Intermodal Volume Rises 5.2% in 2Q, IANA Reports

By Jonathan S. Reiskin, Associate News Editor

This story appears in the Aug. 13 print edition of Transport Topics. Click here to subscribe today.

North American intermodal shipping volumes rose 5.2% during the second quarter, with the domestic segment growing more quickly than import-export business, the Intermodal Association of North America reported.

Industry executives attributed much of the gain to conversion from truck-only transportation.

In an Aug. 6 report, IANA said the three-month tally for containers and trailers was 3.72 million units, up from 3.53 million in the same time last year.

IANA said it was the highest second-quarter volume for international shipping since 2008.

Domestic shipments rose by 6.7%, container volumes soared, but trailers contracted. International container volume gained 3.9%.

“Growth at this pace is exceptional during any quarter, but this gain is even more remarkable due to the softening economic climate,” IANA President Joni Casey said in announcing the report.

The Commerce Department estimated that U.S. gross domestic product grew by 1.5% during the second quarter.

“The ports still seem kind of sluggish, but the interior rail terminals are doing well, from what we’ve seen,” said Jeff Lang, CEO of the Eagle Group, Wenatchee, Wash.

“The economy isn’t booming, but there are conversions to intermodal from truck,” said Lang, who is chairman of the Intermodal Motor Carriers Conference of American Trucking Associations.

Comparing truck-rail movements with pure truck transportation, Lang said intermodal has gained some recent advantages: High diesel fuel prices have made trucking more costly, rail service is more reliable now than in the past, and the shortage of drivers has made it more difficult for trucking companies to operate smoothly.

“The railroads have reduced transit times in some lanes. They keep the trains moving,” Lang said.

Third-party logistics provider Transplace said many of its shipper clients are expanding their use of intermodal because they are wary of truck capacity in coming months.

“There are ongoing conversions from truck freight because the savings for intermodal when diesel is near $4 a gallon are substantial. Also, we all know that capacity for trucks will be tightening if the economy really recovers, so many feel they have to convert more to intermodal,” said Thomas Sanderson, CEO of Transplace, Frisco, Texas.

While the classic intermodal route is probably Los Angeles or Long Beach, Calif., to Chicago, Sanderson said he is seeing growth in shorter lanes, especially in the eastern two-thirds of the country.

“CSX and Norfolk Southern have improved service in the eastern core,” said Sanderson, adding that lanes can be as short as 700 miles in this area.

“There are good opportunities for freight and plenty of [city] pairs make sense,” he said.

J.B. Hunt Transport Services said in its second-quarter earnings report that it experienced 21% growth in its eastern intermodal network, compared with 8% in longhaul routes.

Rail improvements in Birmingham, Ala.; Memphis, Tenn.; and Harrisburg, Pa.; have led to better transit times, said Mark Yeager, chief operating officer of the Hub Group.

“Harrisburg is now one of the main gateways to the East for intermodal,” said Yeager, whose Downers Grove, Ill., firm is a large intermodal marketing company and provider of trucking services.

Yeager said the lower limit for intermodal is the distance for one truck with one driver in one day. With traffic congestion remaining heavy and regulations threatening to cut into driver productivity, the one-day limit for trucks is dipping, and so is the minimum distance for intermodal.

More north-south transportation in the East is possible now, running roughly parallel to Interstate 95, Yeager said. He also described rail service as “the best I’ve seen in more than 20 years. There’s still a time differential between truck and intermodal, but it’s compressed.”

Yeager said he anticipates intermodal volumes to keep outpacing U.S. GDP growth in coming months.

The Association of American Railroads said that, for the 30 weeks ended July 28, U.S. intermodal shipments were up 3.6%, year-over-year, with containers growing and trailers contracting.

Including Canada and Mexico for a North American total, intermodal rose by 4.6%, with Mexico growing faster than Canada and Canada faster than the United States.

“Domestic has been the primary volume driver in intermodal during the first half of 2012, driven by continued highway conversions to rail,” said Steve Branscum, a group vice president of BNSF Railway in charge of intermodal.

“BNSF believes tremendous opportunity for highway-to-rail conversions still exists, and expects for domestic to continue to lead the way in the future,” he said.