Domestic intermodal volumes on the rebound

Nov. 13, 2009
Though intermodal shipments still remain below last year’s levels – a sign of continued struggle in the U.S. and global economies – domestic intermodal volume remains brisk, pointing to a sustained transfer of freight from purely highway transportation to combined truck and rail movements

Though intermodal shipments still remain below last year’s levels – a sign of continued struggle in the U.S. and global economies – domestic intermodal volume remains brisk, pointing to a sustained transfer of freight from purely highway transportation to combined truck and rail movements.

“Certainly no one is excited about the overall year-to-date intermodal picture; with intermodal shipments down 17.1% from last year, it’s horrible,” Tom Malloy, vp-member service with Intermodal Association of North America (IANA), told FleetOwner. “But there are some significant glimmers of hope. One is that total intermodal volumes have kept climbing or stayed flat from month to month; increasing 3% in June over May, another 3% in July over June, flat in August over July, followed by another uptick in September over August.”

Another upbeat glimmer is the quarterly increase in domestic container intermodal volumes, which increased in every U.S. region during this quarter, growing 1.3% overall. Domestic advances during the third quarter were entirely in 53-foot equipment, which jumped 5.5%, the group said.

“Domestic intermodal container shipments is one of our bright spots,” added Malloy. “It’s been steady this year, not falling into negative territory like with international intermodal container volumes. That ‘steadiness’ indicates a lot of intermodal freight stayed put despite the significant drop in fuel prices through the lion’s share of this year versus 2008.”

According to the monthly “Rail Time Indicators” compiled by the Association of American Railroads (AAR) U.S. intermodal traffic totaled 826,341 trailers and containers in October 2009, an average of 206,585 per week. While that’s down 11.2% from the same period in 2008 (when the weekly average was 232,668 units), it’s up 4% from the weekly average of 198,647 in September 2009.

“For rail intermodal traffic, the highest volume weeks of the year are almost always in September and October as retailers stock their shelves for the upcoming holiday season,” Holly Arthur, an AAR spokeswoman, told FleetOwner. “That’s the case this year too: so far in 2009, seven of the eight highest-volume intermodal weeks were in September and October.”

One reason for the growing popularity of intermodal is the depressed state of the trucking industry, plagued by excess capacity and aggressive pricing, Longbow Research analyst Lee Klaskow told Reuters. He noted that intermodal is also more attractive to shippers because it’s greener—as it takes about a third less fuel than shipping by truck alone.

Fuel savings is one reason trucking giant J.B. Hunt Transport Services recently sealed a new intermodal deal with railroad Norfolk Southern Corp. The agreement is designed to accelerate the conversion of traditional truck traffic to truck-rail intermodal transportation for both transcontinental and local intermodal service in the eastern half of the U.S.

“The conversion of highway freight to the more efficient, cost effective, safer and more environmentally friendly services that we jointly provide, will not only benefit shippers and the general public, but our shareholders alike,” said Kirk Thompson, J.B. Hunt’s CEO.

Dave Yeager, CEO of third party logistics company The Hub Group, added that while his firm’s intermodal volume declined 9% in the third quarter, that was actually a little bit better than Hub forecasted just a few months ago. Also, he noted that Hub’s customer direct 53-foot business – the biggest piece of Hub’s intermodal business – was only down 4%.

“We are particularly encouraged that the volume declines lessened as the quarter progressed,” Yeager said in a third quarter conference call with reporters. “Part of this is attributable to some new business wins, but, overall, we believe that business conditions are better and have become more stable.”

He added that the company saw what is hoped to be the bottom of the freight cycle with freight volumes slowly coming back, so expects Hub’s intermodal volumes will only be down in the fourth quarter in the 4% to 8% range.

“Our intermodal volume, while declining, did improve through the third quarter,” Yeager said. “And, although there's a long way to go with the economy, we believe that the future remains bright for intermodal due to the excellent service, a cost advantage over trucks, and the environmental benefits.

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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