Intermodal Freight Volume Falls 16% in First Quarter
This story appears in the May 18 print edition of Transport Topics.
Intermodal freight volume declined 16% in the first quarter of 2009 from a year earlier, in part because of stiffer truck competition for trailer shipments, the Intermodal Association of North America reported.
Domestic intermodal trailer shipments, which picked up last year when record diesel prices inflated truckers’ costs, fell 21% as the fuel price dropped below $2.20 on average from $3.52 in the 2008 period.
In total, intermodal shipments dropped more than 16% to 2,786,465 from 3,327,745. International intermodal moves fell 23%, but domestic shipments in containers rose 0.1%.
Truckers “have been helped by the dramatic decline in fuel prices,” IANA said in its Market Trends & Statistics report issued May 12. “The decrease in freight will continue to outstrip the [trucking] industry’s ability to adjust capacity, at least through the second quarter and probably through the third quarter.”
A particular competitive focus, IANA said, will be freight that travels on irregular routes, which truckers have been taking from intermodal.
“When times are tough, truckers are more interested in carrying that freight and price it more aggressively,” the report said. In better times, IANA said, intermodal moves that freight because fleets spurn that irregular route business because it adds empty miles and reduces productivity.
The trade group estimated that the recession-driven freight reductions could force trucking capacity utilization down to 76% later this year, about 10 percentage points lower than normal. IANA said it believes another factor affecting rail-truck competition will be a continuation of trucking bankruptcies in the weak freight market.
The trade group’s quarterly re-view of U.S. intermodal trends also concluded that recent economic reports, such as steady levels of consumer spending, could mean better times ahead.
“Following intermodal’s first-quarter plunge, it is possible that the worst is over,” the report said. “Even if volumes remain at current levels, year-over-year comparisons will improve as the industry moves through 2009. And hope remains that modest signs of broader economic recovery will blossom in the second half of the year.
“If employment conditions im-prove, consumer spending should follow,” the report said. “Weekly chain store sales offer a timely barometer of shoppers’ behavior. While they pulled even with year-ago results in recent weeks, renewed growth is a necessary condition for freight recovery.”
The increase in domestic container shipments was linked to shippers’ decisions to transload freight. That process involves transferring international cargo to 53-foot domestic containers with greater cargo capacity from smaller 40-foot and 45-foot maritime boxes.
IANA counts transloaded shipments as domestic cargo, even though the goods inside the containers were made overseas, because the freight moves within the United States in equipment designed for domestic service.
International cargo moved in maritime containers accounts for nearly 60% of intermodal traffic moving by rail in the United States, which is the business counted in IANA’s report. Domestic containers are used for about 30% of shipments, and the rest moves in trailers.
Month-to-month first-quarter totals were influenced by the timing of the Lunar New Year, when Asian factories typically are closed.
