional locations. (FreightWaves SONAR)

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