Norfolk Southern’s new initiative to provide expedited service between the East and West coasts with three partners — ocean carrier Hapag-Lloyd, western U.S. Class I counterpart Union Pacific and the Port of Virginia — suggests the four parties are seeking opportunities to maximize recent capital investments while also addressing ongoing congestion.
NS (NYSE: NSC) said the partnership, named OceaNS Bridge Express, will provide shippers a new option to reach West Coast markets. The service will originate at the Norfolk International Terminal at the Port of Virginia and interchange with UP (NYSE: UNP) in Chicago, NS said last week.
NS told FreightWaves that the service aims to cut down travel time because it takes advantage of an additional call in Virginia, which was not previously an option. Containers traverse the remainder of the trip via NS and UP, instead of taking the Hapag-Lloyd ship all the way to Los Angeles or Oakland. This service shortens transit time and prevents shippers from having to wait for space at the West Coast ports, according to NS.
NS’ announcement addresses the congestion at the West Coast ports and the massive investments that have been made at the East Coast ports to expand capacity and accommodate larger vessels, according to Mike Baudendistel, FreightWaves’ head of intermodal solutions.
The new initiative could also serve as an opportunity to bolster the East Coast ports, particularly as West Coast port operators and dockworkers negotiate a new contract to replace the current labor agreement set to expire on June 30.
“Before the pandemic, the East Coast ports had been taking share from the West Coast ports. During the pandemic-era ‘everything shortage,’ the West Coast ports gained share and port diversification strategies came into favor as shippers looked to get goods to consumption centers quickly,” Baudendistel said.
“Now that retailers’ inventory levels are bloated, goods movement in general is less time sensitive, which will likely put the East Coast ports back in favor, which is typically a cheaper alternative for trans-Pacific goods destined for eastern U.S. consumption centers,” he continued.
In announcing the new service last week, executives at NS and UP said it provides shippers with an additional option.
“The current environment has led shippers and carriers to think creatively about moving their goods,” said Shawn Tureman, NS vice president for intermodal and automotive marketing.
Said Kari Kirchhoefer, vice president for UP’s premium, marketing and sales segment: “Union Pacific’s intermodal network is strategically positioned to provide container shippers an alternative with this overland service to the West Coast. Our joint service product to Seattle/Oakland/Los Angeles/Long Beach will expedite these trans-Atlantic shipments to consumer markets in the West.”
Separately, the Port of Virginia said last Wednesday that May was its “most productive month” in the port’s history, with the port processing 314,942 twenty-foot equivalent units, up 8% from May 2021. May’s record surpassed the previous record set in December 2021, and it was the third consecutive month that the port exceeded 314,000 TEUs.