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The Intermodal Ultimatum

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In this episode of “Talk Track”, David sits down with Larry Gross - a 46-year rail industry veteran, award-winning “intermodalist,” + long-time market analyst - to tackle the tough question: does US intermodal have a long-term growth problem? Larry breaks down the data behind his viewpoint - comparing intermodal’s 10-year performance to GDP, import TEUs, + long-haul truckload. He also explains why intermodal share has stagnated despite nearly constant claims that it is actually the industry’s growth engine.

David + Larry break down the intermodal math that really matters to shippers: rail doesn’t have to beat truck on speed, but it does have to beat it on cost. Larry argues that years of simplification + interline avoidance may have optimized the railroads…perhaps at the expense of leaving growth on the table. 

Talk Track, hosted by Harris Ligon + David Correll of Telegraph™, is a spin-off series dedicated to timely rail industry news. From service shakeups to technology breakthroughs, each episode delivers a behind-the-scenes perspective on all the happenings shaping the future of freight rail. 

Harris + David will bring their decades of rail experience to help them parse through the latest industry headlines, evolving regulations, + the long-term forecasts for how railroads move freight across North America. Find us at telegraph.io/insights, Apple Podcasts, Spotify, or wherever you listen to your favorite podcasts. 

About Our Hosts

Harris Ligon is the co-founder + CEO of Telegraph. Prior to launching Telegraph, he spent nearly 15 years in surface transportation at Uber Freight, Norfolk Southern, + BNSF Railway. During this time, he led teams in operations, strategy, business development, + product development. 

David Correll is the Director of Freight Market Intelligence at Telegraph. He has spent two decades in transportation and logistics with the US Department of Transportation, the US Department of Energy, the Massachusetts Institute of Technology, and Clark University.

About Telegraph

Telegraph is a leader in delivering digital solutions to railroads, shippers, logistics service providers, terminals, + railcar leasing companies. With an integrated platform that prov...

SPEAKER_00

I'm getting five, but I'm going to put it.

SPEAKER_01

You're listening to Don't Dwell On It, the podcast where we pause just long enough to figure out what's really moving the freight rail forward. Let's get into it.

SPEAKER_00

Welcome back to TalkTrack, a telegraph podcast where we talk about and respond to the events of the day and those events that affect the railroading community. And by that, really, we mean everyone railroaders, shippers, railcar lessers, everyone who's interested in how things move around in this country. I'm very excited about today's guest. His name is Larry Gross. You probably already know that he is a very well-known 40-year industry veteran. He describes himself professionally as an intermodalist, and I look forward to getting into that with him. He's published very influential viewpoints in all the leading outlets: the Journal of Commerce, Rest of Railroad, and he's done work with FTR. He does his own private consulting work. And in 2024, he was awarded Ayana's Silver Kingpin Award for long-term contributions to intermodalism. Larry Gross, thank you for everything you've done for the industry, and thank you for spending some time with us.

SPEAKER_02

Well, Dave, that's great to be uh to be with you. And uh I hate to start it off with a correction, but I wish it was 40 years, it's 46 years.

SPEAKER_01

Yeah, you're looking at uh at a bruised, uh a bruised and and weary entrepreneur here, uh going all the way back to 1980.

SPEAKER_00

Wow, but one with and from what I know, a lot of uh lessons learned, some the easy way, some maybe the hard way. I specialize in the hard hopefully you'll share some of those with us as part of the conversation.

SPEAKER_02

Right, right. Well, thanks for having me on and uh looking forward to uh having an opportunity to chat.

SPEAKER_00

Excellent, thank you. I I was thinking maybe the the first way into the conversation, and it may be particularly helpful to people that aren't as familiar with your work, is you know, you describe yourself as an intermodalist, and I just wonder if you would kind of help people understand the difference between the viewpoint you come from as an intermodalist with what they might see from someone who say covers the trucking beat as a financial analyst or or a trade industry reporter. What does it mean to have an intermodalist lens on on what's going on?

SPEAKER_02

So my function uh uh for the last, oh golly, 20 years or so, has been to look at the North American intermodal sector from a 40,000-foot level. My my role in life, and it was it was something that I created, didn't exist, I think, before we came up with it, is to look at the North American sector and and try and parse out all of the influences and market forces that are occurring on sort of a global basis. So that would be things like import uh and export flows. We use the IANA data pretty extensively, we use the AR data, you know, we do market share analysis. So we're trying to understand not on a company specific basis, that's the job of security analysts and stock analysts and such. That's not really what I do. But what I try and provide is is a roadmap for what's happening within the business for the participants in the business, and that would be people like class ones and all the big intermodal operators in the ports, uh, you know, the folks that are actually making things happen, and we provide a forecast for them, we pr we try and give them a lens of what's going on in the business.

SPEAKER_00

And it's interesting to think about, you mentioned at the top when you sort of got into this world, and when I think about sort of the globalization lens on things, it seems to me, at least in my mind, that's more of a 1990s thing than a nineteen eighties thing. What got you into international intermodalism in the 1980s when you started?

SPEAKER_02

I got into the business in an entirely different manner. I was involved for the first 20 years of my career with a piece of intermodal technology. And by technology, I'm not referring to digital, I'm talking about hardware. And the hardware was the road railer. And and I'm not sure, perhaps, David, that your viewers uh and listeners are familiar with the road railer.

SPEAKER_00

I was gonna ask, please let us know.

SPEAKER_02

I will tell I will show you one. Excellent. This is a this is a road railer. So it's a it well, I say it is, it was a 53-foot semi-trailer with detachable rail running gear. But eventually the industry decided that they would standardize on the domestic container, which I think was of course I I re I wouldn't I'm not objective about it. This is this is the equivalent of my firstborn here, but I do think it was a mistake for the industry to to select that technology for the domestic intermodal arena, but nonetheless, that was the decision that the industry made. And so the Roadrather has only recently, within the last couple of years, passed fully into the history book. The last operator of it was Norfolk Southern.

SPEAKER_00

And so was it that technological innovation that brought you into intermodalism? Was it the the problem or the the sort of novelty of the solution, or what brought you into that professionally?

SPEAKER_02

I was one of those folks that always was interested in in railroads from an early on. And when I got my MBA, in fact, as part of the uh MBA process, I ended up writing a case study for my marketing professor on the road railer because I had worked during the the summer between my first and second year, though that would have been the summer of 79. And in those times, of course, there were many more railroads involved than we have today. And the other the other thing that that helped me was that when Wabash National purchased this technology, I also became the vice president of marketing for Wabash National, which was and probably still is among the very largest at the time. It was the largest semi-trailer manufacturer in the world. So that gave me a uh you know an excellent view of the over-the-road world, the truckload world. And I had the amazing opportunity to interact and sit across the table and learn from some of the giants in the truckload business, like Don Schneider and Clarence Werner and Russ Jardine of Heartland and Dwayne and Ackley of uh Crete, on and on. And uh uh Swift Transportation, Jerry Moyes, these were all giants of the early deregulated era. And so then when RoadRailer came to the end of the road, so to speak, I decided that perhaps I had a unique set of qualities that would enable me to sort of analyze what's going on in the intermodal world.

SPEAKER_00

And have you been doing the analysis work since then? Is it mostly been analysis? You've been back in the hardware space at all?

SPEAKER_02

It's just uh 2000, say let's call it 2003, since 2003.

SPEAKER_00

Gosh, and one of the things that really got me excited about the opportunity to talk with you was one of your recent pieces where I basically read you saying that there may be a long-term growth problem in the intermodal business. And that that struck me for a couple of reasons. But but the first reason, and I'm I'm thinking here about your November uh your piece from November last year, uh data shows U.S. intermodal has a long-term growth problem. I guess the first thing that struck me there is like I see you as a uh committed intermodalist. Does your what suggests to you that the subject has a problem?

SPEAKER_02

Well, I guess first of all, I'm going to distinguish between an analyst and a cheerleader. My job as an analyst is to lay out the facts as I see them, identify the good and the bad, and uh and hopefully provide folks with some thoughts, useful thoughts if I'm on my game, you know, on how to do things better. So the first thing we have to acknowledge is if there's an issue. And I think the data clearly shows that there's an issue. So one of the um analyses that I've done here fairly recently is to look at the 10-year growth trend in Intermodal and compare it with three benchmarks GDP growth, TEUs coming into the country, 20-foot equivalent import units, and long-haul truckload defined as over 500 miles reefer and dry-van freight only. So the sort of the theoretical intermodal market. If we look at those benchmarks from uh 2015 to the end of 2025, uh four-quarter moving average, the GDP number is at 126 if 2015 is a hundred. So 26% increase. Long haul truck, 22% increase. These are those are numbers from Dwayne from uh uh Noel Perry, noted transportation economist and an old old friend of mine. So 22% growth, not quite keeping up with GDP for various reasons. I think one is GDP has a higher service content now, and a lot of the growth that we're seeing is in non-freight uh producing aspects. Also, this is long haul, and I think trucking has moved a little bit shorter haul. But even so, it's keeping reasonably close to GDP. EUs most recently are at a hundred and basically 140, so a 40% increase. And intermodal is at 106. So over that time frame, yeah, with its ups and downs, we're now six percent higher ten years later. That's not a very impressive performance, and it's not something that I will say there's a certain discussion out there right now that oh, we're in a freight recession. Let's just wait for the market to to correct, for the market to normalize, and we'll, you know, then you'll see us really perform. And I'm I'm saying, well, you got a 10-year trend here. This is not simply waiting for the Goldilocks environment. You know, we need to have a plan where we function across the the various market conditions, not just in the ideal market.

SPEAKER_00

That's really interesting. And in the long-term perspective, I really agree is oftentimes what's missing from sort of the near-term analysis or the some of the trade press analysis. I wonder, do you see yourself then as contradicting some of the Class One railroad leadership that seems in earnings calls and in updates to really stake the future on intermodal growth? I guess I'm thinking in particular, you know, we saw CS CSX call intermodal a bright spot. We saw uh Katie Farmer at the NSF say we expect intermodal volumes to be one of our largest long-term drivers. Do you see your perspective at odds with those claims?

SPEAKER_02

No, I don't see it at odds. Uh, you know, of course, for the railroad to say any railroad, not those in particular, any railroad, that the growth is an Enamodal. If there is to be growth, then that's it. Because their ability to grow carload, I think, is well, first they have to demonstrate on the carload side the ability to hold volume. Before they start talking about growing volume, they have to arrest the inexorable multi-decade slide in in carload. And in my view, you know, the the but the way that the economy, the markets have have evolved. Now, if we go back to our junior high school geometry, we talk about Venn diagrams, right? You got the two circles, how much do they overlap? Well, I would say car load overlaps about that much these days. You know, there's very little overlap between the the commodities and the markets that car load is serving and the markets that truck is serving. So, you know, the the the ability to sort of have this freight that's kind of, I'll say, gonna able to go either way is very limited. They're just the market has already sorted itself out. The folks that, you know, still have rail docks and rail service and can live with it, you know, they're the ones that are still in car load. You know, if it's a unit train, obviously not a truck competitive move. And most of the trucks are moving between locations that don't even have a rail siding, you know, so that's probably not rail uh competitive. Uh so there's not that much overlap. And where the overlap is, is in the is in the domestic intermodal arena. You know, that's where that's where freight can move back and forth. And the railroads have been talking the growth game for forever with regard to domestic intermodal. So, I mean what you the quotes that you were making are nothing new. It's it's just a I mean the problem has been, although there's a lot of talk about it, that we just haven't seen the the proof, we haven't seen the rubber hit the road here in terms of actual growth. And you know, if you look at the share that domestic intermodal uh has of the long-haul truck business, uh my estimate is that in the most recent uh quarter, fourth quarter of uh 2025, that share stands at 6.1%. So let's just talk about domestic because that's where they control their destiny or uh can affect their destiny. You know, if we go back to 2018, that number was more like 7.2%. So we have lost a considerable amount of share here, uh, and that that uh you know is a result of service issues, congestion, post-pandemic, meltdown, PSR, precision scheduled railroading, and what it's what it's done to the intermodal network. You know, but if we had held share from from uh uh nine uh twenty eighteen to now, you know, what does that work out to percentage-wise? It's double-digit percentage more growth or volume than we have today. And we've been stuck, we've been stuck at six percent now for probably about three years.

SPEAKER_00

Okay, can I ask you? That's such an interesting breakdown of of some of the problems, and I really liked how you framed it up as you know, part of you know, maybe the passion that we share for this industry is pointing out problems, you know, in the spirit of you can only solve something once you know that it's a problem. So you mentioned I I think some great explanations around maybe service problems or why there's been some um fair loss to long-haul trucking. But what about what do you think explains why the the growth is so slow compared to GDP, sort of one of the first metrics you looked at? Why is rail volume growth at I think you said six percent, and it's compared to like a 25% GDP growth? What do you think explains that?

SPEAKER_02

Well, I I mean I think I think the main thing is this loss of share that we talked about, right? The best that we can hope to do in the absence of you know, is to we'd be doing well to keep up with truck, right? We haven't kept up with long-haul truck, we've felt fallen behind from a share perspective, and that gets translated into these lower growth rates. If we had not lost share, our growth rate would have kept pace with long-haul truck. So the intermodal equation is actually from a very I'll call it a very simple equation. And it's it's a story of good enough. That if the service is good enough, and by good enough I mean it doesn't have to be as fast as truck, it can be actually and almost almost always is considerably slower than truck, but that's okay. That's just a question of dollars and cents. It needs to be as very close to as reliable as truck. Reliable being beating your schedule commitment at at the dock, you know, and we're competing against an over-the-road competitor that whose whose late performance is measured in minutes and you know it is running in the high 90s. So Inamodal needs to achieve something close to that. And if it achieves that, then it has a seat at the table. And then what happens is you need 15%, and that's my number, 15% door-to-door savings in order for people to sort of sign on. If you if you don't produce those savings, it's gonna go truck because truck is so much easier. So we look at at what what does it take to deliver those savings? Well, probably a third of the miles or so are are dray miles, two-thirds maybe or more rail miles. So proximity to the railhead is very, very important. And the more terminals you have where the freight is originating and terminating, the better your economics are gonna look. The a very useful but crude, but very useful rule of thumb is that in a modal, for intermodal to compete, typically no more than one-third of the miles can be truck miles. Two-thirds at least have got to be rail miles because that's where you're saving money. You're saving money when it's on the rail. Your truck miles are probably more expensive than a long haul trucker because dray costs are more are higher per mile than uh than long haul. So what that means is that as the length of hole goes down, you know, you need to be closer to the freight or terminals, and then they all have to be connected by a by a reasonably decent service, you know, that is fairly close to truck and certainly reliable. And what's happened with PSR is kind of the opposite. We've seen the mar this until recently at least, we've seen the the intermodal network being simplified with a lot of terminals, you know, during the PSR transition, which we'll call 2018 to 2021, let's say, a lot of steel wheel interchange eliminated, a lot of terminals shut down, fewer trains, longer trains, which all works great from a railroad operating perspective. You know, the railroad operating department wants a 300 container train running from A to B with no intermediate switching events. Probably can be done with regard to the IPI, the international. All that stuff comes into, let's say, LA Long Beach, tens of thousands of containers, uh, and they all got to go to Chicago, for instance. Well, okay, you can run this monster train, it's going from A to B. That works really well. But domestic market is not like that. It's dispersed in terms of both its origin and destination, so geographically dispersed, it's also temporally dispersed. When the stuff is going to be ready to move and when it needs to be wherever it's going. So it's not very conducive to running these monster trades that PSR would prefer to run. So I think that's that's been part of the issue.

SPEAKER_00

Can I ask you to overlay that analysis a little bit? So I I sort of read your diagnosis here as there's a long-term growth outlook problem. There's some modal share problems owing to service issues and sort of timeliness issues? There's a problem around thinning out the network in the sort of spirit of PSR cost cutting more broadly. Do you does that summary of those diagnoses track? And if it does, does it explain the emergence of the TransCon merger proposal between UPNNS? Does it would that transaction, if it were to be approved, solve any of those problems or at least address them?

SPEAKER_02

Well, it's one way to solve them. It's not the only way to solve them. But we but even before we get to that, I mean I do want to give credit what credit is due. You know, we talk about service issues, but right now, the intermodal network, from everything that I can gather, and let's set aside these the last couple of weeks when there's been all of this East Coast and Midwest disruption from the weather. But the intermodal network is running extremely well right now. Probably about as well as I've seen it. And one of the most important, yeah, of course, we don't have very good data on that. The SDB collects certain statistics, they only really cover the rail network. They don't really cover what's going on in the intermodal terminals. You know, they don't have, sadly, they did for a while, they don't have on-time arrival. So, I mean, you have train speed, which is not particularly useful. But the the one one of the very to me most interesting statistics is the one that talks about trains being held in terminals. Intermodal trains awaiting either power crew or some other problem. Line blockage, whatever. And those numbers are extremely low right now, historically low, to the point where the average number of trains being held across the entire US intermodal network is less than five at any moment on average. And it typically would have been about 30. So what that says is that there are ample supplies of crews and power being allocated to the intermodal network, and that's a change because typically the railroads have been very eager to sort of follow the volume down. They've always been much more, much more light-footed when it comes to reducing resources than adding resources. And this time around, we seem to be hanging on to those resources.

SPEAKER_00

Can we rule out a competing hypothesis though that maybe there's just less volume on the system, so the system is able to do more with the resources it has?

SPEAKER_02

Yeah, no, there is less volume. But the issue is that they haven't reduced resources. Okay. So I mean, typically they would have they would have been quick on the trigger to lay folks off and mothballed up the road in order to sort of match expenses to revenue.

SPEAKER_00

Well then you probably anticipate what I feel like I have to ask. Why were they not so quick on the trigger this time, do you think?

SPEAKER_02

Well, no, maybe because they realize that that doesn't work so well. I mean I say credit, but credit's due. I mean, I can't I can't read their mind, but I like I like the results. I mean Yeah, yeah. So so what we what we are doing now, and this this is not an overnight situation. It's gonna take a long time to sort for people to develop confidence. The longer we can sort of maintain this high level of service, high relative to what we used to do, not high relative to truck, but better than we used to do, then people are gonna start to become more confident. Now, I want to make clear you don't win customers by providing adequate service. You just prevent losing them. Right? So this so having good service is just gets you a seat at the table. Doesn't doesn't complete the sale. And then you have to make the sale. And the sale is going to be and it always is with Intermodal. You know, it's going to be about money. It's going to be can you deliver this product at a lower 15% lower cost door to door than I can do with a truck. And if the answer is yes, you know maybe it moves in a modal. If the answer is no, it probably doesn't. And that oh that's always the equation unless there's a cap uh truck capacity shortage. Uh and you know we might get one with all of this um in immigration activity, etc, etc. Which changes the equation pretty dramatically because then it's all about just um capacity. But we're not in that situation.

SPEAKER_00

Is there a potential mechanism there where we've had such low trucking rates for so long and I really like your equation of you've got to be a 15 to 20 within a 15 to 20% savings window for a shipper to consider going adding the rail option. Does it become even harder for the intermodal option when the trucking rates are so low that the the improved service is almost a way to say we're never going to get 20% below you know I mean it's two dollar trucking rates you know is undoubtedly more difficult, right?

SPEAKER_02

Because you know we've had flattened freight rates now for three years. The railroad is going to maintain I'm not saying they're making this on Nomodal but they've run a 60 OR, a sub-60 OR, you know, at the uh you know and and any any slippage in that number generates instant wrath on the part of Wall Street, right? So they're they're trying to maintain a 60 OR and they're competing against a trucking industry where even the best operator has an 88 OR or something like that. Right. So you know it's it's very difficult and and the industry is not generally prepared to trade margin for volume.

SPEAKER_00

Let me jump back in then and get your take on we've really I think had some really interesting conversation around some of the battles that the the industry faces or some of the challenges to growth. And so the question on the floor now to you is would a merger between UP and NS solve those problems effectively? Are those the problems that motivated merger action last summer? What's your read on that?

SPEAKER_02

Well I mean if you look at intermodal uh by mileage range the share of intermodal by mileage range it dominates the 2000 to 2500 mile uh length of wall when I say dominates that's the highest share it doesn't dominate but it's highest you know which is the LA Chicago kind of a kind of a route it also does pretty well in this 750 to a thousand which is the east coast Chicago Midwest kind of route. Both of those single line routes where it has problems is in the mid-range lengths of hall. And I call it the donut hole because that's where intermodal share is actually lower. And the reason is because you have two railroads involved and one of length of hall let's say they call it the phrase is the watershed market the the strip 300 miles on either side of the Mississippi River which kind of forms the rough dividing line between east and west in the north in the U.S. railroad network you know if you have a load and let's take a let's take an example of the Twin Cities to Atlanta. Now that is probably about I'm guessing a 9000 mile maybe even a little more length of hall so it should be an intermodal eligible move. But the problem is that the Union Pacific only goes to Chicago or the BNSF only goes to Chicago and then you need to put it on CSX or NS beyond and the neither of the Western railroads are very excited about what is now I'll call it a 400 mile hall from the Twin Cities to Chicago. And then you have a lot of switching involved and transferring the unit from one railroad to the next and so typically what happens is if they handle it at all it gets to Chicago and then they rubber tire it across town. Instead of switching it on steel wheel it's rubber tire. Well that adds a DRE, a chassis, a driver, two terminal lifts quite a bit of cost and and typically enough impact from a cost and service standpoint that even if both railroads are kind of interested in doing it and probably the Western Railroad isn't interested, then it uh you know it does the the economics don't work against trucks. So where the merger theoretically comes into play is that that now one railroad controls the entire hall and so theoretically would be able to be better positioned to serve that. You know Union Pacific in its acquisition application to the SDB said they think there's almost two million truckloads that are in play there. You know and a merger may be one way to do it. I think that there are ways for the railroads to work together shorter of a full merger that could also help. And you know you look at what's going on for instance on the Mexico border right when the CPKC merger occurred Canadian Pacific Kansas City Southern which then also involved Mexico well now you had for the first time a single line crossing of the border and that set in motion you know quite a few domino effects of new services CN put in there Falcon service along with UP BNSF JB Hunt you know FerroMex across Eagle Pass uh a lot of turmoil happened a m a lot of it in in reaction to the single line merger and although that took a while to gain traction I don't think there's any question that uh we're now seeing uh some effects of that and I'm just looking over here at my crib sheet my numbers and US Mexico cross border volume domestic volume was up uh oh let's see here uh 13% in 2025 and that's more than the truckloads crossing was so they have taken some share and it's not all single line right it's just that that has created a an impetus and I think the same thing is starting to happen as a result of this UPNS scenario is you're seeing new services being announced BNSF's CSX has announced some some interline services and they've gotten some traction I mean you can see that in the sh in the intermodal share numbers you know that that that uh you know NS and UP most recently have lost share CSX and BNSF have have have gained share. You know normally I don't get into sort of these individual railroad performance that's not my bailiwick but with regard to the merger I think it's a bigger question.

SPEAKER_00

You know and could you put that in context with um one of your more recent pieces that we also really enjoyed here where you were pointing out that there was less interline service going on over time. And I guess the the rub in my mind that I that I wonder if you could address is like you know so you just mentioned some interline service innovation there's obviously that merger that we're talking about is there really strong demand for East West Interline service or where where where does this motivation to solve it either through merger or through new interline service come from if over time those services have been declining?

SPEAKER_02

Well I mean I think that the the the decline is a symptom of the of the PSR mentality so if you if you go back to I think those numbers went back 20 years and the AAR every week publishes for each railroad the number of intermodal loads they originate and the number of intermodal loads they receive from another railroad. If you add up all of the originations and you add up all the received loads that tells you what percentage are being interchanged. And that number was 22% a year uh 20 years ago and now it's about 15. And why is that? Well my theory is that if you look, if you're an originating railroad let's say typically a western railroad you have a choice if you're going to interchange steel wheel interchange to an eastern carrier then somewhere along the line that train needs to be classified blocked for a variety of eastern destinations and that costs money. And so the question is how from an operating department says well you want me to do all this switching you know I've got I've got additional cost associated with that additional complexity and no additional revenue so why don't we just run the train to Chicago and ground it and drive everything across Chicago and and let the customer take care of it. And I think that that's kind of what's happened. Now you know maybe you know we we see as a result of all of these new new interchanges new services maybe we'll start to see a reversal see a bit a bit of more cooperation. But it's not that the market uh isn't isn't interested in it. The market is interested in any intermodal option that will save its money and provide a reasonable service. You know it is no more complicated than that. You know so it's all about the the industry's ability to provide that combination that combination of reasonably good service reliable at a cost savings.

SPEAKER_00

And the more it does that the more intermodal volume will be gosh so one thing that I would love to ask you sort of at to sum up all of that is you've really I think done an excellent job describing challenges both on the Rail intermodal side on the long haul trucking side and I guess now if I could ask you to you've given the what ails the industry what do you think would fix it? What would you prescribe if if it were just up to you as either the operator of a class one or maybe a policymaker, wherever you think that most helpful lever is what would you prescribe to address some of these issues of anemic growth if I can put it that way or service time or maybe missing some investment opportunities to build up the network what do you think it would take to bring this industry to a higher growth environment?

SPEAKER_02

I think that the main thing is a reduced focus on operational simplicity and minimizing cost and a enhanced focus on understanding the customer's needs and creating a product that meets those needs. And that product as you know at the risk of s of sounding like a broken record is not this is not a difficult thing to understand. But you have to look at it not from a ramp to ramp basis which is how the railroads typically view things you've got to look at it on a door to door basis because the the shipper the BCO is going to look at his or her door to door cost which includes drayage, chassis, container, line haul, etc and you know so if you're only focused on minimizing your terminal to terminal cost by it's you know having rubber tire transfer and giant trains and only you know limited number of terminals that's going to result for a vast percentage of the freight out there that's not doesn't happen to be located advantageously relative to the terminals that you have. It's going to be higher cost for a lot of their business and they're not going to use in a modal you know so you need to address that. Now you know is it a margin question? I don't think it's primarily a margin question at least in terms of pricing. It may be a margin question in terms of the willingness to it sort of accept higher cost that maybe comes with higher complexity. And there has to be a willingness to embrace complexity and be able to execute a more complex operation because you're going to have to do that in order to compete with the truck.

SPEAKER_00

Well embrace complexity I love it. Gosh Larry Gross thank you very much for joining us we really appreciate the time that you shared with us and our listeners to bring some of your many years of experience to to our conversation today and I hope we get to have another one.

SPEAKER_01

Well it's been a pleasure David thank you for having me. Thanks for listening follow the show wherever you listen to podcasts and find us on LinkedIn to keep up with what we're going to talk about