Pacer International Inc. has struck a new, multi-year deal with the Union Pacific Railroad, extending its access to the UP's intermodal network. The arrangement continues the parties' current agreement on the handling of domestic big-box shipments, previously set to expire in 2011. In addition, it resolves outstanding claims between Pacer and UP relating to domestic container transportation; allows for a more efficient equipment model through a fleet-sharing arrangement that gives customers access to the equipment of both companies, and allows Pacer to focus on its direct-to-customer intermodal service offering. The deal gives Pacer a cash payment of $30m, which it will use to reduce outstanding debt under its revolving credit facility. Pacer said it expects the increased focus on high-value, door-to-door service to result in long-term benefits for the company, even though it anticipates a "substantial reduction" in revenues from third-party, ramp-to-ramp services.
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