The Northwest Ohio Hub has enhanced intermodal connectivity. Recently, the hub expanded more than 50% to drive further growth and movement of commodities. The markets in Montreal and Florida are expected to receive new investments. CSX will benefit from the expanding connectivity because high growth can push volumes for the company. It’s expected to benefit from more than 200 new Northwest Ohio lanes.
CSX is trying to pitch clientele, manufacturers with the superior services, and better pricing in order to gain more penetration in the market. With its hub and spoke model as well as its corridor lanes, Northwest Ohio is different from other markets. The model gives CSX a wider reach in the eastern region.
Opportunities in the eastern US
CSX’s network has major connectivity with states in the eastern US. The total opportunity in the region is ~9 million truckloads. The increase in fuel prices, environmental issues, and policy changes will lead to a shift in the medium from road to rail. This will benefit CSX directly. The growth in the region significantly overlays CSX’s intermodal network. CSX launched the “Highway to Rail” campaign in order to capture the growing market.
CSX is also willing to deploy more capital for network expansion and when its volume increases in the region. It faces competition from transport providers like Union Pacific (UNP), Norfolk Southern (NSC), Kansas City Southern (KSU), Genesee & Wyoming (GWR), Berkshire Hathaway (BRK-B), Canadian Pacific Railway Limited (CP), and Canadian National Railway (CNI). Together, these companies form 9.30% of the Industrial Select Sector SPDR Fund (XLI).