The fundamentals quotstill look solidquot for domestic intermodal despite downward pressure on rates of late FTR reports Photo courtesy of CSX

The fundamentals "still look solid" for domestic intermodal, despite downward pressure on rates of late, FTR reports. (Photo courtesy of CSX)

Tougher sledding for intermodal

Tighter truck capacity, however, would provide a boost, says FTR.

The new intermodal competitive index (ICI) crafted by research firm FTR dropped 1.2 points in May to a reading of 3.5 – the second straight decline for the index, reflecting “somewhat difficult competitive conditions” for the domestic intermodal segment.

“May’s ICI was adversely affected by relatively weak intermodal volumes and downward rate pressure,” said Larry Gross, an FTR partner and the firm’s resident intermodal expert, in a statement.

“However, while intermodal is not currently experiencing the robust growth to which we have been accustomed, the fundamentals still look solid,” he added. “With truck capacity expected to tighten as we move into 2017 due to the approaching federal electronic logging device (ELD) mandate and fuel prices also moving up, [that] provides some tailwind for intermodal.”

Gross noted that any reading of the ICI below zero indicates a less-than-ideal environment for intermodal, while readings above zero are meant to communicate relatively favorable conditions. Thus the higher the reading, the more favorable the intermodal environment appears to be, he said.

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