This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
We have always felt good about the long-term growth prospects for intermodal, and we expect the strongest intermodal volume growth in 2020 to continue coming from our cross-border service. The railroads’ share of the US–Mexico cross-border freight market is still low, and we see exciting growth opportunities for many years to come. We are watching the US economy closely, with an eye on available truck capacity and slowing business investment driven by trade uncertainty. We are also watching the Mexican economy closely, as industrial production has declined in 2019 and business confidence has been impacted by some of the new administration’s policies and lack of a ratified USMCA. A ratified USMCA could bring much-needed certainty to North American trade and lay the groundwork for new foreign direct investment into Mexico.
Meanwhile, we will continue to execute well on the things that we can control, including improvements to operations and customer service. Improving customer service and operations was the driving force behind our decision to embrace precision scheduled railroading (PSR) principles and adapt the mantra of “service begets growth,” which is playing out well for us. Strong operational performance driven by PSR initiatives is increasing network capacity, improving our customer service, reducing costs, and providing us with opportunities to win new business, which bodes well for intermodal and will benefit us in 2020 and beyond. When the volume environment improves, we will be ready to capitalize on it with a competitive service offering and ample excess capacity to profitably absorb new business.