Pacer looks to compete with big truck companies

NEW YORK (Reuters) - Logistics provider Pacer International Inc. (PACR.O: Quote, Profile, Research, Stock Buzz) will add truck capacity to its network in order to compete with large U.S. trucking companies for intermodal business, the company's top executive said on Tuesday.

"The complexity of providing door-to-door intermodal services has made it difficult to compete with companies like J.B. Hunt (Transport Services Inc. (JBHT.O: Quote, Profile, Research, Stock Buzz)) or Schneider (National Inc.)," Chief Executive Don Orris said, speaking to the Reuters Manufacturing and Transportation Summit in New York by phone. "Adding this capacity will simplify our service and make things easier for our customers."

Intermodal services use standardized containers that can be carried by different modes of transport -- train, truck or ship. It is the fastest growing form of rail freight, driven by U.S. imports from developing nations such as China and is a fast-growing business for trucking companies.

Orris said Concord, California-based Pacer will either acquire regional trucking companies where necessary, or "use more local partners" and begin offering the service next year.

Both Lowell, Arkansas-based J.B. Hunt and privately-owned Green Bay, Wisconsin-based Schneider offer intermodal services, as does Omaha, Nebraska-based Werner Enterprises Inc. (WERN.O: Quote, Profile, Research, Stock Buzz).

He added that more trucking companies will likely follow suit. "More trucking companies are going intermodal," Orris said. "They are wanting to get in or are putting their toe in the water."

Orris also echoed complaints from other U.S. railroad customers about inadequate service. "Obviously, (the railroads) are not satisfactory in any sense."

Orris said problems with the railroads were in part due to rising demand and congestion, but were in part "self-inflicted issues."

"They shorted themselves on crews, they shorted themselves on locomotives," he said. "As a result, we have lost a lot of customers to the highways."

Orris said he favored a proposal from the railroad industry for an investment tax credit to boost infrastructure spending.

"There is no question that encouraging (the railroads) to add more capacity would be welcome," Orris said. In 2005 Pacer reported revenue of $1.86 billion.