Five minutes with Hub Group's Phillip Yeager

Feb. 16, 2005
Having started in the intermodal business in 1959 and built his company into a major force in the market, Phillip Yeager, chairman of Hub Group Inc. (,



Inc. (, has seen changes in an industry that is handling an ever-increasing amount of shipments. Here, in an exclusive interview are his insights into this aspect of rail today.

"Deregulation was the greatest thing that happened for intermodal and the railroad industry," Yeager asserts, "because it gave the railroads the ability to abandon a lot of trackage."

There were 76 Class I railroads in 1976 and there are only six today, Yeager points out, adding, "It was necessary to consolidate the industry and abandon track capacity in order to survive. There is tremendous interest today in intermodal because it is the railroad's lifeblood and future." As for the trains, however, he acknowledges they have problems.

"Where there used to be four tracks, now there are two. Where there were eight, they now have four. In other words, the infrastructure is such that the railroads are challenged," he says. "But they do a good job."

However, during the peak shipping season in the fall, with the heavy volume of West Coast business, the rail pipeline gets clogged. "Even though the railroads have invested hundreds of millions of dollars in infrastructure, when they hit the peak periods, they have no place to go. They hit points where they just can't get through — like Chicago — and unless they can run trains straight through, there are problems."

In response, the Union Pacific and BNSF railroads have put a number of big terminals near Chicago, which Yeager thinks is a smart move. "It will also help them attract over the road trucks."

As for the port congestion on the West Coast, Yeager believes the only solution is to bring cargo to East Coast ports, either through the Panama Canal or through the Suez Canal.

"The relationship between the railroads and motor carriers is changing," he says. "We've adopted a lot of the trucking companies' methods and brought in a lot of people from the trucking industry."

More cooperation is needed between shippers and vendors, he asserts. "Intermodal is going to show some outstanding growth, but we're going to need help from shippers."