After West Coast ports strike contract deal, BNSF says it is ready for intermodal surge

In the aftermath of a proposed solution to the contract faceoff at West Coast ports, rail operator BNSF Railway Co. (BNSF) says it is ready to haul increasing intermodal volumes once freight in the region returns to its full levels.

The announcement comes after the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) said last week that they had reached a tentative agreement on a new contract. Before that accord, workers who had been laboring under an expired agreement for nearly a year had staged a number of work slowdowns and stoppages, sending ripples through global supply chains.

With some shipments lingering at the docks or on ships offshore and shippers re-routing other cargo to Gulf or East coast ports, freight flows from the West Coast had been tailing off in recent months.

But Fort Worth, Texas-based BNSF says it is now prepared for those trends to reverse and shift cargo back to the West Coast again.

Indeed, after news of the tentative agreement was released, financial analysts with TD Cowen likewise said “we expect the ports to get back to full operations in the immediate term as the fine print gets solidified” and freight shifts back to the West Coast. “Intermodal players should also benefit as shippers recoup comfort with the Port of LA/LB, which has seen a noteworthy decline in volumes, partly due to shippers de-risking their supply chains given uncertainty that was shrouding negotiations. As we have indicated earlier, we believe that over 90% of freight that moved to the East Coast will move back to LA/LB given its natural and longstanding competitive advantages,” Jason Seidl, a managing director with TD Cowen, said in a note to investors.

BNSF says it has spent more than $2 billion in capital expansion since 2019, increasing the overall capacity of its tracks, railcars and facilities. These investments have increased its main line track capacity by 58 miles, totaling approximately 30,000 feet for new production tracks and approximately 6,000 new parking spaces at BNSF intermodal facilities. The company is also deploying new technologies to improve consistency, capacity, and customer experience.

“We are beginning an exciting chapter in the future of the West Coast ports, and BNSF has made key investments over the past several years in preparation to support both immediate and long-term volume growth for intermodal, our largest segment with the most growth potential,” Katie Farmer, BNSF president and CEO, said in a release.