BNSF Sees an Era of Intermodal Growth

Lee Klaskow (0:07)

Hi, everyone, this is Lee Klaskow when we're Talking Transports. Welcome to Bloomberg Intelligence, Talking Transports podcast. I'm your host, Lee Klaskow, Senior Freight Transportation and Logistics Analyst at Bloomberg Intelligence, Bloomberg's in-house research arm. Before we dive in, a quick favor, if you enjoy the podcast, please take a moment to follow, rate, review, and share it with a friend or colleague. Your support helps us continue bringing you conversations with the leaders shaping transportation and logistics. If you'd like to connect, you can find me on the Bloomberg terminal linked in or on X at Logistics Lee. One of the biggest long-term growth opportunities for the North American railroad industry is sitting right next to the tracks. That enormous amount of freight that still moves over the highway, winning more of that business will require railroads to compete with trucking on service, reliability, flexibility, and of course, price.

Joining us today is Jon Gabriel, Group Vice President of Intermodal and Automotive at BNS Railway. Jon has a unique vantage point into two important freight markets. We'll discuss BNSF's effort to convert more highway freight to Intermodal and what needs to happen for rail to meaningfully gain share from trucking and how changing trade patterns and tariffs are affecting automotive supply chains and the company's auto business.

We'll also get Jon's perspective on what freight flows are telling us about the consumer and the broader economy and where he sees the biggest opportunities for the company in the years to head. Jon, welcome to Talking Transports.

Jon Gabriel (1:39)

Thanks, Lee. It's great to be here today, and you'll certainly look forward to sharing the story with you.

Lee Klaskow (1:44)

Jon, you've spent much of your career in transportation. Can you tell us about your path to BNSF and your current responsibilities overseeing Intermodal and Automotive?

Jon Gabriel (1:54)

Absolutely. Well, like so many railroaders, Lee, I've had an amazing career, but it actually started off, I was a railroad kid. My dad was an engineering employee for the Santa Fe and ultimately for BNSF Railway, and that's where my fascination with the industry started. Used to hear dad come home and talk about the operation and his work, and that obviously led to me coming to BNSF Railway where I've spent my entire career. I've been here for 20 years, and I'd say it's a myriad of operational, commercial, service design, and strategy work, and then leading to the role I'm in here, about four or five years ago, Katie Farmer actually challenged. Tom Williams and I were thinking through, what is the future of Intermodal?

With that effort, we actually stood up an innovation group that was solely focused on that exact initiative and effort of what does the future of Intermodal look like? Then a couple of years later, I stepped into this role as our group vice president of consumer products and couldn't be at a more exciting time with where the industry is and certainly the momentum it has to move forward.

Lee Klaskow (2:57)

BNSF is the largest Intermodal railroad and handles more than a million Intermodal loads more than its next competitor. Where do you see the biggest opportunity to grow from here?

Jon Gabriel (3:11)

Well, you hit one of the key points and certainly we're very proud to be the Intermodal leader and we would say we've been for a number of years as we think about where it's going, what we've really learned and I've learned from our customers is no supply chain is created equal.

I think it's going to be a combination of confidence, geographical fit and certainly reducing that friction, whether it's real or perceived for rail to make its way from the highway to the railroad. But I would say like you said in the opening, the opportunity is tremendous. Today, railroads, depending on which stat you look at, handle somewhere between 10 and 12 percent of long-haul freight. That number can be considerably higher than that. Again, we feel like we're putting forward the investments, the technology, and certainly the platform in which customers can convert that freight from the highway and onto our railroad.

Lee Klaskow (4:07)

Your Intermodal franchise is obviously blessed by where the network is located.

A lot of stuff coming in from the ports in Southern California, moving eastward. Also, BN had an early relationship with JB. Hunt. You guys have a great partnership. Can you just talk about maybe the early days of that partnership and how that has benefited the two of you?

Jon Gabriel (4:31)

You're hitting on some of my best material, Lee. I would say what's exciting about the moment that we're in is that BNSF has been preparing for this moment for 40 plus years.