Schneider Moves All Eastern Rail to Norfolk Southern, Citing 30% Rate Gap

Why did Schneider switch from CSX to Norfolk Southern?

Schneider National is moving all eastern intermodal operations to Norfolk Southern, ending its relationship with CSX in a deal both companies frame as growth-driven. The switch, announced October 29 alongside Schneider's third-quarter earnings, makes Norfolk Southern the carrier's exclusive eastern rail partner. Union Pacific remains Schneider's western partner.

The decision follows what Michael Baumgardt, Schneider's executive vice president of intermodal and logistics, described as a lengthy evaluation focused on network reach, train frequency, and proximity to population centers. "It starts with growth and it's really about, okay, how can we get closer to our customers? How can we make sure that we get more truck freight off of the road and into intermodal where it makes sense?" Baumgardt said.

The rate environment adds urgency. Truckload rates carry a 30%-plus premium over intermodal rates right now, making rail an increasingly attractive option for shippers who can tolerate the longer transit time. For a small fleet running lanes where intermodal competes, that spread means more shippers will pull freight off the spot board and onto rail.

What Schneider brings to Norfolk Southern

Schneider operates approximately 23,900 chassis, 26,800 containers, and more than 60 rail hubs across North America. Company drivers handle more than 90% of domestic dray moves, the companies said. That asset-based model, featuring company drivers, company chassis, and company containers, drew positive customer response in the first 24 hours after the announcement, Baumgardt said.

Baumgardt argued the primary capacity constraint in intermodal is not equipment (boxes are available) but dray capacity and driver supply. Schneider's company-driver model gives it a structural advantage in managing that bottleneck, he said.

Norfolk Southern's Vice President Shawn Tureman said the railroad has been building toward this moment for years. Norfolk Southern grew from the third- to the second-largest intermodal franchise in the United States by 2018. In 2022, the railroad set a new target to double its intermodal franchise again and has been directing discretionary capital toward that goal ever since.

Infrastructure investments Norfolk Southern made to land the deal

Norfolk Southern pulled forward some infrastructure investments specifically to prepare for the Schneider partnership, Tureman said. Recent projects include new service between Cincinnati and Atlanta, double-stack clearance improvements linking the Midwest and New England through the railroad's East Edge route, and terminal expansions in Ohio, Michigan, North Carolina, and Illinois.

The railroad is also upgrading pavement, lighting, storage areas, maintenance facilities, truck access, and security at terminals in Atlanta, Louisville, Harrisburg, Chicago, and St. Louis. Norfolk Southern said the work is intended to improve reliability and reduce the time drivers spend moving through terminals.

"Customers are taking a broader view of intermodal than ever before, and we are investing ahead of that demand," said Ed Elkins, Norfolk Southern's executive vice president and chief commercial officer.

Norfolk Southern reported intermodal volumes grew 3% in the third quarter of 2026, citing steady consumer demand, favorable truck-market conditions, and network improvements. The companies said the new agreement would support further growth by broadening Schneider's reach and creating opportunities to convert truckload shipments to intermodal service.

The merger question

Both executives said the pending Norfolk Southern-CSX merger, a topic that surfaces weekly in industry discussions, was not the driver of this agreement, though they acknowledged it could improve the product. "The merger would be icing on the cake in terms of enhancing service, reliability, and speed," Baumgardt said. Tureman echoed that view, pointing to single-line service, shorter routes, and reduced interchange friction as potential merger benefits for Schneider's customers.

The sources also reference a proposed transcontinental merger between Norfolk Southern and Union Pacific. The announcement did not disclose how that potential combination factored into Schneider's decision.

Transition timeline and what it means for capacity

Both sides said planning began immediately after the agreement and that the goal is a seamless handoff. The agreement is effective in November. "What I hope, 3 months from now, for our customers not to have noticed anything," Tureman said, adding that a smooth transition would set the stage for joint sales efforts heading into what he called a strong intermodal market in 2026 and 2027.

Schneider reported earnings growth in its intermodal segment in Q3, consistent with the company's stated growth pillars of logistics, dedicated, and intermodal. Dedicated revenue per truck rose 3.1% in the quarter, though Baumgardt emphasized that disciplined freight selection and appropriate driver allocation remain priorities as the company manages through the current freight cycle.

The announcement did not disclose financial terms, quantify the additional capacity expected from the partnership, or specify a precise transition date beyond November.

What this means for small fleets

For carriers running 1 to 50 trucks, the Schneider-Norfolk Southern deal signals two things. First, the 30%-plus truckload premium over intermodal rates is real and large enough to drive major capacity shifts. Shippers who can plan around rail transit times will continue pulling freight off the spot market, which keeps downward pressure on truckload rates in lanes where intermodal competes.

Second, the dray bottleneck Baumgardt described (driver supply, not equipment) mirrors the broader driver market. Schneider's company-driver model insulates it from that constraint. Small fleets competing for the same dray moves or short-haul intermodal feeder work face the same driver supply problem without the same structural advantage. If Norfolk Southern and Schneider succeed in converting more truckload freight to rail, the lanes that remain for small fleets will be the ones intermodal can't serve: short hauls, time-sensitive moves, and freight that doesn't cube out a container.