Logistics strategy often focuses heavily on truckload, but for supply chains—especially those related to bulk, inbound, or heavy freight—alternative transportation modes are becoming increasingly vital. Logistics leader Linda, who has decades of experience at major organizations including BNSF and Watco, recently shared insights on how companies are finding efficiency, reducing risk, and driving growth by focusing on niche sectors like barge and rail visibility.
Watco’s Three Pillars of Comprehensive Service
Linda, who has a nearly 30-year career in logistics, outlined Watco’s structure as being built upon three primary pillars: Short Lines, Terminals and Ports, and Logistics.
1. Short Lines: Watco is the largest independent short line rail holding company, operating 47 railroads across 7,500 miles of track and moving approximately 1.2 million carloads annually.
2. Terminals and Ports: They manage 76 terminals, which include a mix of rail, truck, and barge-served facilities. Notably, 23 of these terminals are barge-served, predominantly handling bulk, break bulk, and liquid materials.
3. Logistics: The asset-light component, which Linda leads, provides end-to-end solutions including highway movements (which account for about 50% of their business), intermodal, rail logistics, e-commerce fulfillment, and project cargo.
The Efficiency and Impact of Barge Logistics
Barge transportation is often overlooked in domestic logistics but is a critical, highly efficient mode, especially for inbound or bulk commodities. Linda noted that the barge sector accounts for about $100 billion in economic output.
The sheer capacity of a single barge is remarkable: one barge is equivalent to approximately 60 truckloads or 15 rail cars of product. This mode is predominantly used for bulk items, including petroleum, fertilizers, and break bulk. For US agriculture, barge moves approximately 60% of US grain exports.
In recent months, this segment has been heavily impacted by global trade dynamics, particularly tariffs and trade restrictions. However, recent announcements, such as the three-year trade deal between the US and China, have provided encouragement, specifically addressing stalled soybean exports.
Logistics professional Samantha raised the strategic use of Free Trade Zones (FTZs) during periods of tariff uncertainty. Linda confirmed that shippers used these zones as "holding spaces" to push product forward in advance of tariff changes, allowing them to defer tariff payments until the product was pulled out of the bonded warehouse spaces.
Bridging the Visibility Gap in Rail
For many major US shippers, especially those dealing with inbound materials or bulk commodities coming into manufacturing plants, rail visibility has historically lagged far behind the tracking standards of domestic truckload freight.
Linda explained that rail logistics is now one of Watco's fastest-growing segments, driven by a technology-enabled approach. While several rail visibility tools exist, Watco utilizes tools like Tea Telegraph, which incorporates data from major railroads, short line railroads, and terminals to create a more robust view for customers.
However, visibility alone is not enough. The key differentiation is active management.
Linda: "I can send a report to you every day and show that a rail car has been sitting at a siding for a week but that’s not helping the customer, because they’re still going to get demurrage on that rail car unless somebody is out there actively working that pipeline every single day."
This hands-on management approach helps customers achieve crucial rail car cycle improvements and reduced demurrage. This is particularly beneficial for large shippers who rely on private or controlled rail car fleets.
The Mexico Growth Engine
The surge in trade between the US and Mexico has made crossborder logistics a critical focus. Watco’s data reflects this explosive growth, showing an almost 21% growth on Mexico crossborder freight year-over-year, compared to only 2.8% growth in domestic intermodal.
Railroads view Mexico as their next major growth engine, spurring unique partnerships and mergers (like the CPKC merger) to provide seamless North-South service. For shippers, intermodal often presents a superior option to full truckload when moving freight across the border.
Linda: "It's actually a better service product in and out of Mexico because the product clears... at the intermodal ramp... So it’s a faster product, it’s a more reliable product and it’s a safer product because if the train’s not stopping, you’re not getting the same theft that you would realize... in a crossborder service."
This speed, reliability, and security are driving massive investments in rail and ramp infrastructure in Mexico, as confirmed by Samantha’s observations from recent industry panels.
Furthermore, as the market inevitably tightens—a situation experts believe is coming once the period of cheap, available truck capacity ends—rail is poised to capture significant volume. Samantha noted that rail is already prepared:
Samantha: "I think like rail is ready and positioned to pick up some of the volume."
They are actively competing with truckload service by openly advertising expedited moves on key lanes, matching or even bettering the full truckload experience.
Looking Ahead: The Need for Optionality
As shippers wrap up planning for the new year, the primary piece of advice Watco is providing customers is the need for optionality and flexibility.
This includes understanding how modes like rail and barge can fit into the broader supply chain. Linda stressed the importance of end-to-end solutions, strong customer experience, and the lasting value of solid relationships in a shifting market.
Finally, the logistics landscape is being reshaped by speed and convenience, driving rapid expansion in e-commerce and fulfillment services. For example, Watco has grown from handling zero to 17 million packages over the last eight years and manages 27 e-fulfillment centers, demonstrating that even asset-heavy companies must quickly adapt to meet direct-to-consumer demand.