Dive Brief:
- Canadian Pacific Kansas City and CSX launched an “improved” Southeast Mexico service this week, connecting Mexico, Texas and the U.S. Southeast, according to a press release.
- Service upgrades to the SMX line help reduce transit times by about 20% to 45%, including one-day-faster service between Atlanta and Dallas and approximately two-and-a-half days faster transport between Atlanta and central Mexico, per the release.
- New origins and destinations for the SMX service also include Charlotte, Jacksonville and Central Florida. The railroads made service improvements to tracks, bridges and signal infrastructure, in addition to investments in Georgia, Alabama, Mississippi, Louisiana and Texas, per the release.
Dive Insight:
The faster SMX product offering from CPKC and CSX, which initially launched in 2024, comes at a time when shippers are increasingly shifting volumes to intermodal. The freight mode is often cheaper than trucking, but rising fuel prices, higher truckload spot rates are further incentivizing shippers.
“Looking ahead, we are encouraged by the timing of this launch as we are seeing early signs of incremental truck-to-rail conversions driven by higher fuel prices, tighter regulatory enforcement and reduced trucking capacity,” EVP and Chief Marketing Officer John Brooks at CPKC told analysts during a Q1 earnings call on April 29.
CPKC expects most of the truck-to-rail conversion to be seen in its improved SMX offering, according to Brooks.
The SMX rail service aims to compete with trucks on speed and consistency, Schneider National CEO Mark Rourke said in the release. The route can replace up to 300 semi-trucks per train, which also helps reduce emissions.
In addition to the faster services from Atlanta, the SMX also offers shippers a three-day service from Monterrey and four-day service from central Mexico to Atlanta.
Other major railroads have ramped up service offerings to be more competitive on the U.S.-Mexico market.
For instance, Union Pacific, Canadian National Railway and Grupo México Transportes teamed up in 2023 to offer a route from Canada to Mexico with a connection in Chicago.
J.B. Hunt Transport Services, BNSF Railway and GMXT also launched Quantum de México last year. The service connects the U.S. and Mexico, and is focused on service-sensitive freight such as automotive, manufacturing and agricultural.
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