Hub Group president vows aggressive push into Eastern U.S.

Hub Group Inc., the nation's largest intermodal marketing company, plans to aggressively push into the densely populated Eastern U.S. market in an effort to grow its share of the shorter-haul intermodal category, the company's president and COO said today.

Speaking in Key Biscayne, Fla., at a transportation logistics conference sponsored by investment firm Stifel, Nicolaus & Co., Mark A. Yeager said Hub's "local East" traffic grew 24 percent in the fourth quarter of 2010 and now accounts for 36 percent of Hub's total intermodal volume, compared with 24 percent four years ago. Hub's 11-city network stretches as far west as Kansas City, Mo., as far north and east as Boston and Elizabeth, N.J., and as far south as Jacksonville, Fla.

Yeager said shippers that in the past wouldn't have considered intermodal service for lengths of haul under 550 miles are now viewing it as a more attractive option due to higher diesel prices, increased road congestion, and more reliable service on the part of railroads and the local drayage drivers who move traffic to and from intermodal ramps. With more advance planning, shippers may find ways to better utilize the intermodal network for shorter hauls, said Yeager, who is also vice-chairman of Downers Grove, Ill.-based Hub.

The reliability of rail service will be the key factor in making short-haul intermodal a sustainable alternative to over-the-road trucking, Yeager said. In the past, rail service consistency declined as intermodal volumes spiked, Yeager said. "That isn't the case today," he said.

He added that "as long as rail service holds in there, I don't see the trend [toward migrating to shorter-hail intermodal service] reversing itself."

Though rail intermodal service has been gaining share of the long-haul—over 550 miles—market from trucks, intermodal still controls less than 8 percent of the domestic long-haul market for dry van freight, Yeager said, citing data from multiple sources in his presentation.

Hub and J.B. Hunt Transportation Services Inc., the transport logistics giant that is also a major intermodal marketing company, controlled about 39 percent of the $7 billion U.S. intermodal market as of the end of 2009.