Peeling the onion on intermodal data

In the pages of LM and on this Web site, you have likely read how intermodal transportation is in a good spot for various reasons.

These reasons include: lower fuel costs, improving service, and major investments into rail networks, among others. What’s more, it has been a fact that intermodal is taking share from over the road trucking and will continue to be an area of secular growth for railroads.

In fact, in its fourth quarter Market Trends report, which was released in February, the Intermodal Association of North America (IANA) trumpeted how:
-2012 was a record year for intermodal container movements at roughly 13,108,672 million, which topped 2011 by 5.9 percent and the previous high in 2007 by 9.8 percent;
-total 2012 intermodal volume was a record year—at 14,632,228 million—was up 4.0 percent annually
-domestic containers—at 5,528,184 million—saw a 12 percent annual gain, and international containers—at 7,580,488 million—were up 1.7 percent;
-total fourth quarter volume—at 3,671,252—was up 2.0 percent compared to 2011; and
-fourth quarter domestic containers were up 10.5 percent at 1,444,919 million, and international containers—at 1,846,635 million—were down 0.7 percent;

IANA made note of how domestic containers grew for the fourth straight quarter at a double-digit clip, coupled with the fact that big-box loads have nearly doubled in the last decade and things like strong investments into rail networks, terminals and container fleets, high fuel prices, financial and regulatory burdens on truckers, high levels of rail service, and expansion of rail product offerings all remain intact.

These things are all true and have been noted by industry analysts, in Wall Street reports, and in LM. But there is also more to this data than meets the eye, according to Tom Finkbiner, a member of the Board of Directors at the Intermodal Transportation Institute in Denver.

Speaking specifically to IANA’s reported container growth in the fourth quarter, Finkbiner explained that while the headline in what IANA is saying regarding a record number of domestic containers—as a data point—is true, there are also other things to keep in mind.

“The bottom line or other side of that story is that there are a record number of intermodal containers because the freight has been coming out of intermodal trailers,” he said. “That does not necessarily mean that the business is growing. It just means it is moving from one box to another. Secondly, the reason for that is because of the transloading of international containers at ports. In 2006, something like only 20 percent of the containers that entered the U.S. were transloaded at the ports and…80 percent of them went inland. In 2012 about 36 percent of the import containers that came in through the ports got transloaded into a domestic container or a trailer for a trucking company and then get delivered inland. What happened there is that the growth in the amount of freight did not increase; it moves from either an international box to a domestic box with no increase in traffic although it did move between pieces of equipment.”

Taking it a step further, he explained how the gross number of intermodal loadings—both domestic and container—were higher in 2006 than in 2012 as was gross GDP and industrial production.

“We would all like to say that intermodal is a big growth mode and relative to the other commodities the railroads haul it is a growth mode,” said Finkbiner. “But when you say it is a ‘record number of domestic containers,’ unless you put it in perspective, is kind of misleading.”

Fair enough and point well taken. Tom has forgotten more about intermodal than I have ever learned.

When I asked him how IANA would react to his assessment of its data, he stressed that he was not taking shots at them. Instead he diplomatically stated that if you were to ask them about what he said, they would agree, but they would also say that what they reported is accurate and true, which it is, of course.

In the same span of time between 2006 and 2012, Finkbiner said that the number of truckloads moved and truck tonnage volume is larger than intermodal.

That said, he explained he agrees that market share for intermodal in lanes that have a length of haul of more than 1,250 miles leads the way, but relative to all the freight that moves in the country, trucking is still growing faster than intermodal.

“It is misleading to state that things are what they are without all the facts,” he said. “The issue is a practical matter in that intermodal is not a good mode of transportation if you are not going at least 1,000 miles length of haul and by far the biggest spot in the truckload market is below 1,000 miles length of haul. One area in which intermodal offers superior service is more than 1,000 miles. Intermodal is doing OK and it is OK to say that but to say that it is taking over the world of transportation or giving the impression it is moving a record number of loadings or to give the impression that US freight transportation is moving solely to intermodal would be very misleading.”