Star Wars may have the Millennium Falcon, but North America’s cross-border trade now has the Falcon Premium.
A new cross-border intermodal service in the U.S., Mexico, and Canada has been launched by select Class I railroads.
The Falcon Premium service is intended to serve shipments of automotive parts, food, and reefer freight. The rail honchos involved are Union Pacific, Canadian National, and Ferromex (Mexican-based Class I) who will leverage their strategic networks of railway to create this new service that will stretch from Canada to Mexico. Falcon Premium will have a connection hub in Chicago, the capital of the continent’s rail activity.
On an earnings call earlier this week, Tracy Robinson, CN’s president and CEO, touted the collaboration as a bringer of “the fastest transit times between Canada and Mexico”. She went on to highlight the potential to restore a sound presence for rail in the intermodal market, an area of business the mode has struggled to recapture.
At a closer glimpse, the Falcon Premium service will combine Ferromex’s route between Mexican hubs, Silao and Guanajuato, and Eagle Pass, TX; UP’s route from Texas to Chicago; and CN’s route connecting Chicago to (via bypass) major markets all throughout Canada.
A competitive response to CPKC merger
One would think a move of this caliber—connecting all of North America by rail—is the product of well-intended resolve from a consortium of trailblazers.
Three Class I railroads transcend trivial competition against one other and unite for the common good of intermodal shippers by connecting North America.
Unfortunately, that’s not necessarily the case. The cooperation behind this new service more likely follows the principles of “the enemy of my enemy is my friend”.
The Falcon Premium service is actually a reaction to the industry’s recent power consolidation.
Earlier this month, Class I railroads Canadian Pacific and Kansas City Southern officially merged kicking off the continent’s first transnational railway.
Canadian Pacific Kansas City (CPKC), the newly established railroad, now wields a distinct competitive advantage to its fellow Class I peers—its network can provide single options for cross-border intermodal service.
When regulators approved the merger back in March, it’s clear to see why other railroads would ban together to stay competitively viable with cross-border service.
It’s not just trucking that has to look out for siphoned freight, but also the railroads as well.
With the new service being rolled out less than a month since CPKC became official, one may think it could be a sloppy move of desperation.
However, according to CN and UP representatives, Falcon Premium isn’t a half-baked rebuttal to CPKC’s service capabilities. Rather, the railroads boast their strategic partnership will afford shorter and faster routes to all key markets in North America.
“It doesn’t matter what my competition does,” a CN exec told Supply Chain Dive. “We have a great product with [Premium Falcon service] and we think we’re actually going to have the fastest service.”
Final Thoughts
In an ironic twist, CN was zeroing in on combining with Kansas City Southern around two years ago. Obviously, a final deal never came to fruition as Canadian Pacific swooped in for the close after CN bowed out.
However, the CN’s efforts clearly suggest the railroad foresaw the acquisition of KCS could mean for cross-border service.
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